By Dan Davis, July 15, 2026
Most people assume overtime is simple: work more than 40 hours in a week, get paid one-and-a-half times your hourly rate. But there is a wrinkle that costs Louisiana workers real money without their ever noticing. If you earn certain kinds of bonuses, federal law may require your employer to raise your overtime rate to account for them. Many employers get this wrong. A batch of new U.S. Department of Labor guidance issued in late May 2026 is a good reminder of how the rule works — and why it is worth a second look at your paycheck.
The Fair Labor Standards Act (FLSA) requires overtime at one-and-a-half times your “regular rate” for every hour over 40 in a workweek. The catch is that your regular rate is not always just your base hourly wage. The regular rate is supposed to include almost all the money you earn for your work — and that includes many bonuses. When a bonus is part of your regular rate, it pushes your regular rate up, which in turn pushes your overtime rate up. If your employer pays overtime only on your base wage and ignores the bonus, you may be underpaid.
The key distinction is between “discretionary” and “nondiscretionary” bonuses. A discretionary bonus is one where both the fact of the payment and the amount are decided at the employer’s sole discretion, at or near the end of the period, and not because of any promise that led you to expect it. A surprise, no-strings holiday gift is the classic example — and it can be left out of the regular rate.
A nondiscretionary bonus is the opposite: it is promised or expected, or tied to a formula or goal. Production bonuses, attendance bonuses, safety bonuses, bonuses for hitting quality or output targets, and bonuses announced in advance to encourage you to work harder are typically nondiscretionary. Federal regulations are clear that nondiscretionary bonuses “must be included in the regular rate.” In an opinion letter issued in January 2026, and again in guidance issued at the end of May 2026, the Department of Labor’s Wage and Hour Division reaffirmed that a nondiscretionary bonus must be folded into each employee’s regular rate for overtime purposes.
Because a bonus is often paid weeks or months after the hours were worked, the law lets an employer wait until the bonus amount is known, then go back and “apportion” the bonus over the workweeks it covers and pay any extra overtime owed. In plain terms: once the bonus is figured out, it gets spread across the weeks you earned it, your regular rate for each of those weeks is recalculated to include the bonus, and you are owed additional overtime based on the higher rate. Skipping that recalculation is a common and expensive mistake.
There is one important exception the Department of Labor addressed in its May 2026 guidance. A true “percentage of total earnings” bonus — one calculated as the same percentage of both your straight-time and your overtime earnings — already builds in the correct overtime as a matter of arithmetic, so no separate recalculation is required. But that only works if the bonus genuinely increases your overtime earnings by the same percentage as your straight-time earnings and is not structured to shrink as you work more overtime. If a “percentage” bonus is set up so it shrinks the more overtime you work, the Department treats that as an unlawful device to dodge overtime.
Yes. Louisiana does not have its own state minimum wage or overtime law, so the federal FLSA sets the floor for most Louisiana employees — currently a $7.25 minimum wage and time-and-a-half after 40 hours. That means the federal regular-rate rules on bonuses apply directly to Louisiana workers. Hourly employees in warehouses, plants, oilfield services, construction, healthcare, hospitality, and similar jobs that pay production, safety, or attendance bonuses are the most likely to be affected.
It is worth asking questions if you regularly work overtime and earn a promised or performance-based bonus, but your overtime pay never seems to change when the bonus hits. Look at whether your overtime rate is calculated only on your base hourly wage. Under federal law, wage claims generally reach back two years — or three years if the violation was willful — so time matters.
If you think your employer is leaving bonuses out of your overtime, or shorting your overtime pay in any other way, we can help you find out. At Estes Davis Law in Baton Rouge, we handle FLSA and wage-and-hour claims on a contingency-fee basis — you pay nothing unless we recover for you. Call (225) 336-3394 for a free, confidential consultation. Se habla español.
This article is general information about federal and Louisiana law and is not legal advice. Past results do not guarantee a similar outcome; every case depends on its own facts. For advice about your situation, please consult an attorney.
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