Bonus Payout

[tkilburn]

What is the name of your state? IN

Hi,

I have a question. The company I work for pays bonuses in Feb/Mar for the previous year's company financial performance.

It also deposits a profit share amount into the 401(k) accounts based on the same year.

In our handbook, the profit share and bonus information is in the same section together. The profit share states that an employee must be actively employed on December 31 to receive it.

The bonus does not stipulate anything except an employee must have at least one year of service to recieve it.

We have an employee that terminated voluntarily in Jan of this year. He expects to be paid for both the profit share and the bonus. The company heads accepts the fact they owe him the profit share, but do not want to pay the bonus.

I foresee it becoming an issue if we don't pay him (e.g. him pursuing the matter further).

Can anyone offer their opinion in this matter as far as whether or not it is worth the fight of not paying the bonus? Any thoughts on if this were persued by the employee if we would have any obligation to pay it out? There is no past precedent in the company for a situation such as this to rely on for historical practice.

For the record, the revised handbook is coming out next week and has been updated to state you must be actively employed at the time bonuses are paid.

Thanks!

 

[fairisfair]

there is no law, to my knowledge that requires a company to pay bonuses. Your handbook is just that, it is not a law. If prior company policy has always been to pay the bonus to anyone who worked there until December 31st, regardless of their employment status at the time the bonuses are paid, well that might be evidence for the employee to present in litigation. But I seriously doubt that they would prevail. Just curious though, why does the company NOT want to pay this person if they worked the required hours, completed their job in a professional manner, and were still employed at year end??

 

[tkilburn]

Good Question

Just curious though, why does the company NOT want to pay this person if they worked the required hours, completed their job in a professional manner, and were still employed at year end??

It was discovered that the employee had been being seriously overpaid for several months. The employee never reported the error and subsequently turned in his notice right after the correction to his pay was made. It would be a bitter pill to swallow to then turn around and pay out a bonus to him.

So, I guess my question is this, if this employee were to TRY to pursue the matter with either an attorney or the DOL, would they likely receive the advice it wouldn't be worth the time or effort?

I just don't want to have to spend time and money on defending our position that could end up being more than just paying the bonus and being done with it.

Thanks for your insight!

 

[mlane58]

Indiana is not forth coming on it's laws so call the Inidiana DOL at (317) 232-2673 and ask them the question/s---better to hear it from them then end of screwing yourselves.

 

[longneck]

and update your policies to cover situations like this!

 

[tkilburn]

Thanks

and update your policies to cover situations like this!

What is the name of your state? IN

For the record, the revised handbook is coming out next week and has been updated to state you must be actively employed at the time bonuses are paid.

Thanks!

We have taken care of it