Can Bonus Pay Affect My Overtime Hourly Rate? Non-Exempt Employees NEED to Watch This

Описание: Employment law attorney Neil Shouse of Shouse California Law Group explains how bonus pay affects overtime calculations.

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Does Your Bonus Increase Your Overtime Rate? (Discretionary vs. Non-Discretionary)

Receiving a bonus is always a welcome financial boost, but for non-exempt employees in California, that extra money often means you are legally owed even more in overtime pay. Many workers remain unaware that certain types of bonuses must be factored into the "regular rate of pay" used to calculate overtime compensation. The crucial legal distinction lies between discretionary and non-discretionary bonuses. A discretionary bonus is an unexpected reward, such as a random holiday gift, where the employer retains complete control over the amount and the recipient. These do not impact your overtime rate.

However, a non-discretionary bonus is a payment an employee expects to receive based on specific criteria, a contract, or a promise. Common examples include attendance awards, retention bonuses, or production incentives governed by a set formula. Under California labor laws, these payments are considered part of your earned wages. Consequently, when calculating overtime for a pay period where such a bonus was earned, the employer is legally required to add the bonus to your base hourly earnings to determine your true regular rate of pay.

This means that for any overtime hours worked during that period, your time-and-a-half pay must be based on this higher, adjusted total—not just your standard hourly wage. If your employer fails to adjust your overtime rate to account for these bonuses, they are underpaying you. This is a frequent violation for hourly staff. If you believe your rights have been violated, you may be entitled to recover unpaid wages.

If you or a loved one is not being paid the correct overtime rate due to miscalculated bonus pay, we invite you to contact us at Shouse Law Group. We can provide a free consultation in office or by phone. We have local offices in Los Angeles, the San Fernando Valley, Pasadena, Long Beach, Orange County, Ventura, San Bernardino, Rancho Cucamonga, Riverside, San Diego, Sacramento, Oakland, San Francisco, San Jose and throughout California.