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Nondiscretionary bonus eligibility

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unbeknownst

Junior Member
What is the name of your state? IL

Hello,
Here are the facts of my situation:

1. Last year, my former employer last year received some business that required a tremendous amount of work be completed by a specific time. To motivate the staff, it provided a special bonus plan that compensated employees for specific tasks to be completed to meet the specifications of the contracted business. (i.e. the bonus specified we receive $X dollars for each unit of work completed).

2. The work was completed by employees and the company paid half of the bonus at that time and retained the remainder to be paid in early 2005. The bonus plan document specified nothing about needing to be employed by the firm to receive the 2nd half. The document does specify that the purpose of the bonus is to compensate us for specific tasks completed.

3. I understand that most bonus plans are considered discretionary and are therefore a matter of company policy. Most company policies specify workers must be employed by the firm at the time of payment to get a bonus. I also understand that some forms of bonuses are considered nondiscretionary when there is agreement between the employee/employer to complete specific tasks for specific sums of money. I am uncertain whether the legal treatment of these plans require payment by the employer even if the worker quits before the bonus is paid.

4. I did some research on the IL dept of labor site. There is a law called the IL Wage Payment and Collection Act. Title 56 Ch1b Part 300.500 states "A claim for an earned bonus arises when an employee performs the requirements for a bonus set forth in a contract or an agreement between the party". The nature of our work is professional level; normal pay is based on salary (not hourly). I am not sure whether the fact that the nature of the former job is not compensated based on an hourly rate excludes it from jurisdiction under the IL WP&CA.

I guess you can figure where this is going. I left the firm for another job. I think I am entitled to receive the 2nd half of the bonus because it is by definition a nondiscretionary bonus (and I completed the tasks specified under the agreement). I understand there is prior legal precedent supporting this position. Any thoughts on whether I am standing on any legal ground? Thanks for your help.
 


I am a Human Resources professional in IL with over 20+ years experience, and even I can't answer your question fully. Much depends on what the bonus agreement says.

My advice to you is for you to contact the DOL, perhaps fax them a copy of the bonus plan, or at least give them the particulars as you know them to be and let them direct you.

It doesn't cost you anything to file a wage claim, so you can most certainly give it a try.

With that said, I am going to tell you that you most likely are NOT entitled to the wages. Why? Glad you asked! :D

As you probably discovered in your research, the state of IL does not usually consider bonuses wages and they do not therefore have to be paid. Now, as you cited, there are instances in which the bonuses must be paid, but the definition is narrow. Although it appears your bonus is not completely discretionary, an issue comes into play which makes me question the discretion of the bonus. You indicate this bonus plan was put in place to serve the needs of only one customer...that makes me beleive it will be considered discretionary by the DOL. It would be different if you received the incentive for ALL work performed for ALL clients, but that does not seem to be the case here. Also, the DOL often uses the term "bonus" when referencing "commission." They don't distinguish the two in many cases. This was clearly not a commission situation.

Second, in most cases bonuses only have to paid to CURRENT employees, even if not addressed in the bonus plan. They are an incentive to continue good work...how can a former employee continue good work? I know you believe (and your employer probably even led you to believe) that a bonus is a reward for work already done, but that is rarely how the DOL sees it.

Obviously, in your case the devil is in the details. As I said, it doesn't cost you anything, so why not run it by the DOL and see what happens? What have you got to lose?

I'd be interested to hear what they have to say. Please let me know.
 

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