State:
Free Special Resources
Get Your FREE Special Report. Download Any One Of These FREE Special Resources, Instantly!
Featured Special Report
Claim Your Free Cost Per Hire Calculator
This handy calculator lets you plug in your expenses for recruiting, benefits, salaries, and more.

Graphs automatically generate to show you your annual cost per hire and a breakdown of where you are spending the most money.

Download Now!
September 23, 2010
Calculating Bonuses Compensable as Overtime Wages

In a BLR webinar entitled "Avoid Startling High Fines and Expensive Lawsuits Based on Failure to Pay Overtime on Bonuses," Clint D. Robison, Esq. from the Los Angeles office of Hinshaw and Culbertson LLP explained how to handle overtime calculations once it's been determine that a bonus qualifies as compensable overtime wages:

For a Limited Time receive a FREE Compensation Market Analysis Report! Find out how much you should be paying to attract and retain the best applicants and employees, with customized information for your industry, location, and job. Get Your Report Now!
  • First, identify the time frame over which the bonus was earned. This will depend on the circumstances
  • Method A is to apportion the bonus based on workweeks. Divide a quarterly bonus among the number of weeks in the quarter
  • Method B is to apportion based on hours worked during the timeframe
  • The proper method of apportionment will usually involve an equal distribution of the bonus based on hours, weeks or some other factor
  • For each week in which a portion of the bonus is added, the regular rate is increased and additional overtime compensation may be due
  • If the employee didn't work more than 40 hours in that week, then no overtime is required
  • If the employee worked more than 40 hours, you'll need to recalculate to include the bonus
  • You'll need to understand whether a bonus is excludable so that you can value the true cost of a bonus to your business

Don't attempt these evasion tactics:

  • Varying the rate of pay which decreases as the length of the workweek increases
  • Designating some wages as a "bonus" even though the wages are already earned
  • Artificially dividing the workday into straight-time and overtime portions

Clint D. Robison, Esq. is a an attorney in the Los Angeles office of Hinshaw and Culbertson LLP (www.hinshawlaw.com) and Chair of its Employment Practice Liability subgroup. He provides counseling, litigation and risk management services to medium- and large-sized public and private entities and handles all aspects of employment litigation and advice including wage and hour matters, discrimination claims, employment contracts, trade secret issues, retaliation claims, sexual harassment claims and Americans with Disabilities Act (ADA) issues.

Featured Free Resource:
Cost Per Hire Calculator
   
   
 
 
Twitter  Facebook  Linked In
Follow Us
CT-WEB02
Copyright © 2016 Business & Legal Resources. All rights reserved. 800-727-5257
This document was published on http://Compensation.BLR.com
Document URL: http://compensation.blr.com/Compensation-news/Compensation/Employee-Overtime/Calculating-Bonuses-Compensable-as-Overtime-Wages/