Failure to Include Bonuses in the Overtime Rate
One of the most common issues impacting hourly employees occurs when employers fail to include their bonuses or additional pay in the overtime calculations. This is illegal because the law requires employers to calculate overtime based on the regular rate of pay.
The regular rate of pay is based on the total compensation the employee has received.
This means not only the employee’s hourly pay but also any additional pay they receive. Excluding bonuses from the overtime formula means that the employee is not receiving overtime at the correct rate of pay.
Here’s how it happens. Employers elect to pay employees bonuses on a weekly, quarterly or annual basis based on performance, safety, production, sales and countless other reasons. The bonuses—whether they are paid as a check, gift card or cash, need to be added to the total compensation the worker received for the pay period in which the bonuses were earned. This is true regardless of when the bonuses are paid. When the bonuses are paid separately or left out of the overtime calculations, the worker receives an artificially low overtime rate. The wrong overtime rate means that the worker is not being paid all the money they are owed when they work more than 40 hours a week.
If you received a bonus and were paid by the hour, odds are you have a claim for additional overtime compensation from your employer. An experienced back wages lawyer can help you collect your unpaid wages. Contact us today for a free consultation.