Executives, salespeople and even engineers may have bonuses available to them if they meet certain employer standards. Well-compensated professionals often consider bonus structures when deciding what positions they accept.
In some cases, employers may refuse to pay bonuses even when it is clear that a worker meets the standards for the bonus at issue. Do businesses have the right to withhold promised bonuses?
What type of bonus did the company offer?
To determine if withholding a bonus is a wage violation, workers must first classify the bonus. Bonuses are generally either discretionary or nondiscretionary.
Discretionary bonuses may include holiday and end-of-year bonuses offered to share the company’s good fortune with workers. While such bonuses may be an annual tradition, they are the result of managerial goodwill and not contractual obligations. The company can withhold those bonuses as necessary or desired.
Nondiscretionary bonuses are another matter. Nondiscretionary bonuses are part of a worker’s pay, which means that the company cannot deny its employees payment of bonuses for which they qualify.
Non-discretionary bonuses are often part of an employment contract. Occasionally, they may be part of a company-wide incentive program aimed at retaining workers or promoting better productivity. If the basis for the bonus is an employment contract or a company-wide program, employers may not have the option of denying bonuses to workers who have qualified for them.
Maintaining documentation about a bonus program and if/how worker qualified for the bonus can help those who did not receive bonuses pursue the pay they deserve. A wage and hour lawsuit may potentially be necessary to compel a company to uphold its promise to pay bonuses in qualifying circumstances.