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Q.Are bonuses and incentives paid by my employer included as part of my regular rate of pay for purposes of calculating overtime?
A.Nondiscretionary bonuses (those based on objective criteria such as performance, hours worked, or proficiency are included in determining the regular rate of pay for the purpose of computing overtime.
For example, an hourly employee who works 40 hours a week at $10 per hour ihas a “regular rate” of pay of $10 per hour and an overtime rate of $15 (one and one-half times $10). If that same employee received a $100 bonus for meeting a goal that week, the employee’s regular rate of pay would be $12.50 per hour ($100 plus the regular weekly rate of $400, divided by 40 hours) and the overtime rate is $18.75 per hour for that week.
Discretionary bonuses, sums paid as gifts on a holiday or as a special reward for good service, are not included in an employee's regular rate of pay for the purpose of calculating overtime.
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