What is the difference between a discretionary bonus and a nondiscretionary bonus?

Author: Jessica Sussman

Bonuses that are awarded at the sole discretion of the employer are considered discretionary and can be excluded from the regular rate of pay when calculating overtime. A discretionary bonus is determined by the employer without any prior promise or agreement. The employee has no contract right, express or implied, to a discretionary bonus. If an employer promises in advance to pay a bonus, it is no longer discretionary.