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March 28, 2010
Incentives, Overtime Calculations and Workers on Leave

In a BLR webinar entitled ‘Incentive Pay: Best Practices for Designing and Managing Pay-for-Performance Plans’, Dan Kleinman discusses incentives, overtime calculations and the applicability to workers on leave. He provides the following information about non-discretionary incentives and how overtime calculations should occur:

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  • Nondiscretionary incentive payments are included in an employee’s regular rate of pay for the purposes of determining overtime
  • These payments include bonuses given to induce employers to work more efficiently, to achieve specific goals, or to remain with the employer, among other types

Regarding the applicability of incentives for workers on leave, 2009 changes in federal Family & Medical Leave Act (FMLA) regulations state the employees on FMLA leave are not entitled to bonuses or payments based on the achievement of specific workplace goals, even if the FMLA leave is the reason these workers failed to meet those goals.

However, this new rule applies only if employees on equivalent non-FMLA leaves are also denied such incentives.

Dan Kleinman has served as an independent consultant for a broad spectrum of companies and is the principal of Dan Kleinman Consulting (, a California-based compensation and human resource consulting firm. He provides compensation, performance, organizational planning, and reward-system design services. Dan Kleinman can be reached at

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