Is a Company Not Paying Promised Bonus?

Attorney advertisement by Edwin Aiwazian of Lawyers for Justice, PC, headquartered at 450 N Brand Blvd, Glendale, CA 91203

A bonus can be a large portion of a worker’s pay. They keep employees motivated throughout the year, and they can be cause for celebration at the end of the year when the bonus is paid.

But many employers avoid paying out the bonus come year-end. This can create a significant financial setback for a federal minimum wage employee, as they may receive less income than they anticipated.

An employer may claim that bonuses are discretionary and they have no legal obligation to include them in an employee’s wages. However, if the bonus was promised or consistently expected as part of compensation, withholding it could constitute wage theft under state or federal labor laws.

 

Company Not Paying Promised Bonus

The laws on bonus pay in California are clear. Non-discretionary bonuses must be paid out, and discretionary bonuses do not have to be paid out. Here’s the difference between discretionary and non discretionary bonuses in California.

 

Discretionary Bonuses

Discretionary bonuses are bonuses an employer can award at their sole authority. They are not tied to any contractual obligations or written agreements. These bonuses are often given as a gesture of goodwill, such as a holiday gift, or on special occasions. Just because an employee received a bonus last year, does not mean they will necessarily receive another the following year. It’s recommended for employers to clearly define discretionary bonuses to avoid a wage claim.

 

Non Discretionary Bonuses

Non discretionary bonuses are any bonuses calculated based on a metric. Usually, the terms of a non-discretionary bonus are outlined in an employment contract. The employer promises payment in exchange for employee performance, such as meeting sales goals or working a certain number of hours. Because they are considered part of earned wages, failure to pay a non-discretionary bonus may violate wage and hour laws. It’s important to note that non discretionary bonuses are also used in the calculation for overtime pay.

If an employer refuses to pay out a promised bonus, an employee should take legal action. It’s highly recommended for employees to get a consultation with an employment lawyer if they don’t receive the full bonus amount.

 

 

Can A Company Take Away A Bonus? – FAQ

Can a Company Take Back a Bonus if You Quit? It depends on the terms of the bonus agreement. If the bonus was conditional, such as requiring a worker to stay employed through a certain date, the company may be legally allowed to reclaim it or withhold payment if the employee resigns early. However, if the bonus was already earned or there were no clear conditions attached, an employer generally cannot take it back without violating wage laws. Employees should review their employment agreement or offer letter to understand their rights.

 

Can a Company Take Away a Bonus? Usually no; employers who attempt to take back or withhold an earned bonus may be in violation of wage and hour laws. Additionally, once a bonus is paid, it is usually improper for an employer to claw it back unless there was a clear and lawful agreement in place stating specific conditions under which the bonus could be revoked. If the bonus was withheld or taken back unfairly, there may be grounds to pursue legal action.

 

Are Clawbacks Legal in California? Clawbacks are legal in California, but only under specific conditions. A clawback refers to an employer reclaiming previously paid compensation. In California, employers generally cannot take back wages that have already been earned and paid. However, if a bonus was unearned, paid in error, or conditioned on specific terms the clawback may be enforceable. Clawbacks should be outlined in the employment contract.

For instance, if a bonus was awarded for meeting a sales target and a product return caused the employee to fall below the threshold, the employer may have grounds to recover the payment. If the clawback does not meet these legal standards, the employee should consult an experienced lawyer to evaluate the situation and pursue any compensation they may be owed.

 

Can I Sue My Employer for Not Paying My Bonus? Yes, employees may be able to sue their employer if they fail to pay bonuses that was contractually guaranteed, or earned based on measurable performance. Any employer that refuses to pay is in breach of contract, and is legally required to cover for unpaid bonuses.

 

In this case, it’s likely that an employee has the legal right to compensation. Lawyers for Justice, PC is a top employment law firm that specializes in helping victims of wage theft.

With a skilled team of employment attorneys, Lawyers for Justice, PC is dedicated to representing employees’ best interests and ensuring justice is served. To get started, call (818)-JUSTICE for a free case consultation!

Attorney advertisement by Edwin Aiwazian of Lawyers for Justice, PC, headquartered at 450 N Brand Blvd, Glendale, CA 91203