Anonymous
Anonymous asked in Business & FinancePersonal Finance · 3 months ago

Overtime pay deducted from Bonus?

can employers deduct overtime pay from year end annual bonus? Basically my employer states they look at the overall comp number, determine how much I billed in overtime pay during the year and based on that can reduce my annual bonus. (Our comp structure includes base + annual bonus (0-15%)+ overtime pay). Can an employer legally deduct overtime pay from the bonus? This doesn’t sound right to me. Any thoughts?

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  • Judy
    Lv 7
    3 months ago

    Sure they can assuming the bonus and its amount isn't guaranteed by a contract.  Do you mean the OT is deducted from your total pay for the year, then the bonus is calculated on what's left ( your base) or if you earn $2000 in OT pay, your bonus is lowered by $2000?

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  • Scott
    Lv 6
    3 months ago

    It's a bonus, not pay for hours worked. They can adjust it in any way they see fit.

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  • Anonymous
    3 months ago

    They can because you get a bonus.  If you were only paid hourly with no bonuses, overtime would have to be paid as earned.

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  • A.J.
    Lv 7
    3 months ago

    It's not only legal, but a common way to calculate a bonus or profit sharing. Bonus calculated ONLY on base pay, not counting shift premiums, extra pay in overtime, hazard pay, gratuities and tips, nor awards and bonuses through the year.

    You already get compensated extra on the overtime and possibly other extras, and although you may not like it, employees NOT getting overtime pay, such as salaried employees, could argue the other way. They don't have to give you any bonus at all.

    They can also use appraisals and reviews to be a factor; top performers with higher bonuses. 

    The most important part is that how they do it is communicated. Even that isn't required by law but it is fair to know how they do it.

    • A Hunch
      Lv 7
      3 months agoReport

      If the EE is non-exempt & it's a nondiscretionary bonus, the ER has to increase the bonus to include an OT calculation.  It's called the "regular rate of pay" calculation. 

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  • Anonymous
    3 months ago

    Your compensation is:   base pay plus bonus of 0-15% plus overtime; NOT base pay plus overtime plus 0-15% bonus.   See the difference?

    Your employer isn't subtracting your overtime from the bonus.   The are subtracting your overtime pay from the sum of your base and overtime before they calculate your bonus.   Your bonus percentage is based on your base pay.     You do not get a bonus on your overtime.   You were already paid extra for the overtime. 

    Let's say your base is 40k, your overtime was 10k and your bonus is 10%.   Your base plus overtime is 50k.   They are subtracting the 10k before they multiply by 10% because you don't earn bonus on the overtime.    Your 10% bonus is 4k, not 5k.

    As I said, your employer is not subtracting the 10k of overtime from your 4k bonus.   They simply aren't including the overtime when they calculate your bonus.   Perfectly legal and very common.

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  • 3 months ago

    Are you an exempt or non-exempt employee?

    Is the bonus discretionary or in-discretionary?

    If you are non-exempt and it's an in-discretionary bonus, the employer, is required to pay overtime on the bonus.  So you may have misunderstood.

    - they calculate all your regular and OT hours for the year, then pay ot on the part of the bonus that the percentage of hours that were ot hours.

    If you would like more information research the concept = regular rate of pay.

    Your question is: can employers deduct overtime pay from year end annual bonus?

    But that's not your calculation:  Your calculation is:

    - base earning + 0-15% bonus = X

    - ot earning = Y

    = total annual earnings equals X+Y and is legal

    if they deducted ot hours it would be X minus Y... which could be legal but doesn't really make much sense. 

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  • 3 months ago

    Unless you have a contract that states what you should be paid, the employer can do almost any with bonuses that they want to.

    I move like this would be uncool but it would be legal.

    Your recourse is to quit and find a new job.

    • A Hunch
      Lv 7
      3 months agoReport

      This comment is based on your usual great answers = I think you read the commentary but missed the  calculation.  The employer is not deducting the OT; they aren't using the OT as part of the bonus percentage (although if s/he is a non-exempt employee it gets added as part of Reg Rate of Pay Calc).

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  • 3 months ago

    Bonuses can be allocated however an employer wishes.  

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