One of the more surprising changes in the new FLSA overtime exemption rules is a provision allowing certain bonuses, commissions, and incentive pay to count for up to 10% of the new increased minimum salary level. However, the rule provides that only “nondiscretionary” bonuses, incentives, and commissions can be counted. So what exactly does “nondiscretionary” mean?
The new rules don’t actually define “nondiscretionary,” but another part of the FLSA regulations (specifically 29 C.F.R. § 778.211), provides some guidance here. That section discusses which bonuses can be excluded from the “regular rate” used to calculate overtime for non-exempt employees because they are discretionary:
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