![]() ![]() Exempted gift payments, such as Christmas or other special occasion bonuses and anniversary bonuses to long-serving employees, must be unrelated to hours worked, production or efficiency, and not so large that employees would consider them part of their regular wages. Gifts and discretionary bonuses generally do not have to be included in the regular rate of pay. ![]() That’s because the “regular rate” used to calculate overtime must include “all remuneration for employment paid to, or on behalf of, employee.” Failing to include certain bonuses when calculating overtime pay may violate the FLSA and give rise to overtime liability. ![]() However, things get more complex if the employee receives other payments, such as bonuses. Calculating overtime pay is simple if the employee receives only a basic hourly rate as compensation. The federal Fair Labor Standards Act (FLSA) generally requires that nonexempt employees who work more than 40 hours in a workweek be paid 1.5 times their “regular rate” for the hours above 40. ![]()
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