With the new overtime salary requirements coming into effect, I'm trying to figure out the salary requirements as described in this fact sheet.

My question is can we include either revenue sharing, profit sharing or both payouts when calculating the weekly salary? We pay salary people monthly and include payouts for both each month. I think profit sharing is excluded when calculating overtime rates so I'm guessing it can't be included when calculating the weekly salary. However, I don't know how to address revenue sharing.

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    Are you the employer, trying to figure out what you are going to pay your newly hired personnel ? Or the employee, trying to figure out your income potential ?
    – MelBurslan
    Commented Jun 15, 2016 at 16:53
  • This is a question with legal implications so would better be addressed with a lawyer or HR professional.
    – JasonJ
    Commented Jun 15, 2016 at 17:32
  • I have feet in both camps - employee and representing an employer. I just tried submitting the question to the DOL but I'm not confident that I'll get a response. Commented Jun 15, 2016 at 18:22
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    @JasonJanowitz Questions that a HR professional (and consequently a manager or small-business owner) should know the answer to have been deemed on-topic here. This can be answered by simply stating the relevant regulations, it doesn't require interpretation of the law for a specific situation.
    – Lilienthal
    Commented Jun 15, 2016 at 19:33
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    @WilliamJens You should have checked their FAQ before submitting a query, see my answer below. EDIT: Re-reading your question perhaps you're not asking about bonuses in general but rather whether a revenue sharing program counts as a nondiscretionary bonus? If that's the case, please reply back (using @[username]) as that means I'd have to amend my answer and revert my edit of your question.
    – Lilienthal
    Commented Jun 15, 2016 at 19:34

1 Answer 1


Once the upcoming changes to the FLSA overtime rules come into effect on December 1st 2016, up to 10% of the minimum salary can be made up of nondiscretionary bonuses and/or commissions. It's assumed that profit-sharing programs can be considered as nondiscretionary bonuses for purposes of determining the minimum salary.

THe FLSA's 29 CFR 778.200 ("Provisions governing inclusion, exclusion, and crediting of particular payments) provides an exception for a "bona fide profit-sharing plan" when it comes to determining the so-called regular rate (which is used to calculate the overtime pay rate) if:

the payments are made pursuant to a bona fide profit-sharing plan or trust or bona fide thrift or savings plan, meeting the requirements of the Secretary of Labor set forth in appropriate regulations which he shall issue, having due regard among other relevant factors, to the extent to which the amounts paid to the employee are determined without regard to hours of work, production, or efficiency;

Whether a profit-sharing plan qualifies as bona fide is outlined in 29 CFR 549.1. Note that these regulations are only relevant for the regular rate section of the FLSA as this "bona fide" language is currently not used for the minimum salary requirement!

Now, since no such exclusion has been outlined in the Final Rule overtime policies that will come into effect in December, we can assume that as long as a profit-sharing plan meets the requirements to be considered nondiscretionary, it can be considered for the minimum salary requirement. This also matches the spirit of the intended legislation: a significant number of management-level employees (for whom exempt status is typically important and expected) receive a large part of their salary in the form of such bonuses.

The FLSA FAQ says this on nondiscretionary bonuses:

What's the difference between a discretionary bonus and a nondiscretionary bonus?

Nondiscretionary bonuses and incentive payments (including commissions) are forms of compensation promised to employees to induce them to work more efficiently or to remain with the company. Examples include bonuses for meeting set production goals, retention bonuses, and commission payments based on a fixed formula.

By contrast, discretionary bonuses are those for which the decision to award the bonus and the payment amount is at the employer's sole discretion and not in accordance with any preannounced standards. An example would be an unannounced bonus or spontaneous reward for a specific act.

It's clear that a profit-sharing plan that is regularly awarded, formally announced, expected by the employees and where the decision to pay out is not made at whim, will be considered a nondiscretionary bonus.

Whether a revenue-sharing program will be considered a nondiscretionary bonus depends on the details of that plan as there is is known universal definition for such a plan.


This post is an attempt to capture the current state of the Final Rule legislation to the best of my knowledge. If you have employees on the edge of the minimum salary you should contact the Department of Labor or an employment lawyer to ensure that this interpretation is correct. Heavy fines and expensive overtime costs can result when employees are misclassified.

More on FLSA

Details of the upcoming changes, the "Final Rule", are outlined in my answer here. Further detail on the salary and duties tests are in my answer here. Details on nondiscretionary bonuses in the new "Final Rule" are here

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