U.S. Department of Labor Announces Final Rule To Expand Access to Bonuses for American Workers

WASHINGTON DC – The U.S. Department of Labor’s Wage and Hour Division (WHD) today announced a final rule that allows employers to offer bonuses or other incentive-based pay to employees whose hours vary from week to week.

The rule revises the regulation for computing overtime compensation for salaried, non-exempt employees who work hours vary each week (i.e., a fluctuating workweek) under the Fair Labor Standards Act (FLSA). It also clarifies that bonuses, premium payments, commissions and hazard pay on top of fixed salaries are compatible with the fluctuating workweek method of compensation, and that employers must include supplemental payments when calculating the regular rate of pay as appropriate under the FLSA. The final rule includes examples and minor revisions to make the rule easier to understand.

“This final rule offers another example of how the U.S. Department of Labor is working to reduce unnecessary regulatory burdens in order to benefit American workers,” said U.S. Secretary of Labor Eugene Scalia. “Because of the clarity provided by this rule, employers will know they can pay workers’ bonuses in a broader range of circumstances. This rule comes at a time when millions of Americans are returning to work and will benefit from added flexibility in compensation.”

“For far too long, job creators have faced uncertainty regarding their ability to provide bonus pay for workers with fluctuating workweeks,” Wage and Hour Division Administrator Cheryl Stanton said. “This final rule will provide much needed clarity for job creators who are looking for new ways to better compensate their workers. As employers navigate the challenges of the coronavirus, the rule enhances flexibility to provide hazard pay, and to promote health and safety in the workplace through flexible work schedules that stagger start and end times and implement social distancing in the workplace.”

The Notice of Proposed Rulemaking was available for public comment for 30 days. The Department received approximately 36 comments on the proposal, all of which are available to the public at www.regulations.gov.   

WHD’s mission is to promote and achieve compliance with labor standards to protect and enhance the welfare of America’s workforce. WHD enforces federal minimum wage, overtime pay, recordkeeping and child-labor requirements of the FLSA. WHD also enforces the Migrant and Seasonal Agricultural Worker Protection Act, the Employee Polygraph Protection Act, the Family and Medical Leave Act, wage garnishment provisions of the Consumer Credit Protection Act, and a number of employment standards and worker protections as provided in several immigration-related statutes. Additionally, WHD administers and enforces the prevailing wage requirements of the Davis-Bacon Act and the Service Contract Act and other statutes applicable to federal contracts for construction and for the provision of goods and services.

The mission of the Department of Labor is to foster, promote and develop the welfare of the wage earners, job seekers and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.