Construction Bonuses, Per Diems, and Truck Pay: When These Payments May Affect Overtime

Construction workers are often paid more than an hourly wage. A paycheck may include a production or completion bonus, a daily per diem, truck pay, or an allowance for tools and equipment. The way those payments are treated can matter when overtime is calculated.

Under the federal Fair Labor Standards Act (FLSA), overtime is generally based on an employee’s “regular rate,” which may include certain compensation beyond the employee’s base hourly wage. Other payments, particularly legitimate expense reimbursements, may be excluded. The answer depends on the nature of the payment and the circumstances in which it was made.

If your employer calculates overtime using only your base hourly rate, it may be worth taking a closer look at how your other compensation is treated. In some cases, excluding payments that should be included in the regular rate can result in unpaid overtime.

The Basic Rule: Overtime Is Based on the “Regular Rate”

Under the FLSA, non-exempt employees who work more than 40 hours in a workweek generally must receive overtime at one-and-one-half times their regular rate for those additional hours. The regular rate is generally broader than the employee’s stated hourly wage.

Federal law generally includes compensation paid for employment in the regular rate unless a specific exclusion applies. As a result, certain bonuses, incentives, and other payments may need to be considered when calculating overtime.

Nondiscretionary Bonuses Generally Count

Nondiscretionary bonuses are generally bonuses employees know they can earn in advance or that are tied to established criteria or performance. Under federal regulations, these bonuses generally must be included in the regular rate.

Production and Completion Bonuses

Bonuses for meeting production goals, completing projects, staying on schedule, or reaching specific milestones may need to be included when they are promised or expected in advance.

Safety and Attendance Bonuses

Safety and attendance bonuses may also affect the regular rate when employees can earn them by meeting stated conditions. The treatment depends on the terms of the bonus and applicable law.

Retention and Quality Bonuses

Bonuses tied to remaining with an employer, meeting quality standards, passing inspections, or reducing callbacks may likewise be included when they are nondiscretionary.

What Bonuses May Be Excluded?

Not every bonus is included in the regular rate. Federal regulations recognize certain exclusions, including some truly discretionary bonuses.

Truly Discretionary Bonuses

A bonus may qualify for exclusion when the employer retains discretion over whether to pay it and how much to pay, and employees do not have an expectation of receiving it. Simply calling a bonus “discretionary” does not necessarily make it so. The actual terms and circumstances matter.

Holiday Gifts

Certain genuine gifts or holiday bonuses may also qualify for exclusion. However, a payment tied to hours worked, performance, or other compensation may receive different treatment.

Per Diems and Expense Payments

Construction workers frequently receive per diems for meals, lodging, and travel expenses on out-of-town projects. Genuine expense reimbursements may generally be excluded from the regular rate if they satisfy applicable requirements.

But the label “per diem” does not determine the legal treatment. If a payment is not reasonably related to expenses or instead functions as compensation for work, it may need to be considered when calculating the regular rate.

For example, a flat payment made regardless of whether an employee actually incurs qualifying travel expenses may warrant closer review. The same may be true when a payment is structured primarily as additional compensation rather than reimbursement.

Truck Pay, Tool Allowances, and Vehicle Payments

Construction workers may receive additional money for using personal vehicles, tools, or equipment. Whether those payments affect the regular rate generally depends on what the payment is intended to cover and whether it qualifies as a genuine expense reimbursement.

Potential Reimbursements

A payment that reasonably reimburses an employee for actual job-related expenses may qualify for exclusion under the FLSA. The facts and applicable regulations should be reviewed before determining how a particular payment should be treated.

Payments That May Function as Wages

A flat payment unrelated to actual expenses may raise different questions. For example, a daily “truck allowance” paid regardless of mileage, job-related use, or expenses may potentially be treated differently from a genuine reimbursement.

The same principle can apply to tool or equipment allowances. The name used on the paycheck is not necessarily controlling; the substance of the payment matters.

How a Regular Rate Error Can Add Up

Even a relatively small overtime calculation error can accumulate over time.

The precise calculation depends on the employee’s total compensation, hours worked, the type of bonus or other payment, and applicable law. A similar issue affecting multiple employees under the same pay policy could potentially involve a larger group of workers.

What You May Be Able to Recover

If an employee establishes an FLSA overtime violation, the employee may be able to recover:

• Back wages for unpaid overtime during the applicable limitations period.
• Liquidated damages that may equal the unpaid wages, subject to federal law and applicable defenses.
• Attorney’s fees and court costs when authorized by the FLSA and applicable law.

State law may provide additional rights or remedies. Whether a worker can recover additional damages, penalties, or other relief depends on the facts and the laws that apply.

Potential recovery varies from case to case. Past results do not guarantee or predict a similar outcome in another matter.

Time Limits

FLSA claims are generally subject to a two-year limitations period, which may extend to three years for a willful violation. State-law claims can have different deadlines and requirements.

Because deadlines can affect a worker’s potential recovery, anyone who believes overtime was improperly calculated should consider obtaining legal advice promptly.

What to Do If You Suspect an Overtime Problem

Save Your Pay Records

Keep pay stubs, bonus statements, time records, per diem records, and other documents showing how you were paid. Also keep your own record of the hours you worked.

Identify Every Form of Compensation

Make a list of your hourly rate and other payments, including production bonuses, safety bonuses, per diems, truck pay, tool allowances, and other compensation.

Compare Your Overtime Pay

Review whether your employer appears to have calculated overtime using only your base rate. If additional compensation may belong in the regular rate, the difference may warrant further review.

Consider Speaking With an Attorney

Regular-rate questions can involve detailed wage calculations and fact-specific federal and state rules. An experienced wage-and-hour attorney can evaluate the payment structure, applicable deadlines, and potential remedies.

Your Overtime Rate May Be Higher Than Your Employer’s Calculation

Construction compensation often includes more than an hourly wage. Depending on the circumstances, bonuses, per diems, truck pay, and other payments may affect the regular rate used to calculate overtime.

If you believe your employer may have excluded compensation that should have been considered, you may have a legal claim for unpaid overtime. Whether a claim exists, and what it may be worth, depends on the specific facts and applicable law.

Josephson Dunlap, Lawyers for the Workers®, represents construction workers, tradespeople, and other employees in wage-and-hour matters. We offer confidential case evaluations at no cost.