Under the proposed Department of Labor (DOL) regs regarding overtime, are bonuses allowed to be included in the determination of meeting the minimum salary threshold?
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The DOL’s proposed overtime regulations did not include a change to allow bonuses to be included in the determination of meeting the minimum salary threshold.
However, the DOL did invite comments on several overtime issues during the comment period, including whether certain types of bonuses should be included in determining an employee’s salary.
Note that the rule is different for Highly Compensated Employees (HCEs). An employee with total annual compensation of at least $100,000 is exempt if the employee:
- Customarily and regularly performs any one or more of the exempt duties or responsibilities of an executive, administrative, or professional employee
- Earns at least $455 per week paid on a salary or fee basis
- Has the primary duty of performing office or nonmanual work
The employee’s annual compensation may include:
- Commissions
- Nondiscretionary bonuses
- Other nondiscretionary compensation earned
- The employee’s annual compensation may not include:
- Board, lodging, and other facilities
- Payments for medical insurance
- Payments for life insurance
- Contributions to retirement plans
- The cost of other fringe benefits
If an employee’s total annual compensation does not total at least the minimum amount by the last pay period of the 52-week period, the employer may, during the last pay period or within 1 month after the end of the 52-week period, make one final payment sufficient to achieve the required level.
If the employee does not work a full year, the employee may still qualify for the exemption if the employee’s pro-rata portion of salary earned meets the salary requirement.