How the bonus and its overtime are worked out
Gross bonus = salary × percent ÷ 100 (or the flat amount)
Hourly share in a week = that week's share of the bonus ÷ that week's hours (equal per week), or bonus ÷ all hours in the period (equal per hour)
Extra overtime = overtime hours × hourly share × 0.5
A bonus that is promised or tied to work, such as a production, attendance or sales bonus, counts in the regular rate. When it covers more than one workweek, it is spread back over the weeks it was earned, and each week with overtime gets half of the bonus's hourly share times that week's overtime hours (29 CFR 778.209).
Federal rules accept spreading the bonus equally per week or equally per hour when the actual earnings per week are not known (29 CFR 778.209(b)). The two methods can give different amounts; the right one depends on the facts of the plan.
The overtime figure applies only to a covered, nonexempt employee under the federal Fair Labor Standards Act. It does not apply state overtime rules, such as daily overtime, which can add more.
Worked example: a one-week bonus
This is Example A from Department of Labor Fact Sheet #56C. An employee paid $10.00 an hour works 43 hours and is promised a $50 bonus for the week.
| Step | Working | Amount |
|---|---|---|
| Base pay | 43 × $10.00 | $430.00 |
| Bonus | Promised | $50.00 |
| Regular rate | ($430.00 + $50.00) ÷ 43 | $11.16 |
| Overtime on base pay | 3 × $10.00 × 0.5 | $15.00 |
| Extra overtime on the bonus | 3 × ($50.00 ÷ 43) × 0.5 | $1.74 |
| Total pay for the week | $496.74 |
Fact Sheet #56C shows the same total, $496.74. Open this case in the calculator.
Worked example: a quarterly bonus, two methods
A $1,300 quarterly bonus covers 13 workweeks. Twelve weeks have 40 hours and one week has 50 hours.
| Method | Working | Extra overtime |
|---|---|---|
| Equal per week | $1,300 ÷ 13 = $100.00 a week; 10 × ($100.00 ÷ 50) × 0.5 | $10.00 |
| Equal per hour | $1,300 ÷ 530 h = $2.4528 an hour; 10 × $2.4528 × 0.5 | $12.26 |
The calculator shows both and lets you pick. This tool keeps full precision. Equal per week rounds each week's amount to the cent; equal per hour rounds the period total once. Either can differ by a few cents from worked examples that round each step.
When a bonus counts in the regular rate
The calculator does not offer a bare "discretionary" choice, because the label does not decide it. In 29 CFR 778.211(d): "The label assigned to a bonus does not conclusively determine whether a bonus is discretionary." It asks three plain questions instead:
- Was the bonus promised, announced in advance, set by a formula or targets, or written into a contract or union agreement? If yes, it counts.
- Is it tied to hours, attendance, output, quality, sales or staying with the company? If yes, it counts (29 CFR 778.211(c), 778.212(b)).
- Did the employer decide both whether to pay it and how much, on its own, at or near the end of the period, with no earlier promise? Only when the first two answers are No and this one is Yes does the page show "may be excluded".
A bonus left out of the regular rate must meet the conditions in 29 U.S.C. 207(e)(1) or (3). If it does not, the overtime figure applies.
A bonus paid as a percentage of all earnings, overtime included, already carries its own overtime, so no extra amount is due (29 CFR 778.210). This holds only for a true percentage bonus paid unconditionally (29 CFR 778.503).
Employees who are exempt from overtime are not owed this extra amount.
Taxes
Taxes are not shown. Every amount on this page is gross, before any tax or withholding.
Questions
Does a bonus count toward overtime?
Yes, when it is promised or tied to work. Under 29 CFR 778.208, a bonus that does not qualify for exclusion from the regular rate must be totaled in with other earnings to determine the regular rate on which overtime pay is based.
How much is a 5% bonus on a $60,000 salary?
$3,000.00 before taxes. Enter the salary and 5 in the calculator. If the employee is a covered, nonexempt worker with weeks over 40 hours, the bonus may also add overtime pay on top.
Is a discretionary bonus left out of overtime?
Only if it meets the conditions in 29 U.S.C. 207(e). The label does not decide it. The employer must decide both whether to pay it and how much, at or near the end of the period, with no earlier promise (29 CFR 778.211).
Is a Christmas or holiday bonus included?
It depends on the facts. A gift bonus may be left out when its amount is not measured by hours worked, production or efficiency (29 U.S.C. 207(e)(1)), it is not paid under a contract, and it is not so large that employees treat it as part of their wages (29 CFR 778.212(b)). A holiday bonus that is promised, or tied to output, counts.
What if the employer can choose not to pay a promised bonus?
The Department of Labor says the option not to pay does not make a promised bonus discretionary (Fact Sheet #56C).
Sources
- 29 CFR 778.208, Inclusion and exclusion of bonuses in the regular rate (eCFR)
- 29 CFR 778.209, Method of inclusion of bonus in regular rate (eCFR)
- 29 CFR 778.210, Percentage of total earnings as bonus (eCFR)
- 29 CFR 778.211, Discretionary bonuses (eCFR)
- 29 CFR 778.212, Gifts, Christmas and special occasion bonuses (eCFR)
- 29 CFR 778.503, Pseudo percentage bonuses (eCFR)
- 29 U.S.C. 207, Maximum hours, including subsection (e) (Cornell LII)
- U.S. Department of Labor, Fact Sheet #56C: Bonuses under the FLSA
- Rules checked
- October 31, 2026
- Written by
- SumTrue
- Tested against
- Published test cases
- Limits
- Not legal, tax or payroll advice. An estimate from the rules named above. See the Disclaimer.