The question has been raised whether awards made to employees for
suggestions submitted under a suggestion system plan are to be regarded
as part of the regular rate. There is no hard and fast rule on this
point as the term ``suggestion system'' has been used to describe a
variety of widely differing plans. It may be generally stated, however,
that prizes paid pursuant to a bona fide suggestion system plan may be
excluded from the regular rate at
least in situations where it is the fact that:
(a) The amount of the prize has no relation to the earnings of the
employee at his job but is rather geared to the value to the company of
the suggestion which is submitted; and
(b) The prize represents a bona fide award for a suggestion which is
the result of additional effort or ingenuity unrelated to and outside
the scope of the usual and customary duties of any employee of the class
eligible to participate and the prize is not used as a substitute for
wages; and
(c) No employee is required or specifically urged to participate in
the suggestion system plan or led to believe that he will not merit
promotion or advancement (or retention of his existing job) unless he
submits suggestions; and
(d) The invitation to employees to submit suggestions is general in
nature and no specific assignment is outlined to employees (either as
individuals or as a group) to work on or develop; and
(e) There is no time limit during which suggestions must be
submitted; and
(f) The employer has, prior to the submission of the suggestion by
an employee, no notice or knowledge of the fact that an employee is
working on the preparation of a suggestion under circumstances
indicating that the company approved the task and the schedule of work
undertaken by the employee.
