Employees Responsible for Proving Employers Should Include Bonuses in Overtime Rate

When calculating overtime pay, employers must take into consideration “all remuneration for employment.” Bonuses may or may not factor into that remuneration depending on whether bonuses are “discretionary” or “non-discretionary”. The U.S. Court of Appeals for the Fifth Circuit reversed, in part, a jury decision for the employer, 4JLJ, LLC, an oilfield service company.  In doing so, the Court noted that employees have the burden to prove that a company’s bonus was nondiscretionary. In 4JLJ, employees had the opportunity to receive two types of bonuses. The “stage bonus” was paid out at specific stages of the fracking process. How and when these bonuses were given were not stated in writing. The court found employees did not present enough evidence to prove stage bonuses were non-discretionary. “Performance bonus” processes, however, were written in the employee contract including a pay scale. The court found these bonuses were nondiscretionary and should have been included in the regular pay rate. Other employers should review the types of bonuses when deciding whether to use them in calculating overtime pay rates.