Payment of “Bonus” Affects Overtime Rate of Pay

In California, the “regular rate of pay” for overtime purposes must consider all forms of compensation given to the employee including, commissions and non-discretionary bonuses.  A non-discretionary bonus means that neither the formula for calculating the bonus nor when the employee will earn the bonus is left at the discretion of the employer.   

 

Because the bonus was “earned” during regular an overtime hours, the employer has to pay the employee more money for the overtime hours already worked.  The calculation is made by dividing the amount of the bonus by the total hours worked (including overtime) during the bonus generating period.

 

For an interesting discussion of this subject, see the case of Marin v. Costco