It’s not uncommon for businesses to pay bonuses to their employees.  Sometimes these bonuses are discretionary, meaning that the company retains the right to make decisions about whether and how much to pay.  In other cases, the bonuses are non-discretionary, meaning that the employee will automatically be entitled to a fixed bonus if, for example, an objective goal or pre-determined production standard is met.  When such non-discretionary bonuses are offered, it is important to remember that the value of that bonus must be taken into account when calculating overtime compensation. The failure to do so can be extremely costly, as QuikTrip Corp. recently learned.  Following an investigation by the Department of Labor (“DOL”), QuikTrip agreed to pay nearly $750,000 to around 3,800 employees who had not received overtime pay on service bonuses they received over a two-year period.  In QuikTrip’s case, the employees were eligible to receive a bonus when they received a high score for outstanding service as part of a mystery shopper program run by the Company.  Due to a computer error, the value of these bonuses awarded during a given pay period was not being added to the employees’ regular hourly wage rate during the relevant pay period for the purposes of calculating overtime.

The lesson – if you are offering your employees non-discretionary bonuses, don’t forget to take that into account when calculating overtime.