Summary: When employers try to exclude bonuses from overtime pay calculations, they are likely violating federal law. The recent recovery of $259,000 in back wages for workers is the latest example of this type of wage theft. If your employer is not paying you properly, contact an experienced attorney who can help you navigate the legal landscape.
As a matter of federal and state laws, employers must pay employees for all hours worked while compensating nonexempt workers for overtime. Companies must incorporate non-discretionary bonuses in the final calculations to ensure employees are paid properly when determining overtime rates. Failing to comply with overtime requirements is one of the most common violations that companies perpetrate across various industries.
For example, one South Carolina manufacturer was ordered to pay $259,000 to 939 workers after an investigation found that the company had excluded bonuses in wage calculations and denied workers proper overtime pay. If your employer refuses to pay you for overtime hours worked or is incorrectly calculating overtime, it may be time to consult with a skilled wage theft lawyer who can investigate the situation further to determine whether wage recovery is possible.
The Story Behind a South Carolina Manufacturer’s $259K Payout
Aftera lengthy investigation into a South Carolina manufacturer and its four subsidiaries for alleged wage theft, it was found that these businesses neglected to factor premium pay, incentives, and bonuses into employees’ regular rates for the purposes of calculating overtime pay.
Under the provisions of the Fair Labor Standards Act (FLSA), overtime pay kicks in for all covered, nonexempt employees for all hours over 40 in a workweek. In the case of this South Carolina company and its subsidiaries, these entities failed to incorporate the following bonuses in regular rates when determining overtime:
- Bonuses earned for reaching quarterly sales and safety goals
- Incentives for working night shifts
- Incentives for training other employees
- Hourly incentives for hours worked during peak production periods
- Bonuses for perfect attendance
- Bonuses for personal safety performance
In withholding these bonuses from the calculations for overtime, the employers ended up paying workers lower overtime rates than those mandated by law. As a result, the company was required to pay $259,000 to 939 workers who had legally earned overtime but were denied proper wages.
When Bonuses Should Be Included in Wage Violations
This example of a South Carolina manufacturer’s failure to include bonuses in overtime calculations highlights a particularly rampant wage violation. Bonuses usually fall into two categories: discretionary bonuses and non-discretionary bonuses.
Discretionary bonuses do not need to be factored into overtime calculations. On the other hand, non-discretionary bonuses:
- Are obligatory when a worker meets certain predetermined criteria or performance standards
- May be promised by contract or collective bargaining agreement
- Must be included in the regular pay rate for nonexempt employees when calculating overtime
- Include bonuses that are designed to help workers be more efficient or encourage longevity with the company
Non-discretionary bonuses tied to performance evaluations, production incentives, working undesirable shifts, or other set criteria are also generally overtime eligible.
Enlist the Help of an Unpaid Overtime Attorney at Our Firm
Wage theft is a growing problem that affects many workers. Withholding benefits, failing to pay overtime (or the right amount of overtime), and misclassifying workers are just a few examples.
Some instances of wage theft may be more blatant than others. As the story of the investigation and subsequent legal judgment against the South Carolina manufacturer emphasizes, it is unlawful for a company to exclude any hours worked or leave out non-discretionary bonuses to lower its overtime obligations.
If you believe your employer is not paying you the full wages owed due to overtime violations or other issues, a qualified lawyer can step in to protect your rights and get you the compensation you deserve. Fill out our online form or start a chat on the lower right-hand side of the webpage to request your free and confidential review.
