Overtime and Production Bonuses

An Oregon employer violated the Fair Labor Standards Act (FLSA) when it failed to include production bonuses in calculating overtime. It failed to include an annual bonus for each hour worked and a daily driver’s bonus.  West Coast Reforestation Inc. – based in Salem, Oregon – will pay $73,383 to 26 employees for violating overtime and record keeping provisions of the FLSA.

I.  OVERTIME RATE.

Overtime pay is calculated at 1 ½ times the Regular Rate. If all the employee receives is hourly pay, then the Regular Rate is the same as the hourly rate. However, if the employees is paid by the hour plus a production bonus, then both need to be added in the Regular Rate. For example, an employee paid only $10.00 per hour earns overtime pay at 1 ½ times $10.00 per hour or $15.00 each overtime hour.

But suppose an employee earns $10.00 per hour plus a $2.00 per hour production bonus. The Regular Rate is $12.00 ($10.00 plus $2.00). Then the overtime rate is 1/1/2 times $12.00 per hour or $18.00 each overtime hour. The Regulations describing production bonuses can be found here.

II.  PRODUCTION BONUSES.

Here, the employer violated overtime requirements when it failed to include production bonuses and daily payments made to some workers for driving in their regular rates of pay when computing overtime.

A.  Annual Production Bonus.

Workers could qualify for an annual bonus of up to $6.00 per hour for all hours worked during the year based on an evaluation of the quality of their work. This production bonus needed to be included in the Regular Rate when calculating overtime pay. The annual bonus had to be backed into each week’s pay and added to the Regular Rate for those weeks when overtime was worked in excess of forty hours in a week.

B.  Daily Driver’s Pay.

Workers who drove company vehicles were paid an hourly rate plus $50.00 per day. This extra $50.00 per day needed to be added to the Regular Rate when calculating overtime.

Excluding these amounts from the calculation resulted in the employer paying overtime at rates lower than those required by law.

III.  CHECK YOUR PAY.

If you are entitled to overtime pay and earn production bonuses or other pay along with your hourly pay, these extra payments may need to be included in the overtime rate for each hour of overtime that you are owed. The Ken S. Nugent, P.C. Overtime Team  https://www.attorneykennugent.com/lostwages/  of attorneys can help you collect (1) back wages, plus (2) liquidated damages in an additional amount of the same back wages and overtime, and (3) attorney’s fees and costs. For a free evaluation of your work situation, contact us here.  https://www.attorneykennugent.com/lostwages/

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