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Bonuses based on a predetermined formula, such as individual or group production bonuses.The bonus payment is not made according to any prior contract, agreement, or promise causing an employee to expect such payments regularly.Ī non-discretionary bonus is a bonus that fails to meet the statutory requirements of a discretionary bonus.
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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.non-discretionary bonus?Īccording to the federal Department of Labor discretionary bonuses are excludable from the regular rate of pay when: Discretionary bonus payments do not need to be included. There are some types of compensation that must be included in the regular rate, including non-discretionary bonus payments. The regular rate is calculated by taking the employee’s total compensation for the week divided by the total number of hours worked during the week. Under the federal Fair Labor Standards Act an employer is required to compensate most employees at not less than one-and-a-half times their regular rate for time worked in excess of forty hours per week. However, those same employers are now seeing their good intentions coming back to bite them because of how the Department of Labor is treating those bonus payments when it comes to overtime. Since the pandemic began, some employers have been paying their employees bonuses to work during the crisis.