Paying Piece Rate/Spiffs/Commissions
Question: Are piece rate/spiffs/commissions permitted to be paid as a bonus once per quarter? Can “incentive pay” be saved up and paid once a month in a week where no overtime has been worked? Or can it can be saved up and paid once per quarter? Can a holiday bonus be paid without regard to FLSA overtime?
Answer: Compensation of almost every form paid to hourly employees has an impact on the employee’s regular rate of pay and therefore on overtime pay when overtime has been worked. The reason why is that the employee’s regular rate of pay has to be adjusted when the employee receives a bonus or an incentive in a week in which he works overtime. Piece rate payments, spiffs, commissions, incentive pay, and holiday bonuses all must be counted in calculating a revised regular rate in weeks when overtime is worked. Only purely discretionary bonuses may be excluded. With regard to timing payments for weeks in which no overtime has been worked, if the payment is for efforts expended in other weeks or over a period of time, the Department of Labor will likely take the position that the payment should be attributed over the relevant time period. Remember that in most locales, overtime is after 40 hours but in some places, overtime is owed after eight hours in a day.
This response is intended for general informational purposes only and should not be construed as legal advice or a legal opinion, nor is this column a substitute for formal legal assistance. For help with particular legal needs, members are invited to consult with ACCA’s LegalTools Counsel, Brooke Duncan III of Adams and Reese LLP. Mr. Duncan can be reached at 504-585-0220 or by email at firstname.lastname@example.org.
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