Articles Discussing Holiday Pay, Gifts and Bonuses Under The FLSA.

Dear Littler,

We’d like to provide gifts to our staff for the holidays but are unsure which types of gifts would trigger tax obligations for our employees. We’d also like to offer donation matching for our employees’ favorite causes this season but are unsure how that works. Is there any

Many employers give holiday gifts to boost workforce morale and spread holiday cheer. But that purpose will not be fulfilled if the gifts turn out to be insulting or a tax burden for employees. Here are some tips to ensure holiday gifts from the company, managers, and colleagues stay professional

For many, December is a joyful time of year, full of parties, dinners, and decorations. Yet those same festivities make December a busy time of year for us at Shaw Law Group, as we field all kinds of holiday-season-related questions from our clients. This year, we’ll share some of those questions with our faithful blog readers in a December series we’re calling the “Holiday Hotline”! Today, we’ll tackle a few questions about holiday pay and policies…

In 2020, non-exempt, hourly employees of Lowe’s sued the home improvement retailer under the Fair Labor Standards Act (FLSA) for not including payment of a one-time bonus, and payment for time spent on charitable volunteer activities, in the “regular rate” used to calculate their overtime pay.  The U.S. District Court for the Western District of North Carolina dismissed the suit.  On June 17, 2021, the Fourth Circuit Court of Appeals affirmed dismissal, holding that the bonus and volunteer time pay were properly excluded from the calculation of overtime pay.  McPhee v. Lowe’s Home Centers, LLC.  The Fourth Circuit has jurisdiction over federal courts in the Carolinas, Maryland, Virginia, and West Virginia.

Affirming the dismissal of wage and hour claims against “big box” retailer Lowe’s, the Fourth Circuit Court of Appeals agreed that company bonuses, provided to employees following 2018 revisions to federal tax law, were rightly excluded from the “regular rate” used to calculate overtime compensation under the Fair Labor Standards

When an employer permits its employees to participate in a bonus program offered by the employer’s client, based on the work performed for that client, those bonuses do not always qualify as “remuneration for employment” that must be included in the employee’s “regular rate” for purposes of calculating overtime pay due under the Fair Labor Standards Act (FLSA), the U.S. Court of Appeals for the Third Circuit has held. Secretary, U.S. Dep’t of Labor v. Bristol Excavating, Inc., 2019 U.S. App. LEXIS 24767 (3rd Cir. Aug. 20, 2019). In so concluding, the Third Circuit rejected the U.S. Department of Labor’s position that any remuneration received by an employee, whether received directly from the employer or a third party, is always “remuneration for employment.” Instead, the Court of Appeals held, that determination depends on the agreement made between the employer and the employee.

Employers generally recognize that their non-exempt employees must receive overtime premiums on their base pay – in most cases, their hourly wage – when they work overtime. However, not all employers are as well attuned to the requirement that overtime premiums may also be required on other, “supplemental” components of compensation to nonexempt employees. Bonuses are a common example.

Last year, a Manhattan federal district judge reviewed a decision of a federal bankruptcy court and held that Lehman Brothers was not required to pay a $350,000 performance bonus referenced in the offer letter of a prospective employee who never provided services. In doing so, the Court observed that the Firm terminated the contractual relationship prior to the prospective employee performing work contemplated by the offer letter contract and prior to her official start date, and that there was no evidence that the bonus was intended as a “sign on” bonus to be paid prior to the performance of her duties. The Court of Appeals for the Second Circuit has now affirmed the District Court. Ortegon v. Giddens, 2016 U.S. App. LEXIS 404 (2d Cir. Jan. 12, 2016).