Bonuses announced to employees to induce them to work more efficiently.Bonuses for quality and accuracy of work.Bonuses based on a predetermined formula, such as individual or group production bonuses.Nondiscretionary bonuses are included in the regular rate of pay, unless they qualify as excludable under another statutory provision (see below).Įxamples of nondiscretionary bonuses that must be included in the regular rate include: Nondiscretionary BonusesĪ nondiscretionary bonus is a bonus that fails to meet the statutory requirements of a discretionary bonus. The determination must be made on a case-by-case basis depending on the specific circumstances.Ī discretionary bonus may not be credited towards overtime compensation due under the FLSA. While a bonus may be labeled discretionary, if it does not comply with the provisions of the statute, then the bonus is not an excludable discretionary bonus. The label assigned to the bonus and the reason for the bonus do not conclusively determine whether the bonus is discretionary. Referral bonuses to employees not primarily engaged in recruiting activities (subject to additional criteria).Bonuses to employees who made unique or extraordinary efforts not awarded according to pre-established criteria.Bonuses for overcoming a challenging or stressful situation.

The bonus payment is not made according to any prior contract, agreement, or promise causing an employee to expect such payments regularly.Įxamples of some common bonuses that may be excludable discretionary bonuses if they meet the statutory requirements include:.The employer has the sole discretion, until at or near the end of the period that corresponds to the bonus, to determine the amount of the bonus and.The employer has the sole discretion, until at or near the end of the period that corresponds to the bonus, to determine whether to pay the bonus.A bonus is discretionary only if all the statutory requirements are met: Discretionary Bonusesĭiscretionary bonuses are excludable from the regular rate of pay. Information regarding additional exclusions from the regular rate is available in Fact Sheet #56A. Unless specifically noted, payments that are excluded from the regular rate may not be credited towards overtime compensation due under the FLSA. §§ 207(e)(1) and (3) contain statutory provisions which address the excludability of certain bonuses. The Act provides an exhaustive list of payments that may be excluded from the regular rate of pay.

Under the FLSA, all compensation for hours worked, services rendered, or performance is included in the regular rate of pay. Fact Sheet #23 provides additional information regarding overtime pay.Ī bonus is a payment made in addition to the employee’s regular earnings. The amount of overtime pay due to an employee is based on the employee’s regular rate of pay and the number of hours worked in a workweek regardless of whether the employee is paid on a piece rate, day rate, commission, or a salary basis. Fact Sheet #22 provides general information about determining hours worked. The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at not less than time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek. For information regarding nondiscretionary bonuses and employees employed as executive, administrative, professional, or outside sales employees, who are exempt from the FLSA’s minimum wage and overtime requirements, see Fact Sheet #17U. This fact sheet provides general information regarding bonuses and the regular rate of pay under the FLSA for non-exempt employees. Fact Sheet #56C: Bonuses under the Fair Labor Standards Act (FLSA)

Greed corp bonus carrier