b'BonusesWho, What, Why . . . Whodoesitapplyto:YouguesseditanyemployerwhoHow does this break down in laymans terms: If you tell your chooses to pay a bonus to employees.employees that you plan to pay a bonus at a particular point in the future but retain control over the amount, it becomes non-What counts as a bonus: There are a lot of ways to describe adiscretionary. If you tell the employees how much a bonus will bonus. For our purposes, a bonus includes any discretionary orbe (or give them a way to calculate it) but dont say when it will non-discretionary payment or compensation to an employeebe granted, the bonus becomes non-discretionary. Examples of outside of their regular hourly, salary, commission, or piece ratenon-discretionary bonuses include payments for: attendance, pay.A bonus then includes any prize or award to an employeeretention to encourage working undesirable shifts, safety criteria in addition to traditional bonus payments. met,meetingindividualproductivitycriteria,thecompany meetingcertaincriteria,reportingfraudorcriminalactivity, Whatisthedifferencebetweendiscretionaryandnon- recruiting bonus and bonuses that may have been discretionary discretionary bonuses: Im glad you asked. It is one of the keyin the past that have become expected through repetition of dividing lines in payment of bonuses. If a bonus is discretionary,payment.it does not count toward an employees overtime calculation and may not be owed to an employee regardless of that employeesHow does a non-discretionary bonus affect overtime:Employees separationfromthecompany.Non-discretionarybonuseswho are not exempt from overtime must have all money for non-on the other hand, count toward overtime, and an employerdiscretionary bonuses included to determine their overtime rate.may be responsible for them even if an employee leaves. OfTo use a simple example, an employee paid a weekly safety course, if the employee is exempt from overtime, this distinctionbonus of $100 who works 50 hours at $15.00 would receive matters less. (See sections on Overtime and Exemptions fromovertime of $92.50 with the safety bonus calculated instead of Overtime.) $75 based on just one and a half his or her hourly rate. (See the sections on Overtime for more information about how this What is a discretionary bonus: You know what is, and is not,calculation works.) Bonuses paid quarterly would then be spread discretionary. Of course, what you think is discretionary andover the employees pay for the entire quarter on a weekly basis what the government thinks is discretionary may differ. To be,and an additional overtime payment would be due for overtime discretionary in the eyes of the law:weeks with the bonus. The employer must control whether a payment is granted at all;Whatiftheemployeeleavesbeforethebonusisdue:ForThe amount of the payment must be discretionary;discretionary bonuses, the employee clearly will not be entitled to the bonus. For non-discretionary bonuses, the employee willDetermining the amount and making payment must occurbe entitled to a pro-rata portion of the bonus unless the employee near the end of the period for which the bonus is granted;was terminated for good cause or the program providing the andbonus specifically states that the employee must be present atThe bonus must not be subject to a prior contract with thethe time the bonus is awarded to receive it.employee or a promise causing the employee to expect payment. What about prizes and awards:Prizes and awards are generally If the employer surrenders control over any of these items, thetreatedlikenon-discretionarybonuseswhichcounttoward bonus will become non-discretionary. overtime for non-exempt employees, unless: (1) the prize or 31'