California workers have more legal protections than workers in many other states. However, you may still question what your rights are when it comes to bonuses.
A bonus is defined as money promised to you in addition to your regular compensation or commission. California law recognizes two different types of bonuses: discretionary and non-discretionary.
Discretionary and non-discretionary bonuses
A discretionary bonus is one that your employer chooses to give you when they do not have to. Discretionary bonuses are usually bonuses given during the holidays or on special occasions, such as a work anniversary. They are not dependent on your work performance.
A non-discretionary bonus is one your employer is required to give you as part of an employment contract or work policy. For example, if you work in sales, your employer might have a policy that you receive a bonus when you reach a certain amount in sales.
Your employer can generally withhold discretionary bonuses. If sales or profits are down one year, you might not get a holiday bonus, but you could get one the next year if profits are back up. You are typically not entitled to a discretionary bonus just because you may have received one in the past.
However, your employer cannot withhold a non-discretionary bonus. These are treated as part of your wages and your employer generally must pay them to you in accordance with your employment contract or workplace policy.
What happens if I leave the job?
This obligation to pay your non-discretionary bonus remains if you are laid off, terminated or quit. If you were owed the bonus at the time, you left the job, your employer must still pay it to you within 72 hours of your last day.
Like many workers, you probably count on your bonuses to provide you with some extra financial support in today’s challenging times. When your employer withholds your bonus, it may be time to seek help with receiving it.