Rep. Calvert Reintroduces Legislation to Protect Employee Bonuses

Today, Congressman Ken Calvert (CA-41) reintroduced the Employee Bonus Protection Act, H.R. 741, to protect employee bonuses from overly complex federal requirements.

“The last thing that should prevent a hard working employee from getting a bonus is government red-tape,” said Rep. Calvert. “The Employee Bonus Protection Act will help American workers and small businesses by getting the government out of the way and providing a simpler way for employers to award bonuses.”

Under the Fair Labor Standards Act of 1938 (FLSA), the Department of Labor requires that any employer calculate and factor in earned bonuses (including bonuses paid and lodging provided) when determining an employee's "regular rate of pay" for purposes of overtime compensation for each pay period. This requirement poses an unnecessary burden on businesses and employers, large and small alike, who are required to recalculate each employee's rate of pay depending on different bonuses earned every month. In fact, many businesses are forced to eliminate these incentives entirely because they cannot afford to hire an accountant or designate an employee to determine these changing rates of pay, disincentivizing employees to innovate and produce results for their employers, and ultimately their customers.

The Employee Bonus Protection Act would amend the FLSA to provide that an employee's regular pay rate, for purposes of calculating overtime compensation, will not be affected by additional payments to reward an employee or group of employees for meeting or exceeding productivity, quality, efficiency, or sales goals under a gain sharing, incentive bonus, commission, or performance contingent bonus plan.