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incentive pay for non-exempt positions

LGSLGS 1 Post
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Looking for ideas on ways to provide bonus/incentives to inside sales staff and NOT impact hourly overtime calculations. Any ideas?
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  • 3 Comments sorted by Votes Date Added
  • Don DDon D 9,834 Posts
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    Most anything, except Wal-Mart certificates, will impact their earnings. I don't know that it would impact their overtime earnings tho. You need to call your Federal Wage & Hour office. Look under US DOL, Dept of Labor, Wage & Hour.
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  • SystemSystem 5,885 Posts
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    Welcome to the Employers Forum, LGS!

    I'm not a lawyer, but I'm pretty sure that productivity bonuses and incentives usually have to be included in their regular rate of pay when you calculate their OT rate.

    But here's some info I found on bonuses that don't have to be included in calculating the regular rate of pay:

    "Bonuses that are based on a percentage of the employee’s total earnings —
    This type of bonus must be based on a percentage of the employee’s
    total earnings for the bonus period, including overtime pay. A bonus
    that includes only regular total earnings must be discretionary to
    avoid being included in the calculation of overtime.
    ➣ Discretionary bonuses — A discretionary bonus is a payment made to
    the employee under circumstances and conditions completely under
    the employer’s control — such as whether to pay a bonus and, if so,
    its amount.The test for determining whether a bonus is discretionary
    hinges on whether the employer reveals the existence and amount of
    the bonus close in time or far in advance of the payment date."

    I think the regulation covering this is:
    29 C.F.R. §§ 778.208 to 778.215

    Good luck!

    James Sokolowski
    HRhero.com
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  • GLCGLC 174 Posts
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    James is correct. We were going to do the same thing for some of our non-exempts. I called the wage and hour folks to see if the the incentive pay would need to be taken into consideration when calculating OT. The answer was yes. It's very complicated to put in this email. You may want to contact the wage and hour folks. At my last job, we did give discretionary bonuses to all non-exempt staff. We did not have any problems with that. Good Luck.
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