How do FLSA 778.211 discretionary bonuses work?

29 U.S.C. § 207(e)(3)(a) and 29 CFR 778.211 exclude sums paid in recognition of services when both the fact of payment and the amount are determined at the employer's sole discretion at or near the end of the period, and not pursuant to any prior contract, agreement, or promise. Ordinary after-40 half-time still applies to hours worked.

Classic $20 × five 10h + $250 discretionary bonus?

FLSA after-40 pay $1,100 + excluded $250 discretionary bonus = $1,350. Ordinary /overtime/ is $1,100. Including the same $250 in the regular rate totals $1,375. Classic 778.212 with $1,600 is $2,700. Classic 778.213 with $100 is $1,200. Classic 778.222 with $75 is $1,175. Classic 778.225 with $150 is $1,250.

Are attendance or production bonuses discretionary?

No. Under 778.211(c), attendance, production, quality, accuracy, and retention bonuses are nondiscretionary and must be included in the regular rate. Classic same punches with an attendance label → $1,375.

How is 778.211 different from 778.212 gifts?

778.212 is the § 7(e)(1) gift / Christmas path (amounts not measured by hours/production; not contractual). 778.211 is the § 7(e)(3)(a) discretionary-bonus path — sole discretion as to both fact and amount at or near period end. Classic dollars differ: 778.211 $1,350 vs 778.212 $2,700.

What if the bonus was promised in January for June?

The employer abandoned discretion as to the fact of payment. The bonus is not excluded under 778.211 — include in RR (classic → $1,375).

FLSA 778.211 Discretionary Bonuses — Excluded from Regular Rate

How 778.211 pays

Exclusion of the discretionary bonus, not of the hours. Section 778.211 implements § 7(e)(3)(a): qualifying discretionary bonuses stay out of the regular rate and cannot be credited toward statutory overtime. Hours worked still earn ordinary extra half-time after 40 at the typed rate. Total = FLSA after-40 base + bonus.

Discretion gates. The employer must retain sole discretion as to both the fact of payment and the amount until at or near the end of the period. A January promise of a June bonus abandons fact discretion. A fixed cents-per-unit formula abandons amount discretion. Either failure puts the bonus into the regular rate under 778.209.

Labels are not determinative (778.211(d)). Employee-of-the-month, referral (when not primarily recruiting), severance, and extraordinary-effort spot bonuses may qualify when truly discretionary. Attendance, production, quality, accuracy, and retention bonuses are nondiscretionary under 778.211(c).

Not 778.212 / 778.213 / 778.225. Gifts under 778.212 are the § 7(e)(1) path (classic two-weeks $2,700). Profit-sharing under 778.213 is § 7(e)(3)(b) / Parts 549 & 547 (classic $100 → $1,200). Talent fees under 778.225 are § 7(e)(3)(c) / Part 550 (classic $150 → $1,250). Discretionary bonuses are § 7(e)(3)(a).

Classic · $20 · five 10h · $250 discretionary → $1,350 (vs /overtime/ $1,100 · include-in-RR $1,375 · 778.212 $1,600 $2,700 · 778.213 $100 $1,200 · 778.222 $75 $1,175 · 778.225 $150 $1,250).
Attendance / production / promised / amount-fixed · same punches · $250 → $1,375 (IN RR).
Five 8h + $250 (no OT) → $1,050.
$0 bonus → $1,100 (ordinary after-40).

Sources

29 CFR § 778.211 — Discretionary bonuses (Cornell LII, HTTP 200)
29 CFR § 778.211 — eCFR (HTTP 200)
29 U.S.C. § 207(e)(3)(a) — discretionary bonus statutory text (HTTP 200)
29 CFR § 778.200 — Inclusion / exclusion / crediting framework (HTTP 200)
29 CFR § 778.208 — Inclusion and exclusion of bonuses (HTTP 200)
29 CFR § 778.209 — Method of inclusion of bonus in regular rate (HTTP 200)
WHD Fact Sheet #56A — Regular rate under the FLSA (HTTP 200)
/flsa-778-212-gifts/ — 778.212 gift cousin
/flsa-778-213-profit-sharing/ — 778.213 Part 549/547 cousin
/flsa-778-225-talent-fees/ — 778.225 / Part 550 talent cousin
/overtime/ — ordinary after-40 baseline

FAQ

Classic five 10h + $250 discretionary?

$1,100 FLSA after-40 + $250 excluded discretionary bonus → $1,350 vs /overtime/ $1,100 vs include-in-RR $1,375 vs 778.212 $1,600 $2,700 vs 778.213 $100 $1,200 vs 778.222 $75 $1,175 vs 778.225 $150 $1,250.

Attendance or production bonus?

778.211(c) treats them as nondiscretionary — include in RR (classic → $1,375).

Same as /flsa-778-212-gifts/?

No. 778.212 is § 7(e)(1) gifts (classic $2,700). 778.211 is § 7(e)(3)(a) discretionary bonuses (classic $1,350) with sole-discretion gates on both fact and amount.

Promised in advance?

Then discretion as to the fact of payment is abandoned — include in RR (classic → $1,375).

Employee-of-the-month?

May qualify under 778.211(d) when both fact and amount remain at sole discretion and there is no prior promise — classic same punches still → $1,350.