---
kind: "section"
citation: "29 C.F.R. § 778.503"
title: "29"
number: "778.503"
heading: "Pseudo “percentage bonuses.”"
url: "https://uscodex.org/cfr/29/778.503"
---

# §778.503. Pseudo “percentage bonuses.”


As explained in [§ 778.210](/cfr/29/778.210.md) of this part, a true bonus based on a percentage of total wages—both straight time and overtime wages—satisfies the Act's overtime requirements, if it is paid unconditionally. Such a bonus increases both straight time and overtime wages by the same percentage, and thereby includes proper overtime compensation as an arithmetic fact. Some bonuses, however, although expressed as a percentage of both straight time and overtime wages, are in fact a sham. Such bonuses, like the bonuses described in [§ 778.502](/cfr/29/778.502.md) of this part, are generally separated out of a fixed weekly wage and usually decrease in amount in direct proportion to increases in the number of hours worked in a week in excess of 40. The hourly rate purportedly paid under such a scheme is artificially low, and the difference between the wages paid at the hourly rate and the fixed weekly compensation is labeled a percentage of wage “bonus.”


## Notes

### Amendments

[46 FR 7319, Jan. 23, 1981]

### Authority

Authority: 52 Stat. 1060, as amended; 29 U.S.C. 201 et seq. Section 778.200 also issued under Pub. L. 106-202, 114 Stat. 308 (29 U.S.C. 207(e) and (h)).

### Source

Source: 33 FR 986, Jan. 26, 1968, unless otherwise noted.

### Amendments

[46 FR 7319, Jan. 23, 1981]