Giving A Christmas Time Bonus to Your Employees? It May Cost More than You Think (If they are non-exempt workers!)
Many years ago, when I worked for a management consultant, I received a large end-of-the-year bonus. There was something especially exciting about receiving an unexpected bunch of money (I think it was a few hundred dollars). Since I haven’t received anything nearly that large of a bonus in about 25 years, I remember that day with a bit of nostalgia.
Back to the main topic here, here is a reading by www.hrhero.com that provides an interesting discussion of why an end of year bonus to your non-exempt employees may cost much more than you think.
The reason for this is that you need to understand the basis for the overtime calculation. It isn’t merely the employee’s wage rate! Instead,
What’s an employee’s overtime pay rate? “Time and a half.” After a nonexempt employee works 40 hours in a workweek, all time must be paid at one and one-half times the “regular rate.” While the regular rate is an hourly rate, it isn’t always the base hourly rate at which the employee has been paid.
How does one calculate the regular rate? Here is the simple explanation:
spread the bonus across the period of time over which it was earned;
include the additional amount within a recalculated “regular rate” and figure out the amount of additional overtime compensation owed because of the new, higher regular rate
Now, some bonuses MIGHT be excluded, such as the Gift exclusion and the Flat-percentage bonus. Read here for more details!
Sphere: Related ContentIf you enjoyed this post, please consider leaving a comment or subscribing to the feed or by email.
Comments
No comments yet.
Leave a comment