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That retention bonus is non-discretionary and must be included in an employee's regular rate calculation.
What could possibly go wrong?
Whether an annual, longevity, production or signing bonus, employers must conduct a orient express casino login fact-specific analysis to confirm whether a bonus is discretionary or not.A non-discretionary bonus, on the other hand, is a promised or predictable payment made on the basis of lotto ultime 20 estrazioni the employee meeting a certain quality, quantity or efficiency of production.An example of this issue arises where an employer, looking to attract more qualified personnel, offers a 2,000 retention bonus to hourly employees after being employed for six months.If employees work all the hours they are scheduled to work in a pay period, they are paid a 100 bonus.The benefits of offering non-discretionary bonuses to employees are numerous.While certain earnings like discretionary bonuses may be excluded from the regular rate of pay calculation, other payments, such as non-discretionary bonuses and commission, must be included in total compensation.The weekly equivalent of the bonus.92 (2,000 26 weeks).The employer announces the new bonus program to its employees and receives excellent feedback.The following calculation would be used:.92 (weekly equivalent of bonus) 50 hours worked.54 (increase in the regular rate).54 (increase in regular rate).77 (increase in overtime rate).77 x 10 hours overtime worked.70 (increase in overtime earnings due to retention.In this scenario, the employer would add half of the bi-weekly bonus (50) to the employee's earnings (hourly rate times the total hours worked) for that week.The flsa requires that overtime pay be calculated based on an employee's "regular rate" of pay, which includes all compensation earned during a workweek.Instead of trying to match a bonus paid to the weeks that it was supposedly earned, the flsa guidance allows for a simple apportionment solution.
If you are an employer thinking about starting a new bonus program, make sure you understand the facts and implications of such a program before taking the next step.
Such bonuses paid to employees must be apportioned back to the workweeks covered by the bonus period.
While facts associated with each bonus scenario are unique, generally where the employer offers a bonus on a regular basis and an employee recognizes and reasonably expects payment, the bonus is likely non-discretionary.
This is not a new area of wage and hour law, just one that often is overlooked or misunderstood.
Most employers today recognize that the Fair Labor Standards Act (flsa) requires that they pay non-exempt employees an overtime premium for working more than 40 hours in any given workweek.
The key is identifying which bonus payments are discretionary versus non-discretionary.If the employee works overtime during the 26-week period, the increase in the regular rate is calculated by dividing.92 by the total hours worked during the overtime week.This is due to the fact that the flsa is a workweek law, and it is often difficult, if not impossible, to determine exactly which week during a given period that a non-discretionary bonus was earned.For example, an employer pays its employees on a bi-weekly basis.In this case, the retention bonus was earned over six months or 26 weeks.The resulting total compensation would be divided by the total hours the employee worked during that week to determine the regular rate.It also is not an optional.It's also important to be aware that the flsa, which allows for recovery of unpaid wages plus liquidated damages (i.e., double damages is not the only wage and hour law to consider.A discretionary bonus is an unexpected, unannounced payment that is made at the sole discretion of the employer generally in recognition of excellent service, like an unanticipated year-end bonus based on company profits and not on an individual employee's work performance.The most common scenario: to boost efficiency, an employer implements a quarterly productivity bonus as a benefit for non-exempt employees.Many states have their own wage and hour laws that oftentimes are patterned after the flsa, many of which allow for recovery of triple damages.Failure to properly categorize "supplemental" compensation and properly calculate the regular rate for the purpose of overtime payments could lead to costly litigation.Like all other wage and hour issues, simply ignoring the issue does not make it go away.The following quarter, the employer sees its highest productivity levels in years and is ready to cut the checks to its hard working employees.