DOL Opinion Letter Confirms Bonuses Under Predetermined Pay Plans Must Be Included in Regular Rate
On January 5, 2026, the U.S. Department of Labor’s Wage and Hour Division issued Opinion Letter FLSA2026-2 , addressing whether certain “Safety, Job Duties, and Performance” bonuses may be excluded from an employee’s regular rate of pay when calculating an employee’s overtime premium under Section 7(e) of the Fair Labor Standards Act (FLSA). The short answer: they cannot, at least under the circumstances analyzed in the opinion letter. The opinion letter involves a pay plan for waste-management drivers that included a base hourly rate plus incentive bonuses tied to safety, job performance, and completion of duties. These bonuses were formula-driven and could add up to $9.50 per hour when specific criteria were met. Once those criteria were satisfied, the amount of the bonus was quantifiable under the plan and automatically earned by the employee. The DOL confirms in this opinion letter that Section 7(e)(3) of the FLSA allows exclusion only of truly discretionary bonu...