Do Bonuses Count in Overtime Pay? — In Plain Words

This page is general information only. It is not legal advice.

What this page covers

This page covers what one U.S. Department of Labor fact sheet says about bonuses and the regular rate of pay under the Fair Labor Standards Act (FLSA). It is based on one source only: Fact Sheet #56C, “Bonuses under the Fair Labor Standards Act (FLSA),” from the Wage and Hour Division. The sheet gives this information for non-exempt employees.

This page does not decide any one person's case. It prints what that sheet states, in plain words, and it does not promise any reader a result.

Short answer

Yes, sometimes. A nondiscretionary bonus — a bonus workers know about and expect, such as a promised production, attendance, or quality bonus — must be included in the regular rate of pay when overtime is calculated. A discretionary bonus may be excluded from the regular rate only if every requirement the sheet lists is met. The rest of this page prints the sheet's rules and the sheet's own worked examples.

The basics, as the sheet states them

The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at not less than time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek.

The amount of overtime pay due to an employee is based on the employee's regular rate of pay and the number of hours worked in a workweek, regardless of whether the employee is paid on a piece rate, day rate, commission, or a salary basis.

A bonus is a payment made in addition to the employee's regular earnings. Under the FLSA, all compensation for hours worked, services rendered, or performance is included in the regular rate of pay. The Act provides an exhaustive list of payments that may be excluded from the regular rate of pay.

Unless specifically noted, payments that are excluded from the regular rate may not be credited towards overtime compensation due under the FLSA.

Nondiscretionary bonuses must be counted

A nondiscretionary bonus is a bonus that fails to meet the statutory requirements of a discretionary bonus. Nondiscretionary bonuses are included in the regular rate of pay, unless they qualify as excludable under another statutory provision.

Examples of nondiscretionary bonuses that must be included in the regular rate include:

Such bonuses are nondiscretionary because the employees know about and expect the bonus. The understanding of how an employee earns one may lead to an expectation to receive the bonus regularly. The fact that the employer has the option not to pay the promised bonus does not make the bonus discretionary.

Discretionary bonuses may be left out only if every requirement is met

Discretionary bonuses are excludable from the regular rate of pay. A bonus is discretionary only if all the statutory requirements are met:

Examples of some common bonuses that may be excludable discretionary bonuses if they meet the statutory requirements include:

The label assigned to the bonus and the reason for the bonus do not conclusively determine whether the bonus is discretionary. While a bonus may be labeled discretionary, if it does not comply with the provisions of the statute, then the bonus is not an excludable discretionary bonus. The determination must be made on a case-by-case basis depending on the specific circumstances.

A discretionary bonus may not be credited towards overtime compensation due under the FLSA.

How overtime pay is calculated, as the sheet describes it

Overtime pay is calculated based only on payments to the employee that are required to be included in the regular rate of pay. The sheet gives these steps, which can be used to calculate the regular rate of pay and overtime compensation due when the employee is paid on an hourly, piece rate, day rate, job rate, commission, or salary basis. The sheet works the calculation one workweek at a time: the bonus that must be included is part of the total compensation for the week, and that weekly total is divided by the total hours worked in the week.

Step 1: Total compensation for the week (except the statutory exclusions) ÷ Total hours worked in the week = Regular Rate per hour for the week (must be at least the federal minimum wage)

Step 2: Regular Rate x (.5) = Half-time premium for each overtime hour (note the straight time for the overtime hours is included in Step 1)

Step 3: Half-time premium pay rate x Overtime hours = Overtime compensation due

The sheet's worked examples

The sheet gives the worked examples below. They are printed here with the sheet's own numbers, and no other examples or numbers have been added.

Example A: Nondiscretionary bonus

A non-exempt employee is paid $10.00 per hour and receives a $50.00 bonus in a particular week that was promised for helping to produce a special order for a customer two weeks earlier than previously scheduled. The employee worked 43 hours that week. The following is an example of how to compute overtime pay based on the employee's regular rate:

Example B: Shift differential plus nondiscretionary bonus

A non-exempt employee is paid $15.00 per hour plus an evening shift differential of $1.00 per hour for all hours worked during an evening shift. The employee worked 45 hours, 30 of which were during evening shifts, in a week. The employee also earned a $100.00 bonus that week that was promised for helping to produce a special order for a customer two weeks earlier than previously scheduled. The following is an example of how to compute overtime pay based on the employee's regular rate:

Example C: Nondiscretionary bonus and an excludable discretionary bonus

A non-exempt employee is paid $10.00 per hour and receives a $50.00 bonus that was promised in a particular week for helping to produce a special order for a customer two weeks earlier than previously scheduled. The employee also receives a $25.00 on-the-spot bonus that week (because it was not preannounced to the employee, it is an excludable discretionary bonus). The employee worked 43 hours that week. The following is an example of how to compute overtime pay based on the employee's regular rate:

Federal sheet only

This page states the federal fact sheet only. State rules are not covered on this page.

Only the employer or the U.S. Department of Labor can decide a real case.

Sources

Source used for this page, read in full:

Checked November 2, 2026.

Why this page is limited: this page prints the sheet's material on discretionary and nondiscretionary bonuses, its calculation steps, and its worked examples, and it adds nothing from outside the sheet. The sheet works each example for one particular week using the steps above; it does not print a separate formula for splitting one bonus across several weeks, so this page does not add one. The sheet's separate section on gifts and payments in the nature of gifts on special occasions, and its footnotes, are not printed on this page.

This page is general information only. It is not legal advice.