Q. "What's the difference between a discretionary and non-discretionary bonus?"
Answer:
A discretionary bonus is a bonus in which the employer has discretion as to whether to pay it and what amount it will be (i.e., a holiday bonus). There’s no promise or agreement it will be paid.
A non-discretionary bonus is a promised bonus the employee expects to receive if certain conditions are met. These include bonuses for quality and accuracy of work, retention bonuses, and attendance bonuses. They are typically used to motivate employees.
Remember: a non-discretionary bonus issued to a non-exempt employee must be included in the employee's regular rate of pay when calculating overtime.