California ruling on pay stubs sheds light on overtime and bonus compliance

By Paul Lynd (August 17, 2022, 2:03 p.m. EDT) — Federal and California laws require employers to include most bonuses and incentives in the regular rate of overtime pay.

However, a bonus or incentive is often paid after the employee has been paid for overtime worked during the bonus period, such as with a monthly or quarterly bonus.

The employer must then recalculate the normal overtime rate to reflect the bonus or incentive, followed by a retroactive overtime adjustment payment based on the now higher normal rate. This additional amount of overtime is then paid as a lump sum with wages for another pay period….

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