Rep. Calvert Reintroduces Legislation to Protect Employee Bonuses

Statement

Today, Congressman Ken Calvert (CA-42) introduced legislation, the Employee Bonus Protection Act, H.R. 488, aimed at protecting employee bonuses from overly complex federal requirements.

"American workers should never be denied bonus compensation simply because government regulations make it too complicated for employers," said Rep. Calvert. "The government needs to get out of the way and make it easier, not harder, for businesses who want to reward employees with additional compensation. The Employee Bonus Protection Act is a commonsense solution that will help hard working Americans and small businesses."

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.

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