You count on your wages to help you cover the costs of maintaining your household. You probably already know that you have a right to take action if your employer does not pay your hourly wages. Fewer people realize that they also have rights when a company doesn’t pay certain kinds of bonuses.
People often think of a bonus as something separate from wages, but your right to a bonus depends on how the company offers it. Many bonuses have the same protection as your hourly wages or salary.
Bonuses are a common form of compensation for executives and managers
It is relatively common for companies to use additional pay or bonuses as a way to promote better performance by their staff. Managers, executives and even sales professionals may have the ability to earn bonuses in addition to their wages for exceptional work performance.
If your company offers performance-based bonuses and you recently qualified for one, your employer has an obligation to follow through with their promise to pay you a bonus. If they refuse to do so, you have the right to take action and demand your unpaid wages in the form of a non-discretionary bonus.
What is the difference between non-discretionary and discretionary bonuses?
Every state handles wage laws slightly differently, which means that understanding California’s approach to wages and bonuses specifically will help you understand your rights as a worker. In California, employers must fulfill their obligation to employees for all non-discretionary bonuses.
However, discretionary bonuses are optional, meaning the employer can choose not to pay them one year, even if they have always done so in the past. Discretionary bonuses are bonuses that the employer decides to offer its staff for any of a number of reasons. A holiday bonus or a quarterly bonus is an example of discretionary bonuses. There is no form of recourse if an employer does not pay a discretionary bonus.
If there are bonuses tied to work performance, such as meeting a certain sales or staffing goal, then your employer has an obligation to pay those non-discretionary bonuses as described in your employment contract or in communications between the company and its staff.
Unpaid bonuses could impact your finances
Most workers expect that their employer will quickly and completely follow through with their obligation to pay for work performed. If there are terms in your employment agreement that explain a non-discretionary bonus structure and you have met the requirements for that bonus, you may have adjusted your spending accordingly.
Not getting the bonus as promised could lead to financial hardship in the immediate future. If your employer refuses to make things right, you may need to bring a wage claim against the company.