So my company just switched from paying bonuses every quarter to just once a year. Here’s my question… what happens if someone works part of the year but leaves before the annual bonus is paid out? Do they get a portion of the bonus based on time worked? HR says they’ll get nothing if they’re not still working for the company when the bonus payout actually happens… even if they worked all year up to that point. This feels wrong to me. The bonus is supposed to reflect the work done for the previous year, so it seems like they should owe it to people who already did the work, maybe with adjustments for time worked.
Another thing, we get paid once a month, with each paycheck covering the work we did the month before. Using HR’s logic, it sounds like if someone worked all of October but left the company before November’s payday, they wouldn’t get that check either. This can’t be legal, right? Can they actually hold back bonus pay like this?
I’ve asked HR for a copy of the policy, but they haven’t responded yet. By the way, I’m in Connecticut.
Usually, it’s common that companies only give the bonus if you’re still an employee on the payout date. It’s all legal as long as it’s a discretionary bonus.
In most cases, companies give bonuses to encourage people to stick around, so they set policies to keep people from leaving. Unless you have a formal contract saying otherwise, they can usually make these rules. Also, are you sure your company got approval from Connecticut’s labor commissioner to pay monthly? That’s actually not allowed in CT without specific permission.
@Fife
I don’t know if the company got approval for monthly pay. I’m salaried, if that makes any difference. And about the bonus… our bonuses feel like they’re part of our salary since it’s based on job level and comes with a set percentage of our base pay. Right now, I get 12.5% of my base, and the bonus amount can go up or down based on the company’s performance. There’s a formula for it. Seems like it should be non-discretionary.
@Madden
Discretionary just means the company has control over whether or not they pay it, regardless of the formula. From what you described, it does sound like they might have the final say if they consider it a discretionary bonus.
Also, if they’re paying you less than minimum wage (which is $16.35/hr in Connecticut), that bonus could technically stop being ‘discretionary’. But you’ll want to check out this link on how non-discretionary bonuses work for more info:
@Fife
Thanks for the link. By the way, based on that page, wouldn’t my bonus fit the description of a non-discretionary one? The example says that bonuses using a predetermined formula are non-discretionary, and ours definitely follow a set formula.
@Madden
If nothing’s written down, then they likely have a lot of flexibility. I think quarterly payouts do a better job of keeping employees, but that’s just me.