On January 5, 2026, the United States Department of Labor (“DOL”) issued Opinion FLSA2026-2 stating that non-discretionary bonuses that are paid to waste drivers must be included in the calculation of overtime wages. The DOL found the “safety job duties, and performance bonus[es]” were non-discretionary. The employer paid its drivers a $12.00-base hourly rate plus a bonus of up to $9.50 an hour based on punctuality, attendance, consistency in completing daily tasks, driving safety, compliance with traffic laws, proper attire, and performance efficiency. In calculating the workers’ overtime pay, the employer did not include the bonuses. The DOL found this violated the FLSA.
To comply with the FLSA, all non-exempt employees must receive overtime pay “at a rate not less than one and one-half times the regular rate at which [the employee] is employed” for any hours worked over 40 in a workweek, as well as at least the federal minimum wage for all hours worked. 29 U.S.C. §§ 206, 207(a)(1). With very few exceptions, “all remuneration for employment paid to, or on behalf of, the employee” must be included in the “regular rate” calculation. § 207(e).
To calculate the regular rate, employers must divide total pay in a workweek by the hours worked in the same workweek. The FLSA allows an employer to exclude from the regular rate “[s]ums paid in recognition of services performed during a given period” if “both the fact that payment is to be made and the amount of the payment are determined at the sole discretion of the employer at or near the end of the period and not pursuant to any prior contract, agreement, or promise causing the employee to expect such payments regularly[.]” 29 U.S.C. § 207(e)(3). Such a payment is often termed a “discretionary” bonus. See 29 C.F.R. § 778.211.
However, in order to qualify as an excludable non-discretionary bonus, (1) the fact and amount of the payment must be “determined at the sole discretion of the employer”; (2) the employer’s determination must occur “at or near the end of the period” when the employee’s work was performed; and (3) the payment must not be made “pursuant to any prior contract, agreement, or promise causing the employee to expect such payments regularly[.]” 29 U.S.C. § 207(e)(3).
The DOL determined that the waste company’s bonus scheme did not qualify for exclusion. Primarily, the DOL found that bonuses were calculated using a pre-determined plan to incentivize certain work performance.
If you are eligible for overtime and are paid a bonus, call the overtime attorneys at Bohrer Brady, LLC for a free, confidential consultation to see if your bonus should be included in your overtime pay.
