LEGAL TOOLS By Brooke Duncan
Brooke Duncan is one of the nation’s leading labor attorneys.
Paying Piece Rate/ Spiffs/Commissions
QUESTION: Are piece rate/spiffs/commissions permitted to be paid as a bonus once per quarter? Can “incentive pay” be saved up and paid once a month in a week where no overtime has been worked? Or can it be saved up and paid once per quarter? Can a holiday bonus be paid without regard to FLSA overtime?
DISCLAIMER This response is intended for general informational pur- poses only and should not be construed as legal advice or a legal opinion, nor is this column a substitute for formal legal assis- tance. For help with particular legal needs, members are invited to consult with ACCA’s LegalTools Counsel, Brooke Duncan III.
ANSWER: Compensation of almost every form paid to hourly employ- ees has an impact on the employee’s regular rate of pay and, therefore on overtime pay when overtime has been worked. The reason is that the employee’s regular pay rate has to be adjusted when the employee receives a bonus or an incentive in a week in which he works overtime. Piece rate payments, spiffs, commissions, incentive pay, and holiday bonuses all must be counted in calculating a revised regular rate in weeks when overtime is worked. Only purely discretionary bonuses may be excluded. Regarding timing payments for weeks in which no overtime has been worked, if the payment is for efforts expended in other weeks or over a period, the Department of Labor will likely take the position that the payment should be attributed over the relevant time period. Remember that in most locales, overtime is after 40 hours but in some places, overtime is owed after eight hours in a day.
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