Compensation: bonus versus wage increase

Health care facilities with increased revenues that wish to give year-end lump-sum bonuses must comply with fair labor standards to avoid recalculating regular pay and incurring retroactive overtime liability. Discretionary bonuses are excluded from the regular rate of pay. Circumstances in each case determine if a bonus is discretionary and thus excluded from the regular rate of pay. A "discretionary" bonus is one that the facility did not promise or announce and that employees have no reason to view as regular pay. To ensure their bonuses' discretionary status, facilities should not announce the bonus until just before or when they give it and should not discuss it with employee groups. Records should show that the facility (1) never before granted such a bonus, (2) had no plan to do so, (3) had not informed employees of it, and (4) has given the bonus only because of unexpected and probably nonrecurring profits.