Purpose
A non-discretionary bonus is one you are obligated to pay because it is tied to an agreement, an expectation, or measurable performance criteria. Under wage-and-hour rules, such bonuses must be included in the regular rate when calculating overtime. UZIO automates this. Flag the earning, link an OT Adjustment earning, and overtime recalculates automatically, including retroactively when a bonus is paid for a past period.
When to use this: whenever you pay a bonus or commission that employees can count on (attendance, production, safety, sales targets). Purely discretionary bonuses, decided after the fact with no promise, are left unflagged.
Who can do this: users with permission to manage company earnings and run payroll (typically the Employer Admin).
Setup
- Go to Company Earning setup and create or edit the bonus/commission earning (see Company Level Earnings).
- Turn on Include in Overtime Calculation. Yes = non-discretionary (participates in OT); No = discretionary (doesn't affect OT).
- When you flag the earning, UZIO prompts you to create an OT Adjustment earning — accept the prompt, or create the OT Adjustment earning later from the company earning list and link it there (the OT Adjustment type requires a Linked Non-Discretionary Earning).
Expected outcome
The bonus or commission earning is flagged and linked. From now on, when a bonus covers a past period UZIO recalculates that period's overtime, computes the additional overtime due, and posts it as a separate OT Adjustment line, visible on the payroll and on the pay stub.
Note: Non-discretionary bonus overtime recalculation applies to non-exempt employees only. Exempt employees are excluded automatically, consistent with the general rule that exempt employees do not earn overtime.
Paying the bonus in payroll
On the payroll grid, a non-discretionary bonus icon appears at global and employee level. The pop-up takes, per earning:
| Field | Options and rules |
|---|---|
| Amount | The bonus amount ($). |
| Period | Current Pay Period or Custom Period — required once an amount is entered. |
| Custom period rows | A Start Date and End Date per row (end date must be on or after the start date). Click Add Another Period for more — up to 4 custom date ranges per bonus entry. |
Choosing Custom Period has two prerequisites, each enforced with an on-screen message:
- "For Custom Period calculations, a linked OT Adjustment earning needs to be created at company level"
- "To select a custom work period, either Uzio Time Tracking or Deputy integration must be enabled"
For bulk entry, the earning template downloaded from the grid includes two extra columns per non-discretionary earning (amount + period selection).
At processing time, Regular, OT, DOT, and bonus-based OT adjustments calculate automatically, with retro amounts on separate OT Adjustment lines.
How the calculation works
UZIO derives a Bonus Rate, uses it to compute Bonus OT/DOT, and adds those to base OT/DOT. The rules differ for California:
| Component | Non-California | California |
|---|---|---|
| Bonus Rate basis | Bonus ÷ hours worked = regular + overtime + double-overtime + holiday-premium hours | Bonus ÷ regular hours only |
| Bonus OT | Bonus Rate × 0.5 × OT hours | Bonus Rate × 1.5 × OT hours |
| Bonus DOT | Bonus Rate × 1 × DOT hours | Bonus Rate × 2 × DOT hours |
| Net effect | Half-time premium spread across all hours worked | Full-rate premium over regular hours only — a higher adjustment |
What counts in the divisor. "Hours worked" means exactly that: regular, overtime, double-overtime and holiday-premium hours. Paid time off, paid leave, and plain holiday pay hours are not counted — they aren't hours worked, so they don't dilute the bonus rate. For a past-period bonus, only approved periods are included.
Worked example — current period
$15/hr, 40 regular + 10 OT + 3 DOT = 53 hours worked, $110 bonus. Base OT $225, base DOT $90.
- Non-CA: Bonus Rate = 110 ÷ 53 = $2.08 → OT +$10.40 (new total $235.40, rate $23.54); DOT +$6.24 ($96.24, $32.08)
- CA: Bonus Rate = 110 ÷ 40 = $2.75 → OT +$41.25 ($266.25, $26.63); DOT +$16.50 ($106.50, $35.50)
Same bonus, larger California adjustment — fewer divisor hours and higher multipliers.
Worked example — past-period bonus (retro)
$1,000 September bonus paid in October. September hours worked: 145 regular + 17 OT + 7 DOT = 169 hours. October's payroll carries only the OT Adjustment line:
- Non-CA: rate 1,000 ÷ 169 = 5.92 → 50.30 (OT) + 41.42 (DOT) = $91.72 adjustment
- CA: rate 1,000 ÷ 145 = 6.89 → 175.69 + 96.46 = $272.15 adjustment
Note where the two divisors come from. The Non-CA divisor is every hour worked — 145 regular + 17 OT + 7 DOT = 169. Holiday-premium hours would belong in it too, but this employee worked none. The California divisor counts regular hours only, so it stays at 145 — a smaller divisor, a higher rate, and with CA's 1.5× and 2× multipliers a much larger adjustment.
Note: These are illustrative figures, not a template for a specific employee. Work the numbers from the employee's own approved hours, and reconcile the result to the Payroll Register, which uses UZIO's precise unrounded rate.
(A third example in the source covers multi-rate biweekly periods — the blended base is identical under both rule sets; only the bonus portion differs.)
Warning: Misclassifying a promised bonus as discretionary (flag off) understates overtime — a classic wage-and-hour claim. When a bonus is tied to targets, attendance, or production, treat it as non-discretionary and confirm with counsel.
Common mistake: Deleting or never linking the OT Adjustment earning. Without it, past-period bonuses can't post their retro overtime — pay the bonus only after the link exists.
Related articles
- Company Level Earnings — the Include in Overtime flag
- Overtime Rules Setup and Compliance Controls — blended rates
- Processing a Regular Payroll
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