Calculating Overtime Rate
Non-exempt employees are due at least one-and-one-half times their regular rate of pay—which is not always the same amount as the employee’s hourly pay rate—for all hours worked over 40 in a work week. The regular rate may be higher than the employee’s hourly rate of pay because the regular rate includes “all remuneration for employment”. With some things, such as certain bonuses, you are required to recalculate the regular hourly rate.
When a bonus is given, and it is non-discretionary, you must recalculate the regular rate of pay. You can get more information on that here: https://www.dol.gov/WHD/StateandLocalGovernment/CA_Tutorial/media/OT%20Examples%20Final.htm
Be careful of coming up with your own definition of discretionary. Yours needs to match the DOL’s, and just because you call it discretionary, doesn’t mean it is.
Things that do not have to be included in the regular rate of pay are:
the cost of providing certain parking benefits, wellness programs, onsite specialist treatment, gym access and fitness classes, employee discounts on retail goods and services, certain tuition benefits (whether paid to an employee, an education provider, or a student-loan program), and adoption assistance;
payments for unused paid leave, including paid sick leave or paid time off;
reimbursed expenses including cellphone plans, credentialing exam fees, organization membership dues, and travel, even if not incurred “solely” for the employer’s benefit;
certain sign-on bonuses and certain longevity bonuses;
the cost of office coffee and snacks to employees as gifts;
discretionary bonuses, by clarifying that the label given a bonus does not determine whether it is discretionary and providing additional examples) and
contributions to benefit plans for accident, unemployment, legal services, or other events that could cause future financial hardship or expense.