How does the FLSA 778.502 pseudo-bonus rule work?

When an employee is guaranteed a fixed weekly sum, no part of that sum is a true bonus. Schemes that invent a low hourly rate, purported overtime, and a residual labeled bonus, then pay half-time only on the bonus, underpay the Act. The true regular rate is the weekly guarantee divided by hours worked, and the employee is owed additional half-time after 40.

Classic $1,080 weekly guarantee × five 10h?

Weekly guarantee $1,080 for 50 hours → regular rate $21.60. Extra half-time on 10 OT hours is $108. Total $1,188. The vanish-at-55 improper books pay only $1,092.96.

Same as 778.501 split-day?

No. Section 778.501 is the split-day (Poxon) artificial intra-day overtime labels. Section 778.502 is the weekly-guarantee residual labeled as a bonus.

What if the employer follows the vanish-at-55 bonus books?

On the classic $1,080 / 50h facts that pays only $1,092.96 and underpays the additional amount needed to reach $1,188 under 778.502.

FLSA 778.502 Pseudo-Bonus Labels — Fixed Weekly Guarantee Not a True Bonus

FLSA 778.502 pseudo-bonus labels

29 CFR § 778.502 (with 29 U.S.C. § 207; Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419): when an employee is guaranteed a fixed weekly sum, no part of that sum is a true “bonus.” Breaking it into a low hourly rate + purported overtime + a residual labeled “bonus,” then paying only half-time on the “bonus,” underpays the Act — true RR = guarantee ÷ hours; pay additional half-time after 40. Classic CFR week-3 scaled ×3.6: $1,080 × five 10h → $1,188 vs improper vanish@55 $1,092.96 vs 778.114 $1,000/50h $1,100 vs 778.501 $1,430.

How 778.502 pays

No part of a weekly guarantee is a bonus. Section 778.502 addresses schemes that take a fixed weekly wage, invent a low “hourly” rate and purported overtime, label the residual a “bonus,” and then compute overtime only on that residual. The residual is still part of the regular wages the employee is entitled to receive.

True regular rate + additional half-time. Divide the weekly guarantee by hours worked. Pay an additional one-half of that regular rate for each hour over 40. The vanish-at-55 bookkeeping illustration in the CFR (bonus shrinks as hours rise and disappears at 55 hours) does not satisfy the Act.

Not 778.209/210 / not 778.501 / not waiting-time. True discretionary or percentage bonuses are on 778.211 / 778.210. The split-day (Poxon) plan is on 778.501. A bona fide fluctuating-workweek salary (without fake bonus labels) is on 778.114 — same correct arithmetic, different statute and cousins.

Classic · $1,080 guarantee × five 10h (50h) → RR $21.60 → +$108 → $1,188.
Improper vanish@55 · labeled $17.28/h + residual “bonus” half-time only → $1,092.96 (underpays $95.04).
CFR week-2 scaled · same $1,080 × 45h → $1,140.
Forty hours · five 8h → salary only $1,080.
Short week · four 8h → $1,080.

Sources

Cornell LII 29 CFR § 778.502 (HTTP 200)
eCFR 29 CFR § 778.502 (HTTP 200)
29 CFR § 778.502 — GovInfo CFR XML (HTTP 200)
29 U.S.C. § 207 (HTTP 200)
WHD Fact Sheet #23 (HTTP 200)

FAQ

Is a residual labeled “bonus” under a weekly guarantee a true bonus?

No. 778.502: wherever the employee is guaranteed a fixed or determinable sum as wages each week, no part of that sum is a true bonus and the bonus-overtime rules do not apply.

Classic $1,080 × five 10h?

True RR $21.60 → extra half-time $108 → total $1,188 vs improper vanish@55 $1,092.96 vs 778.114 $1,000/50h $1,100.

Same as /flsa-778-114/ fluctuating workweek?

Correct arithmetic matches a bona fide FWW salary, but 778.502 is about the illegal pseudo-bonus labeling of a weekly guarantee. Cousins and classic dollars differ ($1,188 vs FWW’s $660 / $1,100 demos).

Same as /flsa-778-501-split-day/?

No. 778.501 is the split-day (Poxon) artificial intra-day OT labels. 778.502 is the weekly-guarantee residual labeled as a “bonus.”

What about the CFR $300 / 50h example?

Scaled ×3.6 to $1,080: true total $1,188; improper books $1,092.96 (CFR $330 / $303.60 ×3.6).