Bonuses Left Out of Overtime Pay: Tennessee Contractor to Pay $1.73M
Payroll teams that pay nonexempt workers nondiscretionary bonuses should confirm those amounts are included in the overtime regular rate.
A recent DOL investigation found that a Tennessee contractor failed to do so, resulting in a payout of about $1.73 million in back wages for 1,666 hourly workers.
Overtime Pay Miscalculation Leads to Seven-Figure Settlement
The Wage and Hour Division recovered the money for workers at The State Group Industrial, a multi-trade contractor at Ford’s electric-vehicle and battery campus.
“The State Group violated federal law when it excluded bonuses from its overtime calculations, averaging more than $1,000 in back wages owed to each employee,” Wage and Hour Division Administrator Andrew Rogers said.
The FLSA violation was narrow but expensive: The contractor paid incentive bonuses but never included them in the regular rate used for overtime, the DOL determined, so overtime pay was short.
What payroll should do: Audit which bonuses are nondiscretionary and make sure each one is
reflected in the regular rate used to calculate overtime.
- Share on
Free Training & Resources
Further Reading
Ever since the Secure 2.0 Act laid out changes for workplace retirement plans, employers have been waiting for final regs from the IRS. ...
The Department of Labor’s independent contractor (IC) rule that went into effect on March 11 is forcing many businesses to triple-che...
What’s the maximum Social Security tax that Payroll could withhold from each employee in 2027? The taxable wage base estimate has bee...
For most employers nationwide, the new salary threshold for who’s exempt from the federal overtime and minimum wage requirements took eff...
Businesses will be able to get new hires on the payroll more quickly, now that inspecting Form I-9 documents remotely has been given the gr...
Some payroll staffers may assume that complying with IRS regulations is enough to keep their companies out of trouble. That’s not ...
