['Wage and Hour']
['Overtime']
02/14/2024
...
There is no hard and fast rule on payments for suggestions. Generally, though, prizes paid pursuant to a bona fide suggestion plan may be excluded from the regular rate (and do not affect overtime) in situations where:
(1) The amount of the prize has no relation to the earnings of the employee at his job, but is instead geared to the value to the employer of the suggestion submitted, and
(2) The prize represents a bona fide award for a suggestion which is the result of additional effort or ingenuity unrelated to and outside the scope of the usual and customary duties of any employee of the class eligible to participate, and the prize is not used as a substitute for wages, and
(3) No employee is required or specifically urged to participate in the suggestion plan or led to believe that he will not merit promotion or advancement (or retention of his existing job) unless he submits suggestions, and
(4) The invitation to employees to submit suggestions is general in nature and no specific assignment is outlined to the employees, either as individuals or as a group, to work on or develop, and
(5) There is no time limit during which suggestions must be submitted, and
(6) The employer has, prior to the submission of the suggestion by an employee, no notice or knowledge that an employee is preparing a suggestion, and there are no circumstances indicating that the employer approved the task and the schedule of work undertaken by the employee.
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['Wage and Hour']
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