HOLIDAY BONUS

Many employees enjoy bonuses during the holiday season.  Depending on the type of bonus, an employer may be required to apportion the amount of the bonus back over the workweeks of the period in which it was earned, which will result in an adjustment of the regular rate and possible additional overtime liability.  In determining if a bonus is the kind that must be included in regular rate calculations, the Department of Labor regulations look at whether the bonus is a discretionary bonus, gift or payment in the nature of a gift, or whether it is a promised bonus, or a bonus announced to employees to induce them to work more steadily, rapidly or efficiently.  A discretionary holiday bonus would not be included in the regular rate calculation unless it is measured by or directly dependent upon hours worked, production or efficiency.  The regulations governing bonuses are set forth in 29 C.F.R. § 778.208 through 778.215.