"Bonus" inclusive of Final Pay

What is the name of your state? MA

If a comp plan is in place for an employee includes a variable component identified as a "bonus" based upon a fixed formula (performance over a fiscal quarter) and the criteria for earning this payment has been satisfied on or before the termination date, does this amount need to be included in the final payment and do the penalties for delayed payment still apply?

John

Assuming that you are referring to a deferred comp plan, then I am going to offer a tentative yes to both questions. However, the exact terms of the agreement can either strengthen my response to a definite yes, or reverse it to a no. You will need to show the comp agreement to an attorney for a definite answer either way.

A little more info...

We have a bonus plan in place that explicitly calls for a quarterly payment to the participant based upon a calculation driven by the individual's number of utilized hours. It's not material what constitutes utilized, as that's not in dispute. However, the plan clearly states that bonus amount will be paid to the employee as long as they were an active employee for the duration of the fiscal quarter.

Their severance agreement is calling for acknowledgement of :

Receipt of final payments: You hereby acknowledge that, as of the Separation
Date, you will have received all wages (including any bonus amounts, if any) earned but unpaid
and all vacation time accrued but unused as of the Separation Date. To the extent you are
eligible, you may be receiving a check for any commission payments, to the extent earned but
unpaid, which will be calculated and paid in accordance with the Company’s commission pay
practices.

Click to expand...

So...

Q1: Would this amount be considered part of wages (since the commission plan is an entirely separate agreement/plan)

and;

Q2: What type of penalties/provisions exist in the MA regs that may apply here?

This is far too situation specific to be answered with any but the most general information on a message board. I can tell you that IN GENERAL the MA DOL requires an employer to stick to the letter of a deferred comp agreement, but we have not even established for certain that a deferred comp plan is what you have here.

Specifically what penalties would apply would depend on factors we cannot evaluate here. However, unless the law has changed radically since the last time I dealt with this issue, any penalties that may be due (and we don't know that ANY penalties will be due) will be paid to the state, not to you.

As I said above, show the agreement to a MA attorney.