Overtime on overtime: calculating bonuses under compensation plan

A small difference in wages led to a massively complex opinion about how to calculate overtime compensation into a nondiscretionary bonus, whether to apply state or federal law in the calculation, and whether overtime compensation was being double counted.

Folding overtime premiums into nondiscretionary bonus calculations

Stephen Lemm worked for Ecolab, Inc., for several years before becoming a route sales manager for the company beginning April 5, 2018. Ecolab provides sanitation and pest control services and supplies, commercial kitchen equipment and appliance maintenance, and food safety services.

As a route sales manager, Lemm was Ecolab’s primary contact with certain customers. He visited them regularly to install, repair, and maintain Ecolab equipment, provide ongoing training and customer service, and sell Ecolab products and parts.

Route sales managers are nonexempt employees who are entitled to overtime compensation. Lemm regularly worked more than 12 hours a day and more than 40 hours a week in 2018 and 2019. His compensation was calculated under an annual incentive compensation plan. According to the plan, his compensation was comprised of hourly wages and a nondiscretionary monthly bonus. The method of calculating the nondiscretionary bonus is at the heart of this case.