Why Your 'Regular Rate' for Overtime May Be More Than Your Hourly Wage
October 23, 2026
Per DOL guidance under the FLSA, the "regular rate" used to calculate overtime pay can include certain non-discretionary bonuses and shift differentials, not just an employee's base hourly wage — meaning the true overtime rate can be higher than a simple 1.5× of base pay in some circumstances.
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An employee's base rate is $20/hour. They also receive a $40 non-discretionary weekly production bonus. In a 45-hour workweek:
- Total straight-time earnings (base + bonus): (45 × $20) + $40 = $900 + $40 = $940
- Regular rate: $940 ÷ 45 = $20.89
- Overtime premium owed (0.5 × regular rate × overtime hours): 0.5 × $20.89 × 5 = $52.22, on top of straight-time pay already included above
Why This Distinction Exists
A non-discretionary bonus (promised in advance based on meeting a specific metric) is treated as part of compensation for hours worked, so it needs to be factored into the regular rate — a truly discretionary bonus (an unexpected, surprise payment with no pre-announced criteria) is generally treated differently and often excluded.
Frequently Asked Questions
Is the overtime regular rate always just the base hourly wage?
No — it can include certain non-discretionary bonuses and shift differentials, which can raise the effective regular rate above base pay.
What's a non-discretionary bonus?
A bonus promised in advance based on meeting a specific metric, as opposed to a discretionary, unexpected payment with no pre-announced criteria.
How does a bonus affect the regular rate calculation?
Total straight-time earnings (including the bonus) are divided by total hours worked to find the adjusted regular rate used for the overtime premium.
Are all bonuses included in the regular rate?
No — generally only non-discretionary bonuses; truly discretionary bonuses are often excluded, per DOL guidance.