Question: Alan, I feel my company cheated me over yearly bonus. Last year, our company paid out yearly bonuses during the month of February. Based on that, and based on the instability in my former employer’s company, when I accepted a new job, I told my new employer I could start on March 1st, and made my resignation effective February 28. But, alas, they sent out a memo that said, this year, they would pay out the bonus at the end of March.
I could not jeopardize my new employment opportunity by delaying my start date. I feel I deserved the bonus because everyone else in my department received it at the end of March. I was considered a great contributor, and was even asked if I might reconsider and stay. I was even contacted by the company and asked to sign a patent application for a project I had contributed to. My ex-boss tried to help, but HR said that I had to be there in March to get paid the bonus.
Do I have a legitimate case to sue my former employer? Thanks a lot!
San Jose, California
Answer: Dear Lewis: Each year during February, March and April, we hear from many people in your circumstances, or circumstances quite similar to your own. The common circumstance is that “I was not employed at the time bonuses were handed out.” Here is the proper analysis:
1. Rules are rules, and must be ascertained, and followed; your first step is to find out what they are. Most, but not all, bonus programs have a rule that says, using one set of words or the other, “In order to be entitled to receive the annual bonus, the employee must be actively working on the day the bonuses are distributed.” I don’t know whether or not your former employer had a written bonus plan or program, or if it did, what the words said. I know what HR told you, but that does not mean it was a written rule. Instead, it could be just “the way they do things,” or even an excuse not to pay you. You need, first and foremost, to find out if your former employer had a set of written rules applying to bonuses, and read those rules carefully.
And, Lewis, and all of those who read this blog post, I suggest you consider making it a good habit to carefully read all of the rules, of each of the plans, of your package.
2. In writing, ask your HR representative to show you the written rule(s), if any, regarding eligibility to receive annual bonuses that was in effect for the previous calendar year. Your note to me did not say whether or not your HR representative told you, or told your boss, by telephone or in writing, that you would not be paid the bonus. Ask for it in writing, as it would not be the first time that someone – in HR, your boss, or anyone else, for that matter – just said what they thought was the rule, or what they wanted the rule to be, and were mistaken. Make sure you send your request in writing, and by a “verifiable” means, which in my book is email, UPS overnight, Fedex, or the like.
3. If there is are no written rules on this particular point – that is, nowhere does it say in writing that you needed to be an employee on the “bonus-day” to receive an annual bonus – then you have a pretty good argument that “It was earned, and so it must be paid.” Think about it: if you worked Monday through Thursday, even if you were fired or quit on Friday, you still have a right to be paid for working Monday through Thursday. That is the general rule as it applies to salaries, what the law calls “wages.” Well, the same general rule – with one exception – goes for a bonus earned by working hard starting from January 1st and continuing through December 31st; that is, you deserve to get paid it because you earned it. The exception to this general rule is “unless the employee and employer agreed differently regarding the bonus.”
Whether or not you “agreed differently” with your employer it will be found in that bonus plan, or in some other written agreement. Without either of those, the “general rule” would support your legal claim that “it was earned, and so it needs to be paid.”
If you would like to obtain a Model Letter to Request Monies Owed to You By a Former Employer, for adaptation with your own facts, events and circumstances – but that still provides “What to Say, and How to Say It,”™ – just [click here.]
4. Whether you have a “legal case” depends almost entirely on whether there was a written rule in place. Legally speaking, if there was a rule in place that says “An employee must be employed on the day bonuses are paid, and the employer has complete discretion regarding what day that is,” then you will have a very, very hard time pressing a “legal case” in Court. If no such rule was in place, or a rule was in place that is less clear than that, you do have a better “legal case.” If there was no written rule in place, then my view is that you have a very good “legal case.” Of course, you should consult with an experienced attorney licensed to practice in your local area.
If you would like to obtain a list of at least five experienced employment attorneys in the San Jose area, just [click here.]
5. If you have not yet signed that patent application for your former employer that you mentioned, you might offer to do so in exchange for the disputed bonus. Quite often, employers contact former employees and ask them to “do a favor” just like they have asked you to sign a patent application. As you might imagine, unless you have signed an agreement that obligates you to do so, you do not have to do so. So, you might consider offering to “trade favors,” that is, you will sign that patent application if – but only if – you are paid the bonus you earned. There is simply nothing wrong with that, and it just might be the thing to do in this situation.
6. You might also appeal directly, in writing, to your former employer’s Board of Directors; it costs nothing and works more than people expect. Last but not least, you might just bring your arguments for receiving your earned bonus directly to your former employer’s Board of Directors, who are ultimately responsible for the affairs and practices of the company. Though the odds are not high that this will work, I always recommend it as a “last resort” because I have, indeed, seen it work. And all that is at risk is a first class stamp, or perhaps the fees for an overnight letter sent by Fedex, UPS, U.S. Postal service, or similar overnight delivery company.
Lewis, as I noted above, I expect you won’t “presume” anything again about a bonus, and the rules that may apply to them. And, too, I hope using these thoughts and tips, you will be successful in getting the bonus you earned, and for that reason, deserve.
My Best to You,
P.S.: Performance Review coming up? How about a Model Letter to Enhance Your Upcoming Performance Review? It can make a heck of a difference. Just [click here.] Delivered by Email – Instantly!
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