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Do Your Bonuses and Commissions Affect Overtime Pay Rates?

By October 30, 2014 February 7th, 2024 No Comments

In the United States, the Fair Labor Standards Act (FLSA) was put into place and is enforced by the Department of Labor to ensure that our workers are paid fairly. While most hourly employees are aware that they are entitled to overtime wages for working more than a 40-hour work week, it is a little-known fact that commissions and bonuses must be taken into account when establishing a person’s pay rate for overtime hours.

Under the FLSA, eligible employees must be paid a minimum of 1.5 times their hourly rate of pay (“time and a half”) for overtime hours. However, there are multiple ways employers can try to avoid paying employees their fair overtime wages. One way this is accomplished is to fail to calculate bonuses and commissions when establishing an employee’s true hourly pay rate.

If you earn bonuses or commissions, think of it this way: if your hourly rate is $10 per hour but you average an additional $10 per hour in commissions or other bonuses, you actually make $20 per hour. You can also take this into account: you pay taxes on all pay you bring home, so your overtime wages should reflect all pay you earn as well.

Overtime pay laws can be complex and may differ slightly in each state. If you have questions about overtime pay, or if you believe you have been denied overtime pay to which you are entitled, it can be difficult to know where to find the answers you need. For more information, contact an experienced attorney for a consultation where you will learn more about your rights and the options available to you.