Attorney Jean-Claude Lapuyade

California employers may be required to pay bonuses

Many employers in California offer their employees bonuses. San Diego residents likely look forward to these bonuses every year and may even plan their budgets around them.

Employers give bonuses for a number of reasons. Sometimes, a bonus is no more than a generous gift offered perhaps as a holiday present or just because. In these situations, an employer may have no obligation to pay the bonus if, for instance, money is tight.

On the other hand, some bonuses in fact count as wages under California law.

For example, if an employer promised a bonus if the employee reached certain sales or productivity goals, then the law might view the bonus as earned wages if the employee met the goals.

Likewise, some companies offer bonuses to get employees to move to or stay in their position. Courts would be more likely to treat these payments as wages which an employer must pay.

Whether a bonus is a wage an employer must pay depends on the circumstances

Not every bonus an employer offers is something the employer must make good on, even if the employer has paid the same bonus in the past.

On the other hand, many California employers might not understand, or might not want to understand, that their bonuses are in fact wages.

As such, the employer must pay such bonuses promptly or face legal penalties. The employer must also include them when determining an employee’s hourly rate of pay for overtime purposes.

Whether a bonus is an earned wage depends a lot on the facts and circumstances. An employee with questions about a bonus should speak to an experienced attorney.