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 some of the Fair Labor Standards Act (FLSA) exemptions:
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- Some employees may be exempt from the overtime wage provisions
- There are three general categories: Executive, Administrative and Professional
- In order for an employee to qualify as being exempt and thus not be required to be paid at one and one half his or her regular salary, an employee need only to qualify under one of these exempt categories
Under federal law, employers must calculate overtime pay based on an employee's regular rate of pay:
- "Regular rate" is not necessarily the same as an employee's "straight hourly rate." The calculation for "regular rate" in each workweek is: i) all compensation earned (including all hourly pay and "nondiscretionary" production bonuses), ii) divided by the number of hours worked in that week
- Payments excluded from the regular rate include:
- Discretionary bonuses
- Gifts
- Contributions to certain welfare plans
- Payments made to certain profit-sharing plans
- Payments to certain savings plans
- Pay for foregoing holidays
- Pay for foregoing vacations
- Federal regulations provide that a bonus is discretionary only if "both the fact that payment is to be made and the amount of the payment are determined at the sole discretion of the employer at or near the end of the period and not pursuant to any prior contract, agreement, or promise causing the employee to expect such payments regularly"
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.