In my post yesterday, Getting Punished for Doing Good
, about QuikTrip’s fine at the hands of the USDOL for not calculating non-discretionary bonus into overtime for nonexempt employees I was asked on Twitter if that included non-cash bonuses. Well I was not sure, though I suspected it might if it was production related. So I asked around. Good blog friend Ann Bares
pointed me in a couple of directions and I also asked, via Twitter. two attorneys, Eric B. Meyer
and Jon Hyman
. Both replied that the answer was a resounding YES! I was pointed to the following fact sheet from the US Department of Labor, Fact Sheet #23
, which clearly states on page 2 “Where non-cash payments are made to employees in the form of goods or facilities, the reasonable cost to the employer or fair value of such goods or facilities must be included in the regular rate.”
So clearly, if you are giving non-discretionary bonuses based upon production standards, the amount of the bonuses or the value of the award must be added to the base pay rate of the employee and then overtime must be calculated on this amount. If you fail to do so you run the risk of falling into the same trap that caught QuikTrip and many others. Go back and read the comments from yesterday, they are very informative.
As additional resources on this topic see also Ann Bares post on Compensation Force entitled
Know Ye the Regs When Awarding Bonuses or Lump Sums to Nonexempts and Michael Moore’s post entitled Bonus and other Lump Sum Payments to Nonexempt Employees may Impact Overtime Calculations . Both are very informative.
Now you have no excuse for making this mistake and you can make yourself an HR HERO in your company.