Bonuses: FLSA guidelines

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in Office Management,Payroll Management

Payroll procedures for handling bonuses are affected by the FLSA (Fair Labor Standards Act). While such bonuses can increase morale, provide incentive to work harder, and entice strong applicants to join a company, improper treatment of employee bonuses can lead to FLSA violations. 

Payroll management questions arise about whether bonuses are included in non-exempts' regular rates of pay; how bonuses affect overtime pay; and whether long-term bonuses must be redistributed over previously calculated overtime rates.

1. Should bonuses be included in non-exempts' regular rates of pay?

Most bonuses must be included in non-exempt employees' regular rates of pay when calculating overtime.

Bonus payments based on criteria related to attendance, production, efficiency, quality or quantity of work, or any other work performance standard must be calculated.

Bonuses that are exempt from the overtime calculation include...(register to read more)

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