Bonuses and Your Overtime Rate: The Regular Rate Trick Costing You Money

Nondiscretionary bonuses, shift differentials, and commissions must be folded into your overtime rate. Employers who pay overtime on base wage alone systematically underpay every OT hour.

What California Law Says

Overtime is calculated on the regular rate of pay, which includes nondiscretionary bonuses, incentives, and most premiums. The Alvarado decision requires a California-specific formula for flat-sum bonuses that yields a higher rate than the federal method.

How to Fight Back, Step by Step

1. Gather stubs from periods where you earned bonuses or incentives alongside overtime.
2. Recompute the regular rate with the bonus included; for flat-sum bonuses divide by non-overtime hours per Alvarado.
3. Compare the corrected overtime value to what you were paid.
4. Total the shortfall across the claim period.
5. Demand and file — these recalculation claims are precise and hard to dispute.

Common Questions

My attendance bonus is small. Worth pursuing?

Small per-check errors compound across every overtime hour for years, and they pair with pay stub penalties that add real money.

Which bonuses are excluded?

Truly discretionary bonuses announced after the fact and gifts are excluded — but anything promised for meeting targets, attendance, or production goes into the rate.