Poll

You own a company and one of your employees earns an 8% bonus every six months, but it sometimes takes you 9-12 months to actually receive that money and pay the employee. When that employee quits, do you....

Pay the employee the outstanding bonus money as best can be estimated.
65 (67.7%)
Don't pay the employee the bonus money he has worked for but the company has not yet received.
31 (32.3%)

Total Members Voted: 95

Author Topic: Integrity question  (Read 7691 times)

Mr. Green

  • Handlebar Stache
  • *****
  • Posts: 1883
  • Age: 35
  • Location: Wilmington, NC
Integrity question
« on: January 20, 2016, 04:06:27 PM »
I think my employer and I are having a fundamental disagreement. I'm of the mind that I've done the work to earn the bonuses, and the company will be paid that money regardless of my employment status so I should be paid most, if not all, of it. The owner of my small company is leaning toward the notion that if I don't work here anymore he doesn't have to pay me. However, I see this as a conflict of interest because if he knows I'm leaving soon (relocating) he could drag his feet in invoicing for the bonus money, knowing that if I've left by that time he gets to keep it all. I'm wondering whose idea of integrity is skewed, mine or his?
« Last Edit: January 20, 2016, 04:14:42 PM by Mr. Green »

Enough

  • Stubble
  • **
  • Posts: 141
Re: Integrity question
« Reply #1 on: January 20, 2016, 04:17:27 PM »
I work in chemical processing / manufacturing.  At both [large] companies I've worked for, annual bonus' arent distributed until the begining of the second quarter of the following year (~april).  If you quit at any time, the bonus' are not pro-rated & paid for that year.  If you quit between january and march, you dont get your bonus for the prior year. 

earthshine

  • 5 O'Clock Shadow
  • *
  • Posts: 39
Re: Integrity question
« Reply #2 on: January 20, 2016, 04:20:15 PM »
I think you deserve the Bonus for the time you worked...not right for it to be delayed in the first place

Spork

  • Walrus Stache
  • *******
  • Posts: 5753
    • Spork In The Eye
Re: Integrity question
« Reply #3 on: January 20, 2016, 04:21:36 PM »
I worked at a large company that had annual bonuses... And if you were employed Dec 31, you got the bonus payout in March-even if you quit Jan 1.

onlykelsey

  • Handlebar Stache
  • *****
  • Posts: 2172
Re: Integrity question
« Reply #4 on: January 20, 2016, 04:25:27 PM »
In my industry, bonuses are clearly a retention mechanism.  If I leave the day before they're paid out, I get $0 (and miss out on a huge chunk of my pay.  This year my bonus was ~30% of my pre-tax total compensation.)

robartsd

  • Handlebar Stache
  • *****
  • Posts: 2172
  • Location: Northern California
Re: Integrity question
« Reply #5 on: January 20, 2016, 04:30:10 PM »
The OP's case sounds like the company gets a bonus from the customer for completion of a specific project within certain parameters (not unusual for there to be bonuses for completing work early). OP had responsibility for the project in a way that the company customarily would share the bonus with him. Assuming OP has stayed with the company through final sign off of the project, I believe he his right to feel that he deserves the bonus even if he separates before final payment for the project. In the case of a general "we had a good year" type bonus, I would not think an employee who separates before the bonus is paid should feel entitled to any of it. I also would not think it appropriate to expect a bonus based on work on a project that was not completed before separation.

music lover

  • Pencil Stache
  • ****
  • Posts: 653
Re: Integrity question
« Reply #6 on: January 20, 2016, 05:00:19 PM »
Bonuses are discretionary and the employer can do whatever they want. No one is "owed" a bonus.

It's always wisest to wait until one gets the bonus before quitting, or advising that you will be quitting.

wwweb

  • 5 O'Clock Shadow
  • *
  • Posts: 52
Re: Integrity question
« Reply #7 on: January 20, 2016, 06:45:45 PM »
Many states have laws to deal with this scenario - in some states, bonuses which have been earned must be paid even if the employee is no longer with the company. There are also legal distinctions between bonuses and commissions in many states. Commissions often must be paid even if the employee is not longer with the company.

If the bonuses are substantial it wouldn't hurt to consult a lawyer.

wwweb

  • 5 O'Clock Shadow
  • *
  • Posts: 52
Re: Integrity question
« Reply #8 on: January 20, 2016, 06:50:43 PM »
Bonuses are discretionary and the employer can do whatever they want. No one is "owed" a bonus.

This is not true under California law. There is obviously some nuance, but in general there are laws about earned bonuses. See:
http://www.shrm.org/templatestools/hrqa/pages/californiahowarecommissionandbonuspaymentshandledforemployeeswhoterminateemployment.aspx

Quote
Commissions and bonuses are forms of wages in California. Under the Labor Code, wages must be paid within a specified time period after they are earned. Employees who quit or are terminated typically must be paid their final wages on their last day of employment to avoid possible penalties. However, when an employee's earned bonus or commission cannot be reasonably calculated at the end of the employment, an employer must pay the earned bonus or commission when it can be reasonably calculated.

Mr. Green

  • Handlebar Stache
  • *****
  • Posts: 1883
  • Age: 35
  • Location: Wilmington, NC
Re: Integrity question
« Reply #9 on: January 20, 2016, 07:15:42 PM »
Bonuses are discretionary and the employer can do whatever they want. No one is "owed" a bonus.

It's always wisest to wait until one gets the bonus before quitting, or advising that you will be quitting.
In this particular instance "bonus" was a poor word to use. It is a bonus from a contract perspective. The contract does work and the government awards a percentage based on how well they like the work that was done. However, the agreement I have with my company is that if a bonus is awarded to the contract it is automatically paid to me. So as far as my employment is concerned, it's not so much a bonus as it is another 8% on top of my salary. In this situation my employer can coerce me to stay indefinitely by slow rolling the pay out of these "bonuses" and ensuring I'm owed $15-20k at any one time and dangling the idea that they'll catch up at some point. This is where it gets shady to me if they then want to claim that if I stop working for them they don't have to pay out money that was earned almost two years ago (because of the slow rolling).
« Last Edit: January 20, 2016, 07:20:34 PM by Mr. Green »

Axecleaver

  • Magnum Stache
  • ******
  • Posts: 3366
  • Location: New York
Re: Integrity question
« Reply #10 on: January 20, 2016, 07:19:10 PM »
Well, there's right and then there's legal.

Bonuses are completely discretionary. I helped an employer win a deal worth $300m. Got a bonus for $30k paid out over two years. Three months into it (after one of the scheduled 12 payments) they canceled the bonus plan. Talked to a lawyer, nothing I could do. You will probably not win this.

Mr. Green

  • Handlebar Stache
  • *****
  • Posts: 1883
  • Age: 35
  • Location: Wilmington, NC
Re: Integrity question
« Reply #11 on: January 20, 2016, 07:35:10 PM »
Well, there's right and then there's legal.

Bonuses are completely discretionary. I helped an employer win a deal worth $300m. Got a bonus for $30k paid out over two years. Three months into it (after one of the scheduled 12 payments) they canceled the bonus plan. Talked to a lawyer, nothing I could do. You will probably not win this.
Just googled the law. In the state of MD I have to be paid for any bonuses I'm owed. I did not know this! Sounds like I would have a strong case for litigation if my employer decided they weren't going to pay. I would certainly consult a lawyer now that I know more.

soccerluvof4

  • Magnum Stache
  • ******
  • Posts: 4752
  • Location: Artic Midwest
  • Retired at 50
    • My Journal
Re: Integrity question
« Reply #12 on: January 21, 2016, 07:30:15 AM »
On principle im my opinion you earned it you should receive it. Thats what i did with my employees. I dont like companies that find ways to cheat employees and or force people to stay to get them. I didnt want employees that didnt want to work for me but I also wanted them to leave on a good note. Some of my best employees were ones that came back.

Rubic

  • Handlebar Stache
  • *****
  • Posts: 1058
Re: Integrity question
« Reply #13 on: January 21, 2016, 07:50:33 AM »
If I make a promise to my employees, I am bound to honor it, even if I have to withdraw funds from my personal account.  Any other behavior would be unconscionable.  However, I'm very careful about making promises.

zephyr911

  • Magnum Stache
  • ******
  • Posts: 3628
  • Age: 40
  • Location: Northern Alabama
  • I'm just happy to be here. \m/ ^_^ \m/
    • Pinhook Development LLC
Re: Integrity question
« Reply #14 on: January 21, 2016, 08:04:20 AM »
I'd forget about all the "shoulds" and look at what you can realistically expect. No point being mad about policy, as long as they honor their contractual obligations to you.

NoStacheOhio

  • Handlebar Stache
  • *****
  • Posts: 2143
  • Location: Cleveland
Re: Integrity question
« Reply #15 on: January 21, 2016, 08:13:31 AM »
In this particular instance "bonus" was a poor word to use. It is a bonus from a contract perspective. The contract does work and the government awards a percentage based on how well they like the work that was done. However, the agreement I have with my company is that if a bonus is awarded to the contract it is automatically paid to me. So as far as my employment is concerned, it's not so much a bonus as it is another 8% on top of my salary. In this situation my employer can coerce me to stay indefinitely by slow rolling the pay out of these "bonuses" and ensuring I'm owed $15-20k at any one time and dangling the idea that they'll catch up at some point. This is where it gets shady to me if they then want to claim that if I stop working for them they don't have to pay out money that was earned almost two years ago (because of the slow rolling).

Is the agreement in writing? If so, that makes it a lot easier.

frompa

  • Bristles
  • ***
  • Posts: 407
  • Location: Pennsylvania
Re: Integrity question
« Reply #16 on: January 21, 2016, 09:47:13 AM »
It's good you checked the law, because it does differ from state to state, as does the enforceability of a contract of employment that covers the issue of payment of such bonus.  Another suggestion:  When dealing with your employer on this, you might want to to refrain from describing this as an "integrity question" because however much it is such, the inference is that if your employer disagrees with you, he/she/they are being unethical, and such name calling will make it more difficult for you to resolve the conflict.   I happen to believe your entitled to the payment, so best of luck! 

Mr. Green

  • Handlebar Stache
  • *****
  • Posts: 1883
  • Age: 35
  • Location: Wilmington, NC
Re: Integrity question
« Reply #17 on: January 21, 2016, 10:31:26 AM »
It's good you checked the law, because it does differ from state to state, as does the enforceability of a contract of employment that covers the issue of payment of such bonus.  Another suggestion:  When dealing with your employer on this, you might want to to refrain from describing this as an "integrity question" because however much it is such, the inference is that if your employer disagrees with you, he/she/they are being unethical, and such name calling will make it more difficult for you to resolve the conflict.   I happen to believe your entitled to the payment, so best of luck!
Oh, I'm much more delicate in how I talk to my employer.

Mr. Green

  • Handlebar Stache
  • *****
  • Posts: 1883
  • Age: 35
  • Location: Wilmington, NC
Re: Integrity question
« Reply #18 on: January 21, 2016, 10:39:42 AM »
In this particular instance "bonus" was a poor word to use. It is a bonus from a contract perspective. The contract does work and the government awards a percentage based on how well they like the work that was done. However, the agreement I have with my company is that if a bonus is awarded to the contract it is automatically paid to me. So as far as my employment is concerned, it's not so much a bonus as it is another 8% on top of my salary. In this situation my employer can coerce me to stay indefinitely by slow rolling the pay out of these "bonuses" and ensuring I'm owed $15-20k at any one time and dangling the idea that they'll catch up at some point. This is where it gets shady to me if they then want to claim that if I stop working for them they don't have to pay out money that was earned almost two years ago (because of the slow rolling).

Is the agreement in writing? If so, that makes it a lot easier.
The original agreement is not explicitly in writing but I have 4 years worth of email traffic that document the bonuses I've been receiving this whole time (albeit delayed), some of which likely reference the original agreement as it was discussed. I suspect that in a court of law, that would be considered the equivalent of a de facto agreement.

robartsd

  • Handlebar Stache
  • *****
  • Posts: 2172
  • Location: Northern California
Re: Integrity question
« Reply #19 on: January 21, 2016, 11:24:55 AM »
I'd certainly make sure you have those emails gathered as evidence.

Le Dérisoire

  • Stubble
  • **
  • Posts: 104
Re: Integrity question
« Reply #20 on: January 21, 2016, 12:44:06 PM »
I have only one advice: Never ask legal advice on the internet.

Your employment contract could say one thing and the law another thing. The laws are different everywhere. You should ask a real lawyer.

Mr. Green

  • Handlebar Stache
  • *****
  • Posts: 1883
  • Age: 35
  • Location: Wilmington, NC
Re: Integrity question
« Reply #21 on: January 21, 2016, 02:12:38 PM »
I have only one advice: Never ask legal advice on the internet.

Your employment contract could say one thing and the law another thing. The laws are different everywhere. You should ask a real lawyer.
I would never relay on a forum for my legal advice. However, asking the question did lead to me learning what the law is for my state so it was beneficial. And I have not employment contract so I'm not worried there. It was a one page doc that basically says, "I agree to work for this company. Yes."

robartsd

  • Handlebar Stache
  • *****
  • Posts: 2172
  • Location: Northern California
Re: Integrity question
« Reply #22 on: January 21, 2016, 02:28:06 PM »
I have only one advice: Never ask legal advice on the internet.
I agree with never relying on advice on the internet (legal or otherwise) without personally (or having a professional you trust) verifying it. But the advice on the internet can often help you know what kinds of things to look into helping you to more effectively research for yourself or ask better questions of your professional help.

music lover

  • Pencil Stache
  • ****
  • Posts: 653
Re: Integrity question
« Reply #23 on: January 21, 2016, 05:15:06 PM »
Well, there's right and then there's legal.

Bonuses are completely discretionary. I helped an employer win a deal worth $300m. Got a bonus for $30k paid out over two years. Three months into it (after one of the scheduled 12 payments) they canceled the bonus plan. Talked to a lawyer, nothing I could do. You will probably not win this.
Just googled the law. In the state of MD I have to be paid for any bonuses I'm owed. I did not know this! Sounds like I would have a strong case for litigation if my employer decided they weren't going to pay. I would certainly consult a lawyer now that I know more.

Confusion seems to be arising because some of us have a different definition of a "bonus". I consider a bonus to be a discretionary offering entirely at the whim of the employer, but others seem to suggest that a bonus is part of their contract. To me, if it's part of the contract, then it's not a bonus by definition...it's a wage or commission.

Fishindude

  • Handlebar Stache
  • *****
  • Posts: 2002
Re: Integrity question
« Reply #24 on: January 21, 2016, 06:38:22 PM »
Not saying this is the case, but looking at this as an employer, you may have left him "hanging" with nobody to do the job you were doing, now he has to scramble to hire and fill your shoes, costing himself a lot of time, money and effort.  I might not be too fired up about paying a former employee a big bonus either under these circumstance if I wasn't legally obligated to.

Should have worked this stuff out before you bailed.
I'd say your chances are slim.
« Last Edit: January 22, 2016, 05:03:02 AM by Fishindude »

Playing with Fire UK

  • Magnum Stache
  • ******
  • Posts: 2544
Re: Integrity question
« Reply #25 on: January 22, 2016, 03:28:39 AM »
As this question has been asked as an integrity question, I'm going to assume there is no legal obligation to pay it, otherwise this would be a legal question:

If the employee has earned the bonus and worked well, but decided to leave, they should be paid (morally and karmically). However if the funds take time to arrive from the client, there is no obligation on the company to be out of pocket until they arrive, or if the bonus isn't paid. I would make arrangements to pay the ex-employee when the contract is completed and the bonus is paid to the company.

If the emails suggest that the company has previously been expected to assume the risk of the bonus not being paid by the client, but the employee has waived the agreement to be paid on time, I feel there is a stronger case for getting paid sooner.

Good luck

Mr. Green

  • Handlebar Stache
  • *****
  • Posts: 1883
  • Age: 35
  • Location: Wilmington, NC
Re: Integrity question
« Reply #26 on: January 22, 2016, 05:33:07 AM »
Not saying this is the case, but looking at this as an employer, you may have left him "hanging" with nobody to do the job you were doing, now he has to scramble to hire and fill your shoes, costing himself a lot of time, money and effort.  I might not be too fired up about paying a former employee a big bonus either under these circumstance if I wasn't legally obligated to.

Should have worked this stuff out before you bailed.
I'd say your chances are slim.
Oh I haven't left yet. I've been a great employee for my company for the last 6 years, and I'll give plenty of notice. My employer and I have been discussing the issue for months now and he keeps stalling. I was unaware of my state's laws before posting this so I was considering forcing the issue because I'm tired of lack of communication on the part of my employer and the confused state it leaves me in with respect to this money. There have been periods where my employer drops the ball and pays me the bonus almost 2 years after the money has been awarded to my contract, where people sitting around me have received their bonuses (same bonus money paid from the contract) from their companies months ago. That's what is upsetting me. If my company could have received, and paid to me, $15,000 before I leave but because they dropped the ball and didn't invoice it (so they didn't receive it) and then want to turn around and tell me they don't feel obligated to pay it because they don't have the money yet.....that's what I'm trying to get in front of. Plus there's a conflict of interest there. They can "delay" invoicing it, knowing I intend to leave soon, hoping I do and then they get to keep the money. I can't know for sure if they're doing that but it certainly runs through my mind. Of course, just reading about my state's law on the internet isn't the same thing as knowing I could win a court case but at least I'm a little more informed. I posed the question here because I thought it would be worthwhile to have some other data on what various people thought, just to be sure it wasn't me who was way out in left field and being unreasonable. The mixed responses I see here are enough validation for me to know I'm not crazy.
« Last Edit: January 22, 2016, 05:58:34 AM by Mr. Green »

Undecided

  • Handlebar Stache
  • *****
  • Posts: 1076
Re: Integrity question
« Reply #27 on: January 22, 2016, 08:20:00 PM »
Well, there's right and then there's legal.

Bonuses are completely discretionary. I helped an employer win a deal worth $300m. Got a bonus for $30k paid out over two years. Three months into it (after one of the scheduled 12 payments) they canceled the bonus plan. Talked to a lawyer, nothing I could do. You will probably not win this.
Just googled the law. In the state of MD I have to be paid for any bonuses I'm owed. I did not know this! Sounds like I would have a strong case for litigation if my employer decided they weren't going to pay. I would certainly consult a lawyer now that I know more.

Confusion seems to be arising because some of us have a different definition of a "bonus". I consider a bonus to be a discretionary offering entirely at the whim of the employer, but others seem to suggest that a bonus is part of their contract. To me, if it's part of the contract, then it's not a bonus by definition...it's a wage or commission.

OK, but you should be aware that's not how it's typically used in, for example, employment agreements. Pick your favorite US-listed public companies and take a look at the executives' employment agreements. "Bonus" very often means short-term deferred compensation, e.g., an amount due at year end or upon some other schedule.

ulrichw

  • 5 O'Clock Shadow
  • *
  • Posts: 87
Re: Integrity question
« Reply #28 on: January 22, 2016, 09:13:26 PM »

Oh I haven't left yet. I've been a great employee for my company for the last 6 years, and I'll give plenty of notice. My employer and I have been discussing the issue for months now and he keeps stalling. [...]

I'm not sure I completely understand the situation - is this purely hypothetical, and you haven't yet decided when to leave, or is there a pending bonus that you're waiting for?

Can you work out a "tit for tat" deal with your employer in this - i.e., promise him a certain amount of notice and transition time from you in exchange for the payout?

The way I see it: If he won't give you the payout, I don't see the need for you to do any favors for him (i.e., giving lots of notice) - he clearly doesn't seem to be willing to do you any favors.

boarder42

  • Walrus Stache
  • *******
  • Posts: 7849
Re: Integrity question
« Reply #29 on: January 23, 2016, 12:34:35 PM »
They don't have to pay you bonuses are deferred salary more or less I work with a company that has bonuses. And if you don't stay you don't get it.

Calling it an integrity issue makes no sense. Get over it. It's the system. Work with it. It's like bitchjng about taxes and how they are used and how they aren't technically fair and equal. Decide how to maximize your returns inside the system calling the integrity of a system you likely signed a contract for in to question accomplishs what exactly.

Figure out a solution don't complain about a problem.

Jim2001

  • Stubble
  • **
  • Posts: 203
  • Location: Los Angeles, CA
Re: Integrity question
« Reply #30 on: January 24, 2016, 01:25:39 PM »
Every company I've worked at in the last 30 years has had a requirement to be an employee on the date the bonus is paid out.  It was never pro-rated for people who left during the bonus period.

Gronnie

  • Bristles
  • ***
  • Posts: 267
  • Age: 33
  • Location: Orange County, CA
Re: Integrity question
« Reply #31 on: January 24, 2016, 04:06:36 PM »
Tons of companies pay out bonuses 2-3 months after the bonus period ends and require you to be employed on the bonus day. It is complete bs. It means that any time you decide to leave you are always giving up several months worth of earned bonus compensation.