As an Employee with Bonuses or Commissions, Was Your Overtime Pay Miscalculated?

If you worked as an hourly employee who routinely worked overtime and earned bonuses, spiffs, or commissions, then you may want to obtain a free assessment of whether your employer paid your overtime wages at the correct rate.

Overtime Rate Based on Regular Rate Calculation

According to the Fair Labor Standards Act (FLSA), employers must pay their employees overtime wages at a rate of 1.5 times an employee’s “regular rate” of pay for any time the employee works more than forty hours in a workweek. The regular rate of pay determination must include all remuneration an employee receives, including commissions and bonuses paid to the employee. An employee’s “regular rate” of pay is determined by adding his or her total compensation—which includes the hourly pay plus commissions and certain bonuses—and dividing it by the total number of hours worked during the week for which that compensation was paid.

Bonuses and the Miscalculation of Regular Rate of Pay

The calculation is complex and requires sophisticated programs and even then, employers violate the law either because of mistakes or willful refusal to include all the compensation earned in the regular rates or to calculate such additional earnings in the correct pay periods.

According to the U.S. Department of Labor, only certain types of bonuses, which are referred to as “non-discretionary” bonuses, must be included when determining an employee’s regular rate of pay:

Bonuses: For purposes of calculating overtime pay, section 7(e) of the FLSA provides that non-discretionary bonuses must be included in the regular rate of pay. Non-discretionary bonuses include those that are announced to employees to encourage them to work more steadily, rapidly or efficiently, and bonuses designed to encourage employees to remain with a facility. Few bonuses are discretionary under the FLSA, allowing exclusion from the regular rate. See 29 CFR §§ 778.200 and 778.208).

Free Assessment by an Overtime Pay Lawyer

If you worked as an hourly employee who routinely worked overtime and earned bonuses, spiffs, or commissions, then you may want to obtain a free assessment of whether your employer paid your overtime wages at the correct rate. Please contact an attorney at Feldman Williams, PLLC for a free assessment and evaluation.