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Bonuses Can Increase the Amount of Overtime Pay a Worker Can Claim


As this blog has discussed, it is important for employers, not only to pay their employees overtime, but to be sure to properly calculate overtime wages. Normally, employees are paid one and a-half-times their hourly rate for each hour of overtime worked. However, if an employee earns a performance-based bonus, that bonus needs to be included in their regular hours in order to properly calculate their overtime hours.

David Yeremian, an overtime attorney in California, says his state has seen a rise in claims of overtime bonus violations. In particular, the retail industry and industries where compensation is based on a piece-rate basis, are offenders of overtime bonus violations.

For example, if your boss tells you that any salesperson to sell a certain number of clothes by the end of the day will receive a $100 bonus, that $100 needs to be accounted for when calculating the overtime compensation. For an employee who normally earns $10/hr their overtime rate would normally be $15/hr. However, a bonus can increase their normal rate of pay to $11 or $12 per hour which would raise their overtime rate to $16.5 or $18 per hour. With just a few hours of overtime, the difference in how their overtime rate is calculated can make a big difference in the amount of overtime compensation they receive.

Bonuses which would not be included in calculating overtime rates are discretionary bonuses. Discretionary bonuses are not performance based, rather they are gifts from the employer such as one would receive at Christmas. Nondiscretionary bonuses, on the other hand, are the performance based bonuses which do need to be included when calculating the proper amount of overtime compensation an employee has earned.

The attorneys at Chicago Overtime Law Center have decades of experience litigating wage and hour cases including overtime, breaks, vacation pay, and tips. Our offices are conveniently located in Oak Brook Terrace and Chicago, Illinois and we handle cases throughout Cook, DuPage, Kane, Will, McHenry and Lake Counties. If you believe you have been denied overtime wages, contact a Chicago attorney today at 312-869-4095 or fill out our online form. Our Naperville overtime lawyers work with clients from all over the Chicago area. We have overtime lawyer who can handle cases in Waukegan, Joliet, Woodstock and Wheaton.