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8.1 Regular Rate of Pay Determination & Statutory Exclusions

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1 Chapter 1: Worker Classification, Section 530 & FLSA Hours

1.1 Worker Status & Common Law Classification Tests 1.2 Statutory Employees, Statutory Non-Employees & Section 530 Relief 1.3 FLSA Hours Worked, Travel Time, On-Call & Waiting Time 1.4 Public Sector Payroll, Government Contract Acts & Youth Employment

2 Chapter 2: FLSA Exemptions, Pay Frequency & Wage Payments

2.1 FLSA White-Collar Exemptions & Salary Basis Test 2.2 Pay Frequency Laws, Direct Deposit & NACHA Compliance 2.3 Payroll Cards, Paycheck Delivery & Constructive Receipt

3 Chapter 3: Employment Taxes & Core Benefit Concepts

3.1 Federal Employment Taxes: FICA, FUTA & Federal Income Tax 3.2 Section 125 Cafeteria Plans, FSA & HSA Mechanics 3.3 Third-Party Sick Pay, Disability & Professional Payroll Ethics 3.4 Benefit Law Compliance: ACA, COBRA, HIPAA, FMLA, ERISA & Workers' Compensation

4 Chapter 4: Withholding Forms, I-9 Verification & Information Returns

4.1 Form W-4 Withholding Certificates & Lock-In Letters 4.2 Form I-9 Employment Eligibility, E-Verify & Nonresident Aliens 4.3 Form W-2, W-3 & 1099 Year-End Information Reporting

5 Chapter 5: Payroll Tax Returns, Deposit Schedules & Multi-State Compliance

5.1 Federal Payroll Tax Returns: Forms 941, 944, 940 & Schedule B 5.2 Federal Tax Deposit (FTD) Schedules, Lookback Periods & EFTPS 5.3 Multi-State Taxation, Nexus & SUI Localization 5.4 New Hire Reporting, Common Paymaster, Pay Agents & Multiple Worksite Reporting

6 Chapter 6: Recordkeeping, Escheatment & Statutory Penalties

6.1 Payroll Recordkeeping Requirements & Retention Schedules 6.2 Escheatment Laws & Unclaimed Property Compliance 6.3 Information Return Penalties & IRC § 6672 Trust Fund Recovery Penalty

7 Chapter 7: Global Payroll, Nonresident Aliens & International Compliance

7.1 Resident vs. Nonresident Alien Status, Visas & Treaty Withholding 7.2 Expatriate Payroll: Tax Equalization, Hypothetical Tax, Shadow Payroll & Currency 7.3 Totalization Agreements, GDPR & Global Payroll Governance

8 Chapter 8: Regular Rate of Pay & FLSA Overtime Calculations

8.1 Regular Rate of Pay Determination & Statutory Exclusions 8.2 Weighted-Average Overtime for Multiple Pay Rates 8.3 Special FLSA Overtime Methods: Fluctuating Workweek & 8/80 Rule 8.4 Tipped Employees: Tip Credit, Tip Pooling, Overtime & Form 8027

9 Chapter 9: Supplemental Wages, Fringe Benefits & Vehicle Valuation

9.1 Supplemental Wage Withholding: Flat vs. Aggregate Methods 9.2 Employer-Provided Vehicles & Fringe Benefit Valuation 9.3 Group-Term Life Insurance & Section 79 Imputed Income

10 Chapter 10: Involuntary Deductions & Garnishment Administration

10.1 Child Support Withholding & CCPA Maximum Limits 10.2 Federal Tax Levies & Form 668-W Calculations 10.3 Creditor Garnishments, Student Loans & Order Priority

11 Chapter 11: Pre/Post-Tax Deductions, Gross-Up & Special Payments

11.1 Voluntary Deductions: Pre-Tax vs. Post-Tax Ordering & Limits 11.2 Gross-Up Calculations for Net Pay Guarantees 11.3 Final Pay, PTO Payouts & Deceased Employee Wage Processing

12 Chapter 12: Master File Architecture, Processing Controls & Timekeeping

12.1 Employee Master File Setup, Maintenance & Data Integrity 12.2 End-to-End Payroll Processing Cycle & Pre/Post Controls 12.3 Time and Attendance Systems, Rounding & Exception Management

13 Chapter 13: ACH Direct Deposit, Software Migration & Systems Security

13.1 Direct Deposit Operations: ACH Files, Returns & Reversals 13.2 Payroll System Selection, Implementation & Data Migration 13.3 Business Continuity Planning & Disaster Recovery

14 Chapter 14: Policies, Procedures, Department Design & Management

14.1 Standard Operating Procedures (SOPs), Policies & Compliance Governance 14.2 Payroll Department Structure, Staffing & Capacity Planning 14.3 Change Management, M&A Harmonization & Employee Communication

15 Chapter 15: Customer Service, Cross-Functional Alignment & Vendor Governance

15.1 Payroll Customer Service Delivery, SLAs & Inquiry Resolution 15.2 Cross-Functional Alignment: HR, Benefits, Finance & IT 15.3 Third-Party Vendor Management & Payroll KPI Benchmarking

16 Chapter 16: Internal Controls, Fraud Detection & Operational Audits

16.1 Internal Control Frameworks, Segregation of Duties & Governance 16.2 Payroll Fraud Schemes, Detection Techniques & Forensic Auditing

17 Chapter 17: Regulatory Audits, SOX 404 & SOC 1 Reports

17.1 Regulatory Audits: IRS, DOL, State Agencies & Penalty Defense 17.2 SOX 404 Internal Controls & SOC 1 Type II Report Governance

18 Chapter 18: Payroll Accounting Basics, Journal Entries & Accruals

18.1 Double-Entry Payroll Accounting: Gross Wages, Deductions & Taxes 18.2 Employer Payroll Tax Liabilities, FUTA/SUTA & Benefit Costs 18.3 Month-End Wage Accruals & ASC 710 Vacation/PTO Accounting

19 Chapter 19: Reconciliations, Clearing Accounts & Variance Resolution

19.1 Payroll Clearing Accounts, Zero-Balance Accounts & Bank Tie-Outs 19.2 General Ledger to Form 941/W-2 Reconciliations & Variances

8.1 Regular Rate of Pay Determination & Statutory Exclusions

Key Takeaways Explain This Topic AI

Under FLSA Section 7(a)(1), non-exempt employees must receive overtime compensation at not less than 1.5 times their regular rate of pay for all hours worked exceeding 40 in a single designated workweek.

The regular rate of pay is an hourly rate determined by dividing total remuneration for employment in any workweek (less statutory exclusions) by total hours actually worked in that workweek.

Mandatory inclusions in the regular rate include base wages, shift differentials, non-discretionary bonuses (production, quality, attendance, safety, retention), hazard pay, and retroactive wage adjustments.

FLSA Section 7(e) provides exactly eight statutory exclusions from the regular rate, including gifts, true discretionary bonuses, PTO/vacation/sick pay, accountable expense reimbursements, and benefit contributions.

Only premium overtime payments meeting Sections 7(e)(5), 7(e)(6), or 7(e)(7) may be credited against statutory FLSA overtime liabilities under Section 7(h); non-qualifying premiums cannot offset overtime obligations.

Last updated: August 2026

Regular Rate of Pay Determination & Statutory Exclusions

The Fair Labor Standards Act ( FLSA ), codified at 29 U.S.C. § 201 et seq. and interpreted under 29 CFR Part 778 , establishes federal minimum wage and overtime standards for covered, non-exempt employees. Section 7(a)(1) mandates that no employer shall employ any non-exempt employee for a workweek longer than 40 hours unless such employee receives compensation for employment in excess of 40 hours at a rate not less than one and one-half times (1.5 ×) the regular rate at which they are employed .

A common payroll error is assuming that the regular rate of pay ( RROP ) is simply an employee's base hourly wage. Under federal law, the regular rate is a comprehensive statutory calculation encompassing all remuneration for employment paid to, or on behalf of, the employee, subject only to eight specific statutory exclusions enumerated in FLSA Section 7(e).

  • 1. The Workweek Principle & Core RROP Formula
  • The Workweek as the Fundamental Accounting Unit

Under 29 CFR § 778.104, the FLSA applies on a workweek basis . A workweek is defined as a fixed, regularly recurring period of 168 consecutive hours —seven consecutive 24-hour periods. It may begin on any day of the week and at any hour of the day, but once established, it remains fixed unless an intentional, permanent business change is implemented.

Important

Prohibition Against Averaging Workweeks: Each workweek stands alone. An employer cannot average hours over two or more weeks to avoid overtime liability. For example, if a non-exempt employee works 50 hours in Week 1 and 30 hours in Week 2 of a biweekly pay period, the employer must pay 10 hours of overtime in Week 1, even though the biweekly total is 80 hours.

The Mathematical Formula for Regular Rate

Under 29 CFR § 778.109, the regular rate is an hourly rate calculated by dividing total remuneration for employment in the workweek (less statutory exclusions) by the total number of hours actually worked during that specific workweek: Regular Rate of Pay (RROP) = Total Remuneration for Employment − Statutory Section 7(e) Exclusions Total Hours Actually Worked in the Workweek \text{Regular Rate of Pay (RROP)} = \frac{\text{Total Remuneration for Employment} - \text{Statutory Section 7(e) Exclusions}}{\text{Total Hours Actually Worked in the Workweek}} Regular Rate of Pay (RROP) = Total Hours Actually Worked in the Workweek Total Remuneration for Employment − Statutory Section 7(e) Exclusions ​

Once the regular rate is established, overtime gross pay can be computed using either of two mathematically identical approaches: Method A (Overtime Premium Method): Total Gross Pay = Total Straight-Time Earnings + ( Overtime Hours × RROP × 0.5 ) \text{Method A (Overtime Premium Method):} \quad \text{Total Gross Pay} = \text{Total Straight-Time Earnings} + (\text{Overtime Hours} \times \text{RROP} \times 0.5) Method A (Overtime Premium Method): Total Gross Pay = Total Straight-Time Earnings + ( Overtime Hours × RROP × 0.5 ) Method B (Standard 1.5x Method): Total Gross Pay = ( 40 × RROP ) + ( Overtime Hours × RROP × 1.5 ) \text{Method B (Standard 1.5x Method):} \quad \text{Total Gross Pay} = (40 \times \text{RROP}) + (\text{Overtime Hours} \times \text{RROP} \times 1.5) Method B (Standard 1.5x Method): Total Gross Pay = ( 40 × RROP ) + ( Overtime Hours × RROP × 1.5 ) +-----------------------------------------------------------------------------+

  • | FLSA REGULAR RATE DETERMINATION ENGINE |
  • | |
  • | [TOTAL REMUNERATION IN WORKWEEK] |
  • | + Base Wages (Hourly, Salary, Piecework, Commissions) |
  • | + Shift Differentials & Night Premiums |
  • | + Non-Discretionary Bonuses (Production, Quality, Attendance, Retention) |
  • | + Hazard Pay & On-Call Working Compensation |
  • | + Fair Market Value of Non-Cash Goods / Employer Lodging (Sec 3(m)) |
  • | |
  • | MINUS (-) |
  • | |
  • | [SECTION 7(e) STATUTORY EXCLUSIONS] (Exactly 8 Categories) |
  • | - Sec 7(e)(1): Gifts & Holiday Bonuses (Not tied to hours/production) |
  • | - Sec 7(e)(2): Paid Time Off (Vacation, Sick, Holiday Pay) & Expenses |
  • | - Sec 7(e)(3): Bona Fide Discretionary Bonuses & Profit Sharing Plans |
  • | - Sec 7(e)(4): Irrevocable Employer Benefit Plan Contributions |
  • | - Sec 7(e)(5): Daily / Weekly Overtime Premiums |
  • | - Sec 7(e)(6): Weekend / Holiday Premium Pay (>= 1.5x) |
  • | - Sec 7(e)(7): Agreement-Based Out-of-Hours Premiums (>= 1.5x) |
  • | - Sec 7(e)(8): Qualified Stock Options & Stock Appreciation Rights |
  • | |
  • | DIVIDED BY (/) |
  • | |
  • | [TOTAL HOURS ACTUALLY WORKED] (Excluding Unworked PTO / Sick / Holiday) |
  • | |
  • | EQUALS (=) |
  • | |
  • | [REGULAR RATE OF PAY (RROP)] ===> Overtime Paid at 1.5x RROP (or +0.5x) |
  • +-----------------------------------------------------------------------------+
  • 2. Mandatory Remuneration Inclusions in the Regular Rate

Under FLSA Section 7(e), there is a legal presumption that all payments made to or on behalf of an employee constitute remuneration for employment unless explicitly excluded by statute. The following wage elements must always be added to straight-time wages before determining the regular rate:

  • Remuneration Category Description & Legal Context Regulatory Reference
  • Base Earnings Hourly wages, piecework earnings, day rates, commissions, and base salaries. 29 CFR § 778.110

Shift Differentials Extra compensation for working undesirable shifts (e.g., night shift, graveyard, second shift, weekend differential). 29 CFR § 778.207(b)

Non-Discretionary Bonuses Bonuses promised or announced in advance to incentivize attendance, output, safety, quality, longevity, or retention. 29 CFR § 778.208

Hazardous Duty Pay Premiums paid for dangerous operating conditions (e.g., high altitude, chemical exposure, confined spaces). 29 CFR § 778.207

Retroactive Pay Increases Wage increases awarded retroactively; must be allocated back to the pay periods in which work was performed. 29 CFR § 778.303

On-Call / Standby Pay Compensation paid for on-call hours where employee movements are substantially restricted, or working on-call pay. 29 CFR § 778.223

Section 3(m) Board & Lodging Reasonable cost or Fair Market Value (FMV) of employer-provided meals, board, lodging, or facilities for employee benefit. 29 CFR Part 531

3. The Eight Statutory Exclusions Under FLSA Section 7(e)

Congress established an exhaustive list of eight statutory exclusions under 29 U.S.C. § 207(e). Any payment that does not meet the strict criteria of one of these eight exclusions must be included in the regular rate: +-----------------------------------------------------------------------------+

  • | THE EIGHT STATUTORY EXCLUSIONS MATRIX |
  • | |
  • | 1. Sec 7(e)(1) ---> Gifts & Holiday Bonuses (Unconnected to productivity) |
  • | 2. Sec 7(e)(2) ---> Paid Leave (PTO/Sick), Expense Reimb., Reporting Pay |
  • | 3. Sec 7(e)(3) ---> Discretionary Bonuses, Talent Fees, Profit Sharing |
  • | 4. Sec 7(e)(4) ---> Irrevocable Employer Benefit Contributions (401k/HCP) |
  • | 5. Sec 7(e)(5) ---> Excess Daily or Weekly Overtime Premiums |
  • | 6. Sec 7(e)(6) ---> Weekend & Holiday Rest-Day Premium Pay (>= 1.5x) |
  • | 7. Sec 7(e)(7) ---> Contractual Out-of-Hours Shift Premiums (>= 1.5x) |
  • | 8. Sec 7(e)(8) ---> Qualified Stock Option & Stock Appreciation Value |
  • +-----------------------------------------------------------------------------+
  • 1. Section 7(e)(1): Gifts and Special Occasion Bonuses

Sums paid as gifts, payments in the nature of gifts made at Christmas, holidays, birthdays, or other special occasions are excludable, provided the amounts are not measured by or dependent on hours worked, production, or efficiency .

Permissible Example: An employer gives every employee a $100 turkey voucher or a $250 Christmas bonus regardless of individual productivity or hours worked.

Impermissible Exception: A "holiday bonus" that pays $10 for every overtime hour worked during the fourth quarter is a non-discretionary production bonus and must be included in the regular rate.

2. Section 7(e)(2): Payments for Non-Working Time, Expense Reimbursements & Incidental Payments

This section excludes payments that do not represent compensation for hours worked:

Non-Working Paid Leave: Paid Time Off ( PTO ), vacation pay, holiday pay (for unworked holidays), sick pay, bereavement leave, and jury duty pay. Hours paid but not worked are excluded from total hours worked , and the dollars paid are excluded from total remuneration .

Accountable Business Expense Reimbursements: Reimbursements for actual or reasonably estimated travel, lodging, tools, supplies, cell phone usage, or mileage incurred solely on the employer's behalf under an accountable plan (per IRC § 62).

Reporting / Call-In Pay for Unworked Time: Guaranteed payments when an employee is sent home early due to lack of work (e.g., guaranteed 4 hours of pay, but works only 1 hour; the 3 unworked hours are excluded from RROP).

3. Section 7(e)(3): Discretionary Bonuses, Talent Fees, and Profit-Sharing Plans

To qualify as a discretionary bonus under Section 7(e)(3)(a), both statutory criteria must be satisfied :

The employer retains sole discretion until at or near the end of the period as to whether the bonus will be paid and the amount to be paid; and

The payment is not made pursuant to any prior contract, agreement, policy, or promise that would cause the employee to expect such payments regularly. +-----------------------------------------------------------------------------+

  • | DISCRETIONARY VS. NON-DISCRETIONARY BONUS COMPARISON |
  • | |
  • | CRITERIA DISCRETIONARY BONUS NON-DISCRETIONARY BONUS |
  • | -------------------- ----------------------- ----------------------- |
  • | Statutory Authority FLSA § 7(e)(3)(a) 29 CFR § 778.208 |
  • | Advance Announcement NO (Spontaneous) YES (Announced in advance)|
  • | Employer Discretion Retained until payout Relinquished by formula |
  • | Incentive Formula None (Subjective) Hours, output, safety, att|
  • | Regular Rate Impact EXCLUDED from RROP INCLUDED in RROP |
  • | Overtime True-Up Due NO True-Up Required YES True-Up Recalculation |
  • +-----------------------------------------------------------------------------+
  • 4. Section 7(e)(4): Irrevocable Employer Benefit Plan Contributions

Irrevocable contributions made by an employer to a trustee or third party pursuant to a bona fide plan providing old-age, retirement, life, accident, disability, or health insurance benefits (e.g., employer 401(k) matching contributions, healthcare premiums).

5. Section 7(e)(5): Premium Pay for Excess Daily or Weekly Hours

Extra compensation paid at a premium rate for hours worked in excess of 8 in a day, 40 in a workweek, or in excess of the employee's normal or regular working schedule.

6. Section 7(e)(6): Premium Pay for Weekend, Holiday, and Rest-Day Work

Extra compensation paid at a premium rate of at least 1.5 × the bona fide rate established in good faith for work performed on Saturdays, Sundays, holidays, or the employee's regular day of rest.

7. Section 7(e)(7): Contractual Out-of-Hours Premiums

Extra compensation paid under a collective bargaining agreement or employment contract for work performed outside the basic, normal, or regular workday (not exceeding 8 hours) or regular workweek (not exceeding 40 hours), provided the premium rate is at least 1.5 × the established regular rate.

8. Section 7(e)(8): Value of Qualified Stock Options and Equity Plans

Income derived from grants, rights, or exercises under qualified stock option plans, stock appreciation rights (SARs), or employee stock purchase plans meeting the standards of the Worker Economic Opportunity Act.

4. FLSA Section 7(h) Overtime Crediting Rules

A critical concept for payroll practitioners is determining which premium payments may be credited against the employer's statutory overtime liability.

Caution

The Strict Crediting Rule of Section 7(h): Under FLSA Section 7(h)(2), ONLY extra compensation paid under Sections 7(e)(5), 7(e)(6), and 7(e)(7) may be credited toward statutory overtime pay required by Section 7(a). Non-statutory premiums—such as shift differentials, hazard pay, and attendance bonuses— cannot be credited and must be added into straight-time pay to raise the regular rate!

  • Premium Category Excluded from RROP? Creditable Against Overtime? Rationale
  • Daily Overtime Premium (>8 hrs/day) YES (§ 7(e)(5)) YES (§ 7(h)) Statutory overtime premium
  • Sunday Premium (≥ 1.5 × base rate) YES (§ 7(e)(6)) YES (§ 7(h)) Rest-day premium ≥ 1.5 ×
  • Night Shift Differential ($2.00/hr) NO (Included) NO (Cannot credit) Shift inconvenience pay
  • Hazard Pay ($3.00/hr) NO (Included) NO (Cannot credit) Working condition premium
  • Non-Discretionary Attendance Bonus NO (Included) NO (Cannot credit) Productivity incentive
  • 5. Comprehensive Computational Examples
  • Scenario 1: Hourly Employee with Shift Differential, Attendance Bonus, and Unworked Holiday Pay

Employee Profile:

  • Base Hourly Wage: $20.00/hour
  • Second Shift Differential: $2.00/hour (applies to all hours worked)
  • Hours Worked: 48 hours (all worked on second shift)
  • Non-Discretionary Attendance Bonus: $100.00

Holiday Pay (Unworked Monday): 8 hours × $20.00 = $160.00 +-----------------------------------------------------------------------------+

  • | SCENARIO 1: STEP-BY-STEP RROP COMPUTATION |
  • | |
  • | Step 1: Identify Includable Remuneration for Hours Worked |
  • | - Base Hourly Pay: 48 hrs x $20.00/hr = $960.00 |
  • | - Shift Differential: 48 hrs x $2.00/hr = $96.00 |
  • | - Attendance Bonus: Non-discretionary = $100.00 |
  • | ------------------------------------------------------- |
  • | Total Includable Remuneration: $1,156.00 |
  • | |
  • | Step 2: Identify Statutory Exclusions |
  • | - Holiday Pay (8 unworked hrs): $160.00 (Excluded under § 7(e)(2))|
  • | |
  • | Step 3: Determine Total Hours Actually Worked |
  • | - Actual Worked Hours: 48.0 hours (Holiday hrs do not count) |
  • | |
  • | Step 4: Calculate Regular Rate of Pay (RROP) |
  • | - RROP = $1,156.00 / 48 hrs = $24.0833/hr |
  • | |
  • | Step 5: Calculate Overtime Premium Due |
  • | - Overtime Hours = 48 - 40 = 8 hours |
  • | - OT Premium = 8 hrs x ($24.0833 x 0.5) = 8 x $12.04167 = $96.33 |
  • | |
  • | Step 6: Compute Total Gross Wages |
  • | - Straight-Time Worked Earnings: $1,156.00 |
  • | - Overtime Premium: $96.33 |
  • | - Unworked Holiday Pay: $160.00 |
  • | ------------------------------------------- |
  • | TOTAL GROSS PAY: $1,412.33 |

+-----------------------------------------------------------------------------+ Total Straight Time = ( 48 × $ 20.00 ) + ( 48 × $ 2.00 ) + $ 100.00 = $ 960.00 + $ 96.00 + $ 100.00 = $ 1 , 156.00 \text{Total Straight Time} = (48 \times \$20.00) + (48 \times \$2.00) + \$100.00 = \$960.00 + \$96.00 + \$100.00 = \$1,156.00 Total Straight Time = ( 48 × $20.00 ) + ( 48 × $2.00 ) + $100.00 = $960.00 + $96.00 + $100.00 = $1 , 156.00 RROP = $ 1 , 156.00 48 hours = $ 24.0833 / hour \text{RROP} = \frac{\$1,156.00}{48 \text{ hours}} = \$24.0833/\text{hour} RROP = 48 hours $1 , 156.00 ​ = $24.0833/ hour Overtime Premium = 8 hours × ( $ 24.0833 × 0.5 ) = $ 96.33 \text{Overtime Premium} = 8 \text{ hours} \times (\$24.0833 \times 0.5) = \$96.33 Overtime Premium = 8 hours × ( $24.0833 × 0.5 ) = $96.33 Total Gross Pay = $ 1 , 156.00 + $ 96.33 + $ 160.00 = $ 1 , 412.33 \text{Total Gross Pay} = \$1,156.00 + \$96.33 + \$160.00 = \$1,412.33 Total Gross Pay = $1 , 156.00 + $96.33 + $160.00 = $1 , 412.33

Scenario 2: Discretionary vs. Non-Discretionary Bonus Impact

An employee works 50 hours in a workweek at a base rate of $25.00/hour and receives a $500.00 bonus. +-----------------------------------------------------------------------------+

  • | BONUS CLASSIFICATION FINANCIAL COMPARISON (50 HOURS) |
  • | |
  • | Component Case A: Non-Discretionary Case B: Discretionary|
  • | ------------------------ ------------------------- -------------------- |
  • | Base Wages (50 x $25) $1,250.00 $1,250.00 |
  • | Bonus Amount $500.00 $500.00 |
  • | Includable Compensation $1,750.00 $1,250.00 |
  • | Hours Actually Worked 50 hrs 50 hrs |
  • | Regular Rate of Pay (RROP) $35.00/hr $25.00/hr |
  • | Overtime Premium (10 hrs x 0.5) $175.00 $125.00 |
  • | ------------------------ ------------------------- -------------------- |
  • | TOTAL GROSS PAY $1,925.00 $1,875.00 |
  • | Payroll Compliance Variance: +$50.00 (Failure to include = Penalty)|
  • +-----------------------------------------------------------------------------+

In Case A, misclassifying the $500.00 production bonus as discretionary results in a $50.00 wage underpayment and statutory wage-and-hour liability under FLSA Section 16(b).