(‘Tis the season to know your rights)
Q: I AM an hourly employee working as a staffing personnel for an agency. When we are able to sign up more than 100 clients in a 6-month period, we are paid a bonus. I work more than 8 hours per day every day and work some hours on the weekends. However, I am not paid overtime. When I asked my employer why I am not paid overtime, I was told that I was already receiving a bonus so I am already paid. Is this right?
A: No, it is not. Under California law, you are still entitled to overtime pay if you worked more than 8 hours per day or more than 40 hours per week.
A bonus is money paid to an employee in addition to the hourly wage, monthly salary, or commission paid as compensation for work performed. There are two types of bonuses: discretionary bonuses and non-discretionary bonuses.
A discretionary bonus is a bonus that may be paid as a form of a gratuity or a gift for past service. This type of bonus is usually not measured by or dependent on an employee’s hours worked, production, or efficiency. A perfect example of this type of bonus is the holiday bonus at the end of the year. Other special-occasion bonuses are also included in this category.
A nondiscretionary bonus is bonus that is usually dependent on performance over and above that which is paid for hours worked or sales completed. This type of bonus is intended to increase an employee’s efforts in the performance of his or her job, to induce them to work more steadily, more rapidly, more efficiently, or to remain with the company. Examples are bonuses for production, efficiency, quality and accuracy of work, attendance, duration of service, and bonuses promised when an employee is hired.
A nondiscretionary bonus may have been agreed to by both employer and employee. The agreement may state that the employer promises to pay a bonus in return for a specific result; for example, if an employee exceeds a minimum sales figure or piece quota, or if the employee promises to remain with the employer for a certain period of time.
It is important to distinguish the type of bonus an employee is receiving. Under California law, money earned as a nondiscretionary bonus will be treated as wages. This means that a nondiscretionary bonus is included in determining the regular rate of pay for computing an employee’s overtime pay.
Therefore, given the situation above where an hourly employee receives a bonus for exceeding the number of clients signed up in a 6-month period, the employee is receiving a nondiscretionary bonus intended to make employees work harder at signing up more clients. The bonus cannot take the place of overtime pay. The employer still owes the employee compensation for work done in excess of 8 hours per day or 40 hours per week.
Because the employee is receiving a nondiscretionary bonus, this amount must be included in the employee’s regular rate in computing the employee’s overtime pay. When including the bonus in the regular rate, the bonus must be apportioned back over the workweeks of the period in which the bonus was earned.
For example: The employee receives a regular rate of $10 per hour, and receives a bonus of $2000 in a 6-month period (or 26 weeks) for signing up more than 100 clients. The employee’s normal overtime rate would be $15. However, if we include the bonus as part of the employee’s regular rate, then the employee’s overtime rate would be $17.88, not $15. The difference of $2.88 may not be much by itself but spread over time, it becomes a significant amount for the ordinary worker.
Determining the correct amount of your overtime compensation under the law may mean more wages to benefit you and your family. In today’s economy, knowing your rights to wages can go a long way.
* * *
C. Joe Sayas, Jr., Esq. is an experienced trial attorney who has successfully obtained significant results, including several million dollar recoveries for consumers against insurance companies and big business. He is a member of the Million Dollar-Advocates Forum—a prestigious group of trial lawyers whose membership is limited to those who have demonstrated exceptional skill, experience and excellence in advocacy. He has been featured in the cover of Los Angeles Daily Journal’s Verdicts and Settlements for his professional accomplishments and recipient of numerous awards from community and media organizations. His litigation practice concentrates in the followaing areas: serious personal injuries, wrongful death, insurance claims, unfair business practices, wage and hour (overtime) litigation. You can visit his website at www.joesayas law.com or contact his office by telephone at (818) 291-0088.
(Advertising Supplement)
| < Prev | Next > |
|---|
