Paramedic Relocation, Sign-On and Retention Bonuses and the Regular Rate

Today’s FLSA Question: I have noticed several recruiting announcements lately where municipalities and private corporations are offering new paramedics sign-on, retention, and even relocation bonuses. These bonuses can be significant. In fact, one agency is offering a $10,000 sign-on bonus, a $10,000 retention bonus (after completing 2 years) and another $5,000 as a relocation bonus. Do these bonuses need to be included in a paramedic’s regular rate?

Answer: Good question. All bonuses must be included in a non-exempt employee’s regular rate, unless the bonus meets an exception found in either the FLSA or Department of Labor (DOL) regulations. Unfortunately, neither the FLSA nor the regulations contain a long laundry list of specific bonuses that can be excluded. In order to determine if a specific bonus can be excluded from an employee’s regular rate, there needs to be a careful examination of the specific facts and nature of the bonus. Generally speaking, only discretionary bonuses can be excluded from an employee’s regular rate. According to the DOL discretionary bonuses must meet the following requirements:

• The employer has the sole discretion, until at or near the end of the period that corresponds to the bonus, to determine whether to pay the bonus;
• The employer has the sole discretion, until at or near the end of the period that corresponds to the bonus, to determine the amount of the bonus; and
• The bonus payment is not made according to any prior contract, agreement, or promise causing an employee to expect such payments regularly.

Based on the facts you provided it does not appear that the organization offering a sign-on, retention, and relocation bonus for new paramedics is retaining any real discretion as required by the regulations. Additionally, DOL regulations found at 29 CFR §778.211(c) state: “any bonus which is promised to employees upon hiring … would not be excluded from the regular rate.” Here the sign-on and retention bonuses fit squarely within the requirements of §778.211(c) and must be included in the regular rate. However, whether a “relocation” bonus can be excluded from an employee’s regular rate requires a little more analysis.

In my opinion, the “relocation” bonus that you describe most likely cannot be excluded from the regular rate. It appears on its face that it is just another lump-sum bonus intended to incentivize paramedics to join the organization. The fact that the organization calls this particular bonus a “relocation bonus” does not change the nature of the bonus. Compare that to an offer to reimburse new employees the costs of relocating in totality or up to a certain amount, or if the new employer directly paid a third-party mover for the costs associated with relocating a new employee. These types of payments would be more in-line with an employer assisting a future employee with the financial burden of relocating for a new position as opposed to merely providing compensation.

Has your organization started providing financial incentives and bonuses for new hires? Do you have questions about what bonuses and incentives can be rightfully excluded from an employee’s regular rate? If you answered yes, please join us this Wednesday July 24, 2024 at 1PM (EST) for Advanced FLSA: Calculating the Regular Rate for Firefighters and other First Responders. Click here for more information.