I am a paralegal who often works more than 45 hours per week. We were told in July that our holiday bonus will be $10,000 and should be considered part of our yearly pay. I only make $25,000 per year, and my overtime is based on 1.5 times my hourly rate of $12.00. I was also told that Ill only receive my holiday gift if my boss thinks that I did a good job. Is this allowed?

 

A:

While we would need a few more details before giving you an official answer, from what it sounds like, the answer is NO; that isn’t allowed.

If your holiday gift or bonus is just that – a gift – then your employer should not make a Holiday gift a condition of your performance.

Your employer should not be telling you that it should be part of your yearly pay either. If he is considering that money to be part of your compensation for the year, then he should be factoring that bonus into your overtime rate.

Let’s use a simple math equation to demonstrate.

As is it right now, you make $12 per hour and work an average of five hours of overtime each week, so your paychecks should look like this before taxes:

$12 x 40 hours = $480
($12 x 1.5 overtime rate) x 5 hours of overtime = $90
($480 + $90) x 52 weeks = $29,640
Total yearly compensation + Holiday “bonus” = $39,640

But since your employer should be factoring your bonus into your regular rate of pay, you should be receiving more for overtime. Here is the correct equation:

$12 x 40 hours x 52 weeks = $24,960
$24, 960 + $10,000 Bonus = $34,960
$34,960/52 weeks = $67, 231
$67, 231/40 hours = $16.80
$16.80 x 1.5 overtime rate = $25.21

Your overtime rate should be $25.21, not $18 like it is now. If you plug the correct overtime rate into the first set of equations, your yearly compensation should look more like this:

$12 x 40 hours = $480
($25.21 overtime rate) x 5 hours of overtime = $126.05
($480 + $126.05) x 52 weeks = $31,514.60
Total yearly compensation + Holiday “bonus” = $41,514.60
That’s a yearly difference of $1,874.60, all because your employer misclassified your “bonus” as a gift.

These equations can be confusing, but they are imperative to protecting your paycheck. For help with figuring your pay, contact the Houston overtime lawyers at Kennedy Hodges for a free copy of their book, The Ten Biggest Mistakes that Can Hurt Your Wage and Overtime Claim. The lawyers will also sit down with you – for free – to evaluate your case and discuss your options. Protect yourself by calling them today at 888.449.2068 or by filling out our online form to schedule your free case evaluation.