Overtime must be calculated by an employer to be at least one and one-half times the regular rate earned by a non-exempt employee for all hours worked over 40 in a workweek. In most cases, the “regular rate” includes all “remuneration for employment” which includes nondiscretionary bonuses, which means when a nondiscretionary bonus is paid an employer will need to recalculate the regular rate of pay and determine if additional overtime earnings are warranted.

To determine how to calculate the regular rate, determine whether the bonus covers either only one weekly pay period OR a longer period of time.  i.e. Why was the bonus paid?  If it’s an annual bonus then the entire year would need to be reviewed. If the bonus covers only one weekly pay period, then an employer should add the bonus that to the other earnings and divide by the total hours worked that week. If the bonus covers a longer period, then a similar process should be followed to find an equivalent amount for each week each week, unless it is possible to determine what portion of the bonus the employee actually earned each week.


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