Payroll teams that pay nonexempt workers nondiscretionary bonuses should confirm those amounts are included in the overtime regular rate.
A recent DOL investigation found that a Tennessee contractor failed to do so, resulting in a payout of about $1.73 million in back wages for 1,666 hourly workers.
Overtime Pay Miscalculation Leads to Seven-Figure Settlement
The Wage and Hour Division recovered the money for workers at The State Group Industrial, a multi-trade contractor at Ford’s electric-vehicle and battery campus.
“The State Group violated federal law when it excluded bonuses from its overtime calculations, averaging more than $1,000 in back wages owed to each employee,” Wage and Hour Division Administrator Andrew Rogers said.
The FLSA violation was narrow but expensive: The contractor paid incentive bonuses but never included them in the regular rate used for overtime, the DOL determined, so overtime pay was short.
What payroll should do: Audit which bonuses are nondiscretionary and make sure each one is
reflected in the regular rate used to calculate overtime.