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Entitled to Bonus after termination/quit?

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bbtandme

Junior Member
What is the name of your state? Illinois

This is a two part question. If I am terminated before the years end, am I still entitled to the bonus the I have accrued over the past year, both team and individual? The bonus' stack from quarter to quarter along with a total year end. There is no indication within my hiring letter or within the written bonus plan that states I still need to be an employee when the bonus is paid. Secondly, am I entitled to the bonus if I quit? Thank you.
 


Beth3

Senior Member
A two part-question with a one-part answer: Whether or not you are eligible to receive a bonus if you leave, whether it's voluntary or involuntary, depends entirely upon the particulars of your employer's bonus plan and obviously no one here has any idea what those are. This is not a legal issue - it's a company policy issue.
 

bbtandme

Junior Member
So if it's not stated in any company policy and the terms are not defined, then I should be entitled? If I'm denied, then it would become a legal issue if they cannot prove their side in writing...correct?
 

Beth3

Senior Member
So if it's not stated in any company policy and the terms are not defined, then I should be entitled? No. Sorry but it doesn't work that way. Company policy is little more than managment's decisions put down on a piece of paper for everyone's convenience - primarily their own. It's not "binding" and they may change their policies any time they like. So even IF they have the bonus policy written down, they can change it any time they want to. Same goes if it's not written down.

If their policy or practice doesn't address whether the bonus will be paid to someone who quits or is fired, that can't be interpreted to mean you're entitled to it because it doesn't say otherwise. It can also be interpreted to mean you aren't entitled to it because it doesn't say you are.

Unless an employer's policy or handbook is very poorly written, it doesn't constitute a contractual agreement anyway.

If I'm denied, then it would become a legal issue if they cannot prove their side in writing...correct? No. See above.
 

Beth3

Senior Member
While there are an unlimited number of variations possible when an employer structures a cash bonus plan, all those I've seen state an individual must be employed at the time the bonuses are distributed in order to be eligible. Since bonus programs are a retention and reward tool, there's no incentive for an employer to pay a discretionary bonus to someone who's already left their employment.
 

bbtandme

Junior Member
True...I was looking at it mostly from the contributions made the previous year stand point, when I was employed and therefore entitled to what the reward was. I was actually under the assumption that if I worked out the year, that qualified me for the 2004 bonus. That may not be the case though, so good thing I asked the question. Thanks.
 

pattytx

Senior Member
Beth, what about nondiscretionary bonuses earned but not yet paid at time of termination? Aren't there some states that consider that vested wages?

Example: I used to work for a mid-level software vendor as a "consultant", although I was a company employee. Our compensation package stated that we would receive X dollars additional compensation for every client-billable hour worked. The additional compensation was normally paid on the second semi-monthly paycheck of the following month. Illinois DOL told me they considered that vested wages that had to be paid out with final wages (or as soon as the amount could be calculated). It took them 2 months to pay me after I wouldn't let it drop.
 

cbg

I'm a Northern Girl
It is true that in some states some non-discretionary bonuses (particularly if they can be defined as deferred comp) have to be paid even after termination. I've had that happen too. But I don't think Beth is saying that it's definitely not payable; just that (a) we don't know enough to say if it is or not and (b) the fact that the terms are undefined does not automatically make it payable, which is what the poster was hoping for.
 

Beth3

Senior Member
patty, it also depends what type of bonus plan it is - an ERISA qualified plan or an informal plan driven by company policy (as many it not most are.) We don't have anywhere near enough info to determine what type of plan the OP has and I suspect even he doesn't know.

I can only comment that in most instances, cash bonus plans are simply a company policy issue and in many cases, the employee must be employed at the time bonuses are distributed to be eligible.
 

psbjr

Junior Member
New Jersey

I am due a deferred defined pension from a company I left in 1995. I can't collect on this until 2016 (age 65). This company recently changed over to a lump sum pension plan for its active employees. This, of course, reduces their pension benefits but would be much better for me. The option to switch was not offered to me.

Is it legal for the company to treat active and previous employees differently?
 

Beth3

Senior Member
Yes.

Next time you post with a question, please start your own thread and don't piggyback on someone else's. It can make it quite confusing.
 

pattytx

Senior Member
Suz, the person I spoke with at the Illinois DOL told me that, in my case, they did have to pay it. Maybe it was just the details of my situation, or maybe the person was wrong. :eek:
 

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