Yes, some bonuses affect overtime pay. Paying a bonus on a separate line of a nursing assistant’s paycheck does not automatically keep it out of the overtime calculation. The facility needs to know why the bonus was paid, when it was earned, and whether it belongs in the employee’s regular rate of pay (U.S. Department of Labor [DOL], 2009b, 2019).
For an employee eligible for overtime, the regular rate can include more than the hourly wage. A promised attendance bonus, a bonus for picking up a shift, or a retention bonus may need to be included. A genuinely discretionary bonus may be excluded if the employer retains discretion over both whether to pay it and how much to pay until at or near the end of the bonus period. The word “discretionary” in a payroll code does not decide that question; the actual arrangement does (DOL, 2009b, 2019).
Here is a one-week example. A nursing assistant earns $20 an hour, works 45 hours, and earns a $90 attendance bonus for that same week. Assume the bonus must be included and the facility uses the standard overtime rule for hours over 40 in a workweek.
The straight-time pay is 45 × $20 = $900. Add the bonus for $990, then divide by 45 hours. The regular rate is $22 an hour. Because the 45 hours have already been paid at straight time, the additional overtime premium is half that rate for the five overtime hours: $11 × 5 = $55. Total pay is $1,045. If the facility used only the $20 hourly wage to calculate that premium, it would pay $1,040, or $5 less in this example (DOL, 2019).
That $5 is an illustration, not a finding about any facility. It shows why the bonus and the overtime calculation must be checked together.
Why Bonus Terms and Payroll Codes Must Match
A manager approves a bonus. Payroll receives an amount marked “bonus.” What else does payroll know? It needs the terms of the payment, the weeks in which it was earned, and enough information to determine whether overtime must be recalculated.
A retention bonus needs particular care. If it was earned over several months and must be included in the regular rate, paying it at the end does not erase the earlier overtime weeks. The facility may need to allocate the bonus to the weeks it covers and calculate additional overtime for weeks in which the employee worked overtime. The DOL illustrates this with a $2,000 retention bonus earned over 26 weeks; that example is not a formula for every bonus (DOL, 2009b).
Start with the written bonus terms, time records, a sample payroll record, and the overtime calculation. Check who tells payroll which weeks the bonus covers and who reviews any additional overtime due.
Finally, confirm which overtime arrangement applies. Under specific conditions, qualifying hospitals and residential care establishments may use an “8 and 80” arrangement: overtime is due for hours over eight in a day or 80 in a 14-day period (DOL, 2009a, 2009b). The 45-hour calculation above uses the standard workweek method; it should not be applied to an “8 and 80” arrangement without checking its rules. State law may impose additional requirements.
Follow the bonus from its promise to the paycheck. That is how a facility can check both the payment and the math.
References
U.S. Department of Labor, Wage and Hour Division. (2009a, July). Fact sheet #31: Nursing care facilities under the Fair Labor Standards Act. https://www.dol.gov/agencies/whd/fact-sheets/31-flsa-nursing-care
U.S. Department of Labor, Wage and Hour Division. (2009b, July). Fact sheet #54: The health care industry and calculating overtime pay. https://www.dol.gov/agencies/whd/fact-sheets/54-healthcare-overtime
U.S. Department of Labor, Wage and Hour Division. (2019, December). Fact sheet #56C: Bonuses under the Fair Labor Standards Act (FLSA). https://www.dol.gov/agencies/whd/fact-sheets/56c-bonuses
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