Many workers don’t realize that bonuses and commissions must be factored into their overtime rate, and employers who get this wrong may owe you money.
If you work more than 40 hours a week and receive bonuses or commissions on top of your hourly wage, your employer may be shortchanging you on overtime — even if they are paying you overtime. Under the Fair Labor Standards Act (FLSA), overtime must be calculated based on your “regular rate of pay,” which includes more than just your hourly wage. Non-discretionary bonuses, commissions, and certain other forms of compensation must also be factored in. When employers leave these out, workers end up receiving less overtime pay than the law requires.
What Is a Non-Discretionary Bonus?
Not all bonuses are treated the same under the law. A “discretionary” bonus — such as a surprise holiday gift or a one-time reward given entirely at the employer’s option — does not need to be included in overtime calculations. But a “non-discretionary” bonus is one that employees are promised or can expect to earn based on their performance, hours worked, sales, or other measurable criteria. Common examples include production bonuses, attendance bonuses, safety bonuses, and sales commissions. If your bonus is something you earn by meeting a set goal or standard, it almost certainly must be included when your employer calculates your overtime rate.
How the Math Works — and Where Employers Go Wrong
Here’s a straightforward example of how this plays out. Suppose you earn $20 per hour and work 50 hours in a week, and you also earn a $200 commission that week. Many employers simply pay the base overtime rate — $30 per hour (time-and-a-half) — for the 10 hours of overtime, ignoring the commission entirely. But the law requires the commission to be added to total straight-time earnings, and the overtime premium recalculated from there. The difference may seem small in a single week, but over months or years — and multiplied across an entire workforce — the underpayment can add up to thousands of dollars per employee.
Here’s how the numbers compare:
| What Employer Paid | What Law Required | |
|---|---|---|
| Regular pay (40 hrs × $20) | $800.00 | $800.00 |
| Commission | $181.00 | $181.00 |
| True “regular rate” | $20.00/hr | $23.35/hr* |
| Overtime premium (14 hrs) | $140.00 | $163.46 |
| Total | $1,401.00 | $1,424.46 |
*Calculated by adding the $181 commission to all straight-time earnings ($1,080), then dividing by 54 total hours worked.
The underpayment for that single week was $23.46, but under the FLSA, willful violations entitle employees to double that amount in liquidated damages, making the total $46.93 for just one week. Multiplied over three years and across an entire workforce, the employer’s liability grows dramatically.
What You Can Do
If you regularly work more than 40 hours a week and also receive bonuses or commissions, take a close look at your pay stubs. Your overtime rate should reflect more than just your base hourly wage. If your employer has been calculating overtime on your hourly rate alone — while ignoring your commissions or production bonuses — you may have a claim for unpaid wages. Under the FLSA, workers who successfully bring these claims can recover the full amount of unpaid overtime, plus an equal amount in liquidated damages, and attorney’s fees paid by the employer.
Contact Bohrer Brady, LLC at (800) 876-3911, (225) 925-5297, or info@bohrerbrady.com to find out if you may be owed additional pay. There is no cost to you for an initial consultation.
Bohrer Brady, LLC, represents workers in wage and hour cases throughout Louisiana and beyond.
