(a) General rules. Where a bonus payment is considered a part of the
regular rate at which an employee is employed, it must be included in
computing his regular hourly rate of pay and overtime compensation. No
difficulty arises in computing overtime compensation if the bonus covers
only one weekly pay period. The amount of the bonus is merely added to
the other earnings of the employee (except statutory exclusions) and the
total divided by total hours worked. Under many bonus plans, however,
calculations of the bonus may necessarily be deferred over a period of
time longer than a workweek. In such a case the employer may disregard
the bonus in computing the regular hourly rate until such time as the
amount of the bonus can be ascertained. Until that is done he may pay
compensation for overtime at one and one-half times the hourly rate paid
by the employee, exclusive of the bonus. When the amount of the bonus
can be ascertained, it must be apportioned back over the workweeks of
the period during which it may be said to have been earned. The employee
must then receive an additional amount of compensation for each workweek
that he worked overtime during the period equal to one-half of the
hourly rate of pay allocable to the bonus for that week multiplied by
the number of statutory overtime hours worked during the week.
(b) Allocation of bonus where bonus earnings cannot be identified
with particular workweeks. If it is impossible to allocate the bonus
among the workweeks of the period in proportion to the amount of the
bonus actually earned each week, some other reasonable and equitable
method of allocation must be adopted. For example, it may be reasonable
and equitable to assume that the employee earned an equal amount of
bonus each week of the period to which the bonus relates, and if the
facts support this assumption additional compensation for each overtime
week of the period may be computed and paid in an amount equal to one-
half of the average hourly increase in pay resulting from bonus
allocated to the week, multiplied by the number of statutory overtime
hours worked in that week. Or, if there are facts which make it
inappropriate to assume equal bonus earnings for each workweek, it may
be reasonable and equitable to assume that the employee earned an equal
amount of bonus each hour of the pay period and the resultant hourly
increase may be determined by dividing the total bonus by the number of
hours worked by the employee during the period for which it is paid. The
additional compensation due for the overtime workweeks in the period may
then be computed by multiplying the total number of statutory overtime
hours worked in each such workweek during the period by one-half this
hourly increase.
