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September 22, 2010
Employer Pays $750,000 in Back Pay for Failing to Pay Overtime on Bonuses

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 described a lawsuit against Quik Trip Corp., which agreed to pay $750.000 in back pay:

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  • QuikTrip Corporation, operating convenience stores and travel centers, agreed paid to pay nearly $750,000 in back pay to over 3,800 workers in 9 states.
  • Violations were disclosed in Arizona, Georgia, Illinois, Iowa, Kansas, Missouri, Nebraska, Oklahoma and Texas.
  • An investigation found that Quik Trip had violated the Fair Labor Standards Act (FLSA) by failing to pay the additional overtime premium due on performance-related bonuses.
  • Quik Trip was recognized as one of Fortune Magazine's "Top 100 Companies to Work For." How do we reconcile this with the fine? It demonstrates that a company can be doing well in one area that includes employee satisfaction, but it needs to remain very careful in cases such as these.
  • Does the FLSA render bonuses unlawful? No. It takes issue with certain types of bonuses and their impact on overtime compensation. The key distinction is between discretionary and non-discretionary bonuses.
  • Bonuses given as gifts, such as at the holidays, may be excluded from the regular rate as long as the amount of the bonus is not dependent on hours worked, production, or efficiency.
  • It should not serve as a motivator for increased or more efficient performance.
  • In addition, a gift bonus may not be so significant that your employees consider it part of their wages rather than a gift.

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.

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