Now more than ever, employers are looking for creative ways to acknowledge the hard work and resilience employees have demonstrated in these unprecedented times. Bonuses, extra pay, and non-cash rewards can be excellent motivators to improve employee engagement and productivity. Employers must be mindful of potential administrative concerns and execute properly to remain compliant with U.S. Department of Labor (DOL) regulations.
The Human Capital Management team at RKL produced a primer on the different types of bonuses and pay and examples and guidance on how to administer properly. Click here to learn more about DOL definitions for discretionary and non-discretionary bonuses and how bonuses may affect hourly pay.
Cash incentives can be excellent tools to demonstrate to an employee that you are as committed to their well-being as they are to your company. If an employee works overtime, however, these can be an administrative burden when not properly promised or managed.
When an employee receives non-discretionary bonuses or supplemental payments, the regular rate of pay (and premium rate of pay) can change. Current payroll systems are not set up to process and calculate such payments, so manually calculation and entry is required. View a demonstration of different calculations and pay impact here.
A Different Approach
There are ways to avoid these complex calculations. Instead of a flat bonus, offer a percentage of regular and overtime pay as a bonus. Use this wording for your COVID-19 incentive: In a gesture of appreciation for your willingness to work during these unprecedented times, we are providing each of our employees with a bonus of two percent of your regular and overtime pay. This bonus will be provided on the subsequent pay. This approach avoids additional calculation, is an easy-to-understand formula for employees, and may also incentivize them to work more hours to earn more pay from which to base the two percent.
There are many creative ways to demonstrate gratitude to employees while still being compliant with DOL regulations – it just may require a little outside-the-box thinking. RKL Human Capital Management advisors are available to help local employers devise, review or adjust their bonus procedures for compliance and maximum benefit. Contact firstname.lastname@example.org to start the conversation and stay tuned to RKL’s Coronavirus Resource Center for more guidance and insights to help organizations navigate these uncertain times.