The Department of Labor’s Wage and Hour Division has clarified in Opinion Letter FLSA2026-2 that most performance-based bonuses must be included in an employee’s regular rate of pay when calculating overtime. In plain terms, if guaranteed additional pay is triggered by specific performance criteria—like safety, attendance, productivity, or jobsite conduct—it is a non-discretionary bonus and must be factored into overtime premiums. For contractors and subcontractors who commonly use safety or performance incentives to drive results, the takeaway is straightforward: build these bonuses into your overtime calculations or risk back pay, penalties, and attorneys’ fees.
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Construction employers should review bonus plans, payroll system capabilities, and communications to employees. If you need help auditing your plans or recalibrating calculations, please give us a call at (402) 898-7400. Learn more about Woods Aitken’s Labor & Employment Practice Group and subscribe to our E-Briefs for the latest news, tips, and updates.