Fifth Circuit panel rules on bonuses and FLSA overtime calculations

On Behalf of | Oct 6, 2020 | Fair Labor Standards Act (FLSA) |

In September, a case involving employee bonus pay was heard by the Fifth Circuit Court of Appeals. A Fifth Circuit panel ruled that it is the employee’s responsibility to establish that their bonus pay is non-discretionary and therefore should be included in the regular rate of pay for the purpose of calculating overtime under the Fair Labor Standards Act (FLSA).

The burden of proof

In many cases, bonuses are paid at the discretion of the employer. There may or may not have been a promise that a bonus would be paid in addition to an employee’s wage or salary.

For the purposes of calculating overtime, it will now be up to the employee to prove that a bonus was promised as part of employment.

Sample case

In the case recently before the Fifth Circuit panel, workers at an oil field said they were promised two types of bonuses by their employer. One was a “stage” bonus for finishing parts of a project. The other was a “performance” bonus, which was indicated in a written contract with the employees. The “stage” bonus, however, was not included in a written contract. Issues arose when the “stage” bonus was not paid. In this case, the Fifth Circuit panel placed the burden of proof on the employees to show that their employer had promised the “stage” bonus.