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{"id":1582,"date":"2013-12-09T08:00:29","date_gmt":"2013-12-09T08:00:29","guid":{"rendered":"https:\/\/www.paymeovertime.com\/?p=131"},"modified":"2013-12-09T08:00:29","modified_gmt":"2013-12-09T08:00:29","slug":"california-commissions-bonuses","status":"publish","type":"post","link":"https:\/\/www.california-labor-law-attorney.com\/california-commissions-bonuses\/","title":{"rendered":"California Labor Law’s Regarding the Payment of Commissions & Bonuses"},"content":{"rendered":"

\"Guy<\/p>\n

Did you know commission’s and bonuses are part of your overtime pay calculation?! If California labor law\u2019s dictate you should be classified as a\u00a0non-exempt employee<\/a>, \u00a0in which you are entitled to overtime pay at 1 \u00bd to 2 times your straight time rate. And you are promised bonuses for reaching certain goals or you are entitled to commissions, then according to California labor law\u2019s a special calculation must be made that increases your regular hourly overtime rate. \u00a0 California wage law provides that when a non-exempt employee works hours in excess of eight in any workday or 40 in any workweek, employers must compensate the employee at 1 \u00bd to 2 times the employee\u2019s regular rate of pay depending on the total number of hours worked. The \u201cregular rate of pay\u201d comprises more than just the employee\u2019s hourly rate of pay it includes many different kinds of monetary remuneration an employee earns for his labor, including commissions and bonuses.\u00a029 U.S.C. 207(e).<\/a>
\nWhen calculating the regular rate of pay, employers must follow specific rules depending on the type of income in question. Where an employee earns commissions or bonuses, the\u00a0Department of Labor Standards Enforcement (\u201cDLSE\u201d)<\/a>\u00a0\u00a0uses the following rule to incorporate the additional compensation into the employee\u2019s regular rate of pay:<\/p>\n

\u201cCompute the regular rate by dividing the total earnings for the week, including earnings during overtime hours, by the total hours worked during the week, including the overtime hours. For each overtime hour worked, the employee is entitled to an additional one-half the regular rate for hours requiring time and one-half and to an additional full rate for hours requiring double time.\u201d\u00a0DLSE Manual, Section 49.2.1.2\u00a0<\/a><\/p>\n

For example, one type of incentive compensation may provide additional compensation if the store performs at a certain level. A company\u2019s bonus plan could provide that a bonus will be paid to employees for increasing sales of specified products, increase profitability, improve customer handling and enhance quality of service. It could be referred to as an Incentive Program that requires employees to reach attendance goals to be eligible. The plan may also specify the payout schedule: eligible employees receive both quarterly and year end payouts. Another type of incentive may also pay certain hourly employees additional compensation, or a commission, for the sale of various products.<\/p>\n

Employers must include these nondiscretionary bonuses along with other earnings to determine an employee\u2019s regular rate on which overtime pay is computed. A bonus is \u201cnondiscretionary\u201d if the employer makes a promise to pay it based on the requirements being met. This includes bonuses designed to induce the employees to work more steadily, more rapidly or more efficiently, to remain with the employer, to meet attendance goals, individual or group production bonuses and bonuses for quality and accuracy of work.\u00a029 C.F.R. 778.211(c).\u00a0<\/a><\/p>\n

In any pay period in which a bonus has been earned the employer must recalculate the rate of pay upon which overtime for that pay period is calculated. The employer must add together all compensation earned for the workweek and then divide the compensation by the number of hours worked.<\/p>\n

These Bonuses and Commissions Must be\u00a0Timely Paid<\/strong><\/p>\n

Generally speaking, commissions and bonuses are due and payable after the employee did what was required and the amounts could reasonably be computed. Commissions are considered earned only after the happening of that event designated in the agreement with the employee so long as the event is reasonably tied to the calculation.\u00a0DLSE Opinion Letter, 2002.12.09-2.<\/a><\/p>\n

If for example a commission is earned when the sale is made then that is the date from which all calculations are made.<\/p>\n

Labor Code section 204<\/a>\u00a0designates the time frame in which an employer must pay its employees. Wages earned by any person in any employment are due and payable twice during each calendar month, on days designated in advance by the employer as the regular paydays.<\/p>\n

Section 204(b)(1)<\/a>\u00a0allows an employer additional time to pay commissions in the next pay period but only if it also itemizes the subsequent wage statement by including detailed information regarding the wages that it could not pay on time. Each wage component must be separately listed and specifically list the dates for which it is applicable.<\/p>\n

The amount that an employee is short changed may not sound like a lot of money at first, when just looking at just a couple of pay periods. But the amount increases well into the tens of thousands of dollars when a claim includes up to four years of back wages plus interest and plus penalties.<\/p>\n

Labor laws can be very complex if you have any questions and think you may have a claim against your California employer contact our team now at:<\/p>\n

408-648-4248 direct or United Employees Law Group<\/span><\/a><\/p>\n

\n

Photo Credit: Shutterstock\/Nagy-Bagoly Arpad<\/p>\n","protected":false},"excerpt":{"rendered":"

Did you know commission’s and bonuses are part of your overtime pay calculation?! If California labor law\u2019s dictate you should […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[50],"tags":[],"class_list":["post-1582","post","type-post","status-publish","format-standard","hentry","category-bonus-and-commission"],"acf":[],"yoast_head":"\nCalifornia Employees are owed overtime on bonusses and commission pay.<\/title>\n<meta name=\"description\" content=\"Did you know that employees in California are supposed to have overtime pay calculated including any bonus pay or commissions? 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