Which item would not be included in the regular rate for overtime calculations?

• A. Base pay
• B. Discretionary bonuses
• C. Non-discretionary bonuses
• D. Commissions

Answer: (B)

Discretionary bonuses are not included in the regular rate used to calculate overtime. The regular rate is the average pay the employee earns for that workweek, including base pay, commissions, and any non-discretionary bonuses or other compensation tied to work performed. Discretionary bonuses are paid at the employer’s discretion and aren’t guaranteed or tied to hours worked, so they don’t reflect the employee’s actual compensation for the week’s hours and aren’t counted when determining overtime. For example, if you’re calculating overtime for a 50-hour week and you have base pay plus a guaranteed incentive, those amounts go into the regular rate, but a discretionary bonus paid that week would not.