Can year-end bonuses replace overtime pay?

With the holidays upon us, many of Georgia’s workers have received or will be receiving end of the year bonuses.   In most cases this is cause to celebrate.  However, what if that “bonus” is paid but overtime hours earned are not?  Can bonuses be paid in place of overtime compensation?

In general – bonuses and overtime pay (as well as paid time off), are separate categories of pay.  Companies may provide bonus payments at their discretion.  However – these are separate and distinct from overtime pay obligations and paid time off.  Regarding overtime pay, if you are a non-exempt employee, the Fair Labor Standards Act (FLSA) provides that you are entitled to earn overtime compensation at a rate of one and one-half times your hourly wage, for all time spent in excess of 40 hours working.  A bonus generally cannot replace this obligation. However, if you are an exempt employee you are not entitled to overtime pay regardless of the amount of time worked.   Further, if you are entitled to paid time off, depending on your state, these days must be used up before the end of the year (“use it or lose it”) while others allow some vacation time to be rolled over.  However, regardless of your company or state’s paid time off policy, in most circumstances bonuses cannot replace contractual and/or legal obligations to pay PTO or overtime wages.

For more information or if you have any wage or hour questions, please contact the experienced Atlanta wage and hour lawyers at Buckley Bala Wilson Mew LLP for an immediate case evaluation.