Find Out When Bonuses Should Be Calculated Into Your Regular Pay Rate to Determine your Overtime Rate
Employee bonuses are usually given to reward performance, encourage good performance, productivity, or as a gift around the holidays. Usually, any bonus given to an employee must be included in the regular rate of pay.
To calculate your correct regular rate of pay, which affects your overtime rate, employers must take into account all work-related payments for both hourly and salaried employees.
Examples of these payments, which must be added to the employee's total wages to determine the correct regular rate of pay, can include:
- Bonuses: "Non-discretionary" bonuses, or additional payments that are directly tied to hours worked or to special achievements, must be used to determine the regular rate of pay. Only "non-discretionary" bonuses, like certain types of gifts, may be excluded under FLSA overtime laws.
- Incentive Pay: extra compensation for special achievements
- Shift Differentials: Employees who work nights, weekends, or holidays are often paid a "shift differential." Employers are required to include this in the regular pay rate, as long as the "differential" is less than 50% of the employee's regular rate of pay.
- Longevity Pay: Extra payments related to the length of time an employee has worked at a company.
A lawsuit brought against SkyWest Airlines is an example of how some employers violate these labor laws.
The lawsuit, filed in California Superior Court, claims that SkyWest failed to consider non-discretionary bonus payments when calculating the regular pay rate for its airport agents. This means that when employees were actually paid overtime they were paid a low hourly overtime rate and denied their correct overtime wages.
The lawsuit also involves a wage dispute for unpaid overtime wages. In the lawsuit, an employee claims the airline failed to pay overtime wages for hours worked over 40 in a workweek, a violation of the labor laws. Overtime wages require a rate of one and one-half times an employee's normal rate of pay.
In another wage and hour violation, SkyWest failed to provide accurate wage statements in violation of the labor codes. The suit seeks payment for unpaid overtime compensation, damages, restitution, attorneys' fees and court costs.
Almost 90 percent of the workforce is protected by the wage and hour laws.
Make sure you are receiving your honest day's pay by contacting a wage and hour lawyer today to get the wages you deserve under the labor laws. View our Case Results to see how we have recovered millions in back wages, overtime compensation, and damages for our clients. Remember, if there is no recovery, there is no fee. Our firm is in Houston, Texas, but we maintain a national practice.