C.F.R. » Title 29 » CHAPTER V—WAGE AND HOUR DIVISION, DEPARTMENT OF LABOR › SUBCHAPTER B—STATEMENTS OF GENERAL POLICY OR INTERPRETATION NOT DIRECTLY RELATED TO REGULATIONS › PART 778—OVERTIME COMPENSATION › Subpart C—Payments That May Be Excluded From the “Regular Rate”

29 C.F.R. § 778.209

Method of inclusion of bonus in regular rate

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(a) General rules. Where a bonus payment is considered a part of the regular rate at which an employee is employed, it must be included in computing his regular hourly rate of pay and overtime compensation. No difficulty arises in computing overtime compensation if the bonus covers only one weekly pay period. The amount of the bonus is merely added to the other earnings of the employee (except statutory exclusions) and the total divided by total hours worked. Under many bonus plans, however, calculations of the bonus may necessarily be deferred over a period of time longer than a workweek. In such a case the employer may disregard the bonus in computing the regular hourly rate until such time as the amount of the bonus can be ascertained. Until that is done he may pay compensation for overtime at one and one-half times the hourly rate paid by the employee, exclusive of the bonus. When the amount of the bonus can be ascertained, it must be apportioned back over the workweeks of the period during which it may be said to have been earned. The employee must then receive an additional amount of compensation for each workweek that he worked overtime during the period equal to one-half of the hourly rate of pay allocable to the bonus for that week multiplied by the number of statutory overtime hours worked during the week.

(b) Allocation of bonus where bonus earnings cannot be identified with particular workweeks. If it is impossible to allocate the bonus among the workweeks of the period in proportion to the amount of the bonus actually earned each week, some other reasonable and equitable method of allocation must be adopted. For example, it may be reasonable and equitable to assume that the employee earned an equal amount of bonus each week of the period to which the bonus relates, and if the facts support this assumption additional compensation for each overtime week of the period may be computed and paid in an amount equal to one-half of the average hourly increase in pay resulting from bonus allocated to the week, multiplied by the number of statutory overtime hours worked in that week. Or, if there are facts which make it inappropriate to assume equal bonus earnings for each workweek, it may be reasonable and equitable to assume that the employee earned an equal amount of bonus each hour of the pay period and the resultant hourly increase may be determined by dividing the total bonus by the number of hours worked by the employee during the period for which it is paid. The additional compensation due for the overtime workweeks in the period may then be computed by multiplying the total number of statutory overtime hours worked in each such workweek during the period by one-half this hourly increase.

Notes of Decisions
Cited in 30 cases (9 in the last 5 years), 1988–2026 · leading case: Allen v. Bd. of Pub. Educ. for Bibb Cnty., 495 F.3d 1306 (11th Cir. 2007).
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Allen v. Bd. of Pub. Educ. for Bibb Cnty., 495 F.3d 1306 (11th Cir. 2007). “When a driver drives a combination of regular and other routes, and receives two different rates of pay, then the combined pay for those rates must be used in calculating all remuneration for employment.”
Alvarado v. Dart Container Corp. of California, 411 P.3d 528 (Cal. 2018). “" ( 29 C.F.R. § 778.209 (a) (2008), italics added.”
William Hornady v. Outokumpu Stainless USA, LLC, 118 F.4th 1367 (11th Cir. 2024). “” See 29 C.F.R. § 778.209 . And when they did, any overtime would need to be recalculated to reflect the revised regular rate.”
Senne v. Kansas City Royals Baseball Corp., 315 F.R.D. 523 (N.D. Cal. 2016). “(emphasis in original) (citing 29 C.F.R. § 778.209 ; Leyva v. Medline Indus.”
Schmitt v. State of Kan., 844 F. Supp. 1449 (D. Kan. 1994). · cites it 3× “The State’s formula is virtually identical to the formula found in 29 C.F.R. § 778.209 ,. Essentially, the § 778.”
Johnson v. Big Lots Stores, Inc., 604 F. Supp. 2d 903 (E.D. La. 2009). “” 29 C.F.R. § 778.209 (b). The regulations explain that “it may be reasonable and equitable to assume that the employee earned an equal amount of bonus each week of the period to which the bonus relates.”
Robert B. Reich, Sec'y of Labor v. Interstate Brands Corp., 57 F.3d 574 (7th Cir. 1995). “The Secretary has not challenged the deferral mechanism in the baking industry’s collective bargaining agreements, and we therefore assume that bakeries are entitled to compute and pay retrospectively, as in these examples.”
Mendez v. Radec Corp., 232 F.R.D. 78 (W.D.N.Y. 2005). “” 29 C.F.R. § 778.209 (a); see, e.g., Featsent v.”
Scott v. City of New York, 592 F. Supp. 2d 475 (S.D.N.Y. 2008). “29 C.F.R. § 778.209 (a). 82 . United States v.”
Marin v. Costco Wholesale Corp., 169 Cal. App. 4th 804 (Cal. Ct. App. 2009). “” ( 29 C.F.R. § 778.209 (a) (2008).) C. The Parties’ Competing Formulas Defendant calculated the overtime owed on the bonus by dividing the employee’s maximum base bonus by the minimum number of paid hours *808 required to achieve that maximum bonus (1,000) to determine a…”
Rodriguez v. City of Albuquerque, 687 F. Supp. 2d 1270 (D.N.M. 2009). · cites it 3× “Judge Herrera also relied on an interpretive bulletin — 29 C.F.R. § 778.209 — -in concluding that the proper divisor in the regular-rate calculation was the total number of hours worked.”
McLaughlin v. McGee Bros. Co., Inc., 681 F. Supp. 1117 (W.D.N.C. 1988). “* # # * * * 29 C.F.R. § 778.209 (a) provides in pertinent part: Method of inclusion of bonus in regular rate.”
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— 29 C.F.R. § 778.209(a) — 3 cases
Hornady v. Outokumpu Stainless USA, LLC (S.D. Ala. 2022).
Su v. All. Mech. Solutions LLC (S.D. Ala. 2022).
Gibson v. Outokumpu Stainless Steel USA, LLC (S.D. Ala. 2023).
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