Bonus and Overtime Calculations
Payroll _HR
1 Post
We pay monthly bonuses that are based on established measurable performance goals. These bonuses are paid on goals met for the month prior. For example, an employee earns a $500 bonus that is paid on the 2nd paycheck in February but the bonus was earned for performance goals met for the month of January.
When we pay out the bonus and the employee has overtime hours we know that the bonus has to be figured into the overtime rate. Now the real questions is what overtime hours are included in the calculation. (1) Do we use the entire month of January's overtime hours for the calculation. (2) Just use the overtime hours earned on the paycheck (2nd check in February) that the bonus is being paid on. (3) Or use the entire month's overtime hours earned in the month of February.
When we pay out the bonus and the employee has overtime hours we know that the bonus has to be figured into the overtime rate. Now the real questions is what overtime hours are included in the calculation. (1) Do we use the entire month of January's overtime hours for the calculation. (2) Just use the overtime hours earned on the paycheck (2nd check in February) that the bonus is being paid on. (3) Or use the entire month's overtime hours earned in the month of February.
Comments
You would take the regular hours (hours * wage) add in the bonus and divide by regular hours to create your wage necessary to compute overtime.