Non-Discretionary/Incentive Bonuses Under the FLSA

SESCO Management Consultants

Includable In Earnings

Incentive, production, and attendance bonuses are part of a non-exempt employee’s earnings which must be included in their regular rates when figuring the overtime pay due under the Fair Labor Standards Act (“FLSA”). To be excluded from the overtime pay calculations, bonuses must not be paid pursuant to a “contract, agreement, or promise causing the employee to expect such payments regularly,” a limitation found in Section 7(e)(3)(a). For this reason, bonuses fail to qualify for exclusion when they are promised to newly hired employees, when they are embodied in union contracts, and when they are announced to employees to induce them to work more steadily, rapidly, or efficiently or to remain with the employer.

Types of Bonuses

The types of incentive and production bonuses which must be taken into consideration when figuring overtime pay, because of a contract, agreement, or promise, are those based on:

-Attendance
-Production by individual employees
-Production by a group of employees
-Quality of work
-Accuracy of work
-Length-of-service
-Cooperation
-Courtesy
-Efficiency
-Number of overtime hours worked.

Increase in Overtime Pay

The requirement that incentive, production, and attendance bonuses be included in computation of an employee's regular hourly rate causes a proportionate increase in his overtime pay, since the regular rate is the basis of FLSA overtime compensation.

No Offset Against Overtime Pay

Incentive and production bonuses may not be credited against overtime pay required by the FLSA. They are part of the employees' regular earnings. This is true even if the percentage of the bonus above a certain quota is directly increased in proportion to the number of hours worked.

Fixed Percentage Bonus

An employer is not required to retrospectively recalculate the regular rate if the employer pays a fixed percentage bonus that simultaneously pays overtime compensation due on the bonus. For example, a bonus that is 10 percent of straight-time wages (the hourly rate × straight-time hours worked up to 40) and 10 percent of overtime wages (1.5 × the hourly rate × straight-time hours worked over 40) does not require recalculation of the regular rate because the bonus includes the overtime compensation due on the bonus as an arithmetic fact, fully satisfying the FLSA’s overtime requirements. Similarly, a bonus that is 10 percent of total compensation—including hourly wages, overtime, bonuses, commissions, etc.—does not require recalculation.

If you are not a retainer client, contact us to learn about our services by calling 423-764-4127 or click here.
 

A Go-To Safety Resource for Home Health Nurses

When nurses feel safe in the field, they’re able to focus their energy on providing excellent patient care. 

That's why we've put together our newest tip sheet: 25 Safety Tips for Home Health Nurses. It's packed with straightforward advice to make every home visit smoother and safer while providing more peace of mind.

Inside the guide, you'll find tips for:

  • Before you go
  • On your way
  • When you arrive
  • During the visit
  • Dealing with concerns

This tip sheet is perfect for keeping close when you're on the move, sharing during team meetings, and starting important conversations around safety in the field.

Grab your copy, and feel free to forward this email to other caregivers and frontline workers in your organization.

Download the Guide
 

Biden Plugs Home Care, Family Caregivers in State of the Union

McKnight's Home Care | By Liza Berger

In a State of the Union speech Thursday night that was lighter on healthcare than other domestic, and foreign, policy issues, President Biden gave a brief nod to home care.

The reference came after he mentioned proposing a minimum tax of 25% for billionaires, which he said would raise $500 billion over the next 10 years.

“Imagine what that could do for America … Imagine a future with home care and elder care so seniors and people living with disabilities can stay in their homes and family caregivers get paid what they deserve!,” he said.

A fact sheet published by the Biden administration on Thursday prior to the speech touted his accomplishments in increasing home- and community-based services. It noted that his administration delivered $37 billion to states to expand HCBS. Specifically, the funding provided a temporary 10 percentage point increase to the federal medical assistance percentage (FMAP) for certain Medicaid expenditures for HCBS. The FMAP increase expired on March 31, 2022.

The fact sheet also alluded to his support for the 80/20 provision in the proposed Medicaid Access Rule “to make sure home care workers get a bigger share of Medicaid payments for these critical services.”

And he is calling on Congress to allow older adults and those with disabilities on Medicaid home care waiting lists to remain in their homes, according to the fact sheet.

Read Full Article 
 

Report: Low Medicaid Reimbursement Rates Lead to Private Duty Nursing Shortage in Colorado

Denver 7 | By Adria Iraheta 

ENGLEWOOD, Colo. — Low Medicaid reimbursement rates are causing nurses in Colorado to seek higher-paying jobs, leaving families in vulnerable positions, according to a new report.

Amid crunching numbers and sending emails from the kitchen, Rod Schiller keeps an eye on his 13-year-old son, Luke, on a monitor.

Luke is hooked up to several machines in the bedroom.

“He does not eat without care. He doesn't go to the bathroom, you know, without help. He’s non-ambulatory. He can't turn over in the bed without somebody helping him. He is totally dependent on a good care provider,” Schiller said.

At one point, a machine beeps.

“His shaker just finished, so I’m going to do his cough assist,” Schiller explains.

Luke got his first home nurse when he was a toddler. Since then, it’s been a revolving door of nurses.

“We've had nurses that will stay two weeks, and they'll leave. Or we've had nurses that we want to leave,” said Schiller.

It’s a problem that’s only getting worse.

A new analysis done on behalf of the Home Care and Hospice Association of Colorado shows the state has some of the lowest reimbursement rates for private care nurses

Colorado’s Medicaid RN payment rate is $7.05 below the median. For licensed practical nurses, the rate is $9.04 below the median.

The analysis shows that Colorado needs a Medicaid rate increase of 37.8% for RNs and 52.1% for LPNs to attract sufficient private duty nurses...

Read Full Article
 

CMS To Discontinue Hospice Component of Medicare Advantage (MA) Value Based Insurance Design (VBID) Model in CY 2025

NHPCO Regulatory Alert

On March 4, 2024, the Centers for Medicare & Medicaid Services (CMS) announced the termination of the hospice component of the VBID Model, effective December 31, 2024. CMS cited feedback from providers, beneficiaries, and MA Organizations (MAOs) about their experience with VBID as the reason for discontinuing the hospice component of the model. CMS will no longer be accepting applications for the calendar year (CY) 2025 Request for Applications. This means hospice will no longer be a part of the VBID model beginning January 1, 2025. Hospice providers currently contracted with MAOs will continue with their contracts for CY 2024. CMS will issue additional guidance later this year.

This follows over five years of advocacy and engagement by NHPCO, including meetings and official filings with the CMS VBID team in February 2024, August 2022, August 2021, and Spring 2020.

CMS will continue the VBID model without the hospice component with the goal of enhancing care coordination, optimizing cost, and delivering equitable, high-quality, person-centered care to Medicare beneficiaries.

Any questions can be directed to [email protected] with ‘VBID’ in the subject line
 
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