Federal

Employee Bonus Protection Act

Source: Congress.gov · 384 words in original text

What This Bill Does

This bill changes how overtime pay gets calculated for workers. It says that certain bonus and incentive payments will not count toward an employee's regular rate of pay when figuring out overtime compensation.

Who It Affects

Employees who receive bonus or incentive payments. Employers who pay bonuses or incentives through gainsharing plans, incentive bonus plans, commission plans, or performance contingent bonus plans.

Key Provisions

• Certain additional payments will not be counted as part of an employee's regular rate for overtime purposes. These include payments made to reward an employee or group of employees for meeting or exceeding productivity, quality, efficiency, or sales goals through a gainsharing plan, incentive bonus plan, commission plan, or performance contingent bonus plan. (Sec. 2) • Any plan that offers these rewards must be in writing and made available to employees. (Sec. 2) • The amount of payments under the plan must be based on a formula that is stated in the plan and established and maintained in good faith. (Sec. 2) • The plan must be created to give employees extra pay on top of regular wages and salaries. This extra pay cannot depend on whether the plan exists or what payments it makes. (Sec. 2)

What Changes

The Fair Labor Standards Act of 1938 is amended so that bonus and incentive payments made under qualifying plans no longer count toward calculating overtime pay rates.

Important Definitions

None defined in the bill text.

I 118TH CONGRESS 1ST SESSION H. R. 741 To amend the Fair Labor Standards Act of 1938 to provide that an employ- ee’s ‘‘regular rate’’ for purposes of calculating overtime compensation will not be affected by certain additional payments. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 2, 2023 Mr. CALVERT introduced the following bill; which was referred to the Committee on Education and the Workforce A BILL To amend the Fair Labor Standards Act of 1938 to provide that an employee’s ‘‘regular rate’’ for purposes of calcu- lating overtime compensation will not be affected by cer- tain additional payments. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Employee Bonus Pro- 4 tection Act’’. 5 SEC. 2. REGULAR RATE FOR OVERTIME PURPOSES. 6 Section 7(e) of the Fair Labor Standards Act of 1938 7 is amended— 8 VerDate Sep 11 2014 06:53 Feb 22, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H741.IH H741 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 741 IH (1) by inserting before the semicolon at the end 1 of paragraph (3) the following: ‘‘; or (d) the pay- 2 ments are made to reward an employee or group of 3 employees for meeting or exceeding the productivity, 4 quality, efficiency, or sales goals as specified in a 5 gainsharing plan, incentive bonus plan, commission 6 plan, or performance contingent bonus plan’’; and 7 (2) by adding at the end the following: 8 ‘‘A plan described in clause (d) of paragraph (3) shall be 9 in writing and made available to employees, provided that 10 the amount of the payments to be made under the plan 11 be based upon a formula that is stated in the plan, and 12 be established and maintained in good faith for the pur- 13 pose of distributing to employees additional remuneration 14 over and above the wages and salaries that are not de- 15 pendent upon the existence of such plan or payments made 16 pursuant to such plan.’’. 17 Æ VerDate Sep 11 2014 06:53 Feb 22, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6301 E:\BILLS\H741.IH H741 kjohnson on DSK79L0C42PROD with BILLS

Important: This plain English summary was generated by AI and is provided for informational purposes only. It is not legal advice. Always consult the official bill text on Congress.gov or a qualified attorney for legal matters.