In overtime pay calculations, which one is included in the regular rate?

In overtime pay calculations, nondiscretionary bonuses are included in the regular rate because they are bonuses that an employee earns as a result of their performance or meeting specific criteria established by the employer. Unlike discretionary bonuses, which are given at the employer's discretion without any expectation from the employee, nondiscretionary bonuses are expected and part of the employee's compensation package.

The regular rate of pay, which determines the overtime pay rate, must include all earnings for hours worked except for certain types of payments outlined by the Fair Labor Standards Act (FLSA). This includes wages, salaries, and most forms of profitable bonuses that are not discretionary. Therefore, when calculating overtime, these nondiscretionary bonuses are factored in to ensure that employees are fairly compensated for their work beyond normal hours, reflecting their complete earnings during the pay period.

In contrast, discretionary bonuses, gifts, and reimbursed expenses are not included in the regular rate of pay. Discretionary bonuses are not guaranteed and thus can be excluded from the regular rate, while gifts and reimbursed costs do not alter the calculation of regular earnings, as they are not payments for work rendered.