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May 14, 2010
Discretionary Bonuses—When May Payments Be Excluded from Regular Pay?

In a BLR webinar titled "Reducing Overtime Costs: What You Legally Can—and Can't—Do to Keep Workers at Their Straight-Time Rates," Laura P. Worsinger, Esq., explained that certain payments maybe excluded in determining an employee's regular rate of pay when awarding discretionary bonuses.

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She said certain payments may be excluded in determining the "regular rate":

  • Sums paid as gifts; payments in the nature of gifts made at Christmas time or on other special occasions, as a reward for service, the amounts of which are not measured by or dependent on hours worked, production, or efficiency (discussed in 29 CFR § 778.212).
  • Reasonable payments for traveling expenses, or other expenses, incurred by an employee in the furtherance of his employer's interests and properly reimbursable by the employer; and other similar payments to an employee which are not made as compensation for his hours of employment (discussed in 29 CFR §§ 778.216 through 778.224).
  • Contributions the employer irrevocably makes to a trustee or a third person under a bona fide plan for providing old-age, retirement, life, accident, health insurance, or similar benefits for employees (discussed in 29 USC §207(e)(4); 29 CFR §778.214).

Laura P. Worsinger, Esq. is Of Counsel with the Los Angeles office of Dykema Gossett PLLC. She has broad counseling and litigation experience and specializes in the defense of employers in individual and class actions involving wage and hour violations, misclassification, discrimination, wrongful termination, and other employment-related proceedings. She can be contacted at lworsinger@dykema.com.

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