Published on February 1st, 2011 by Alan L Sklover
Question: My husband’s employer pays out annual bonuses on one specified day each year that everyone refers to as “Bonus Day.” According to the company’s policies, in order to be entitled to an annual bonus, the employee must be employed by the company on that “Bonus Day.”
Problem is, my husband has good reason to believe that his company is very seriously considering terminating him (due to its very wrong review of his performance) at a meeting he is scheduled to attend with Human Resources and his boss just nine days before Bonus Day. Of course, he is concerned that he might be terminated at that meeting, and in that way be denied an annual bonus for last year.
To prevent that, he is thinking about taking vacation days he has accrued from the day before the date of the meeting, to the day after Bonus Day, so that he can collect his bonus.
What do you think of this strategy?
San Diego, California
Answer: Dear Stephanie, (a) I do not believe that it will work, but (b) I don’t know if it will be necessary. Let me explain:
a. Employers are generally free to set their own policies, including regarding bonus eligibility. In general, the law does not require employers to set any certain policy about bonus eligibility. That said, there are some limits on employer conduct in this context: the law will not tolerate truly improper behavior, such as (a) bonus payments based on prohibited discrimination (race, gender, age, etc.), (b) violation of promises, such as breach of a contract to pay a certain amount of bonus, or (c) trickery, misstatements or fraud in calculating how much the actual bonus payments should be.
b. However, intentional timing of a termination in order to deny a promised bonus would probably not stand scrutiny of a court. Years ago many employers terminated employees just days – or hours – before “Bonus Day.” But then more and more courts and arbitration panels said, in effect, “Stop that nonsense. Pay him or her the bonus he or she has been promised or has earned.” That has led most employers not to even try this “last day firing” tactic any more.
c. Your husband probably requires his boss’s approval for vacation, and can probably even be required to attend such a meeting while on vacation. In my experience, I would expect that, if your husband wants to take the vacation days off you’ve mentioned, he probably needs his boss’s consent. Even if he did not require prior consent, most employers would probably say, or suggest, “You must, in all events, attend this important meeting. Your refusal to do so will result in your being fired for insubordination.” This is the first reason I expect your husband’s strategy will not work: he probably does not have complete control over his work schedule.
d. And, too, if the bonus amount is “Discretionary,” in light of the allegations of poor performance, your husband may be scheduled to get a “zero bonus.” In your letter, you did not mention if the annual bonus is (i) a promised certain amount, (ii) a promise of an amount determined by some objective formula, or (iii) entirely discretionary. If it is a promised set amount, or a promised amount set by a formula, I expect your husband will probably get his bonus, for the reason described in section (b), above. But, since most bonuses are “entirely discretionary,” if this is the case here, your husband’s alleged poor performance would probably result in him being given a “zero bonus,” even if he was employed past “Bonus Day.” This is why I don’t know if your husband’s strategy is worth trying.
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e. My suggestion: Your husband should consider frankly “laying out his case” for an incorrect performance review, and entitlement to a bonus, in an email to his boss and HR. In general, and from what I know of your husband’s situation, I would suggest your husband consider making a clear record of his case for “incorrect performance review” and “entitlement to a bonus,” in an email to his boss and HR, and ask that this be placed on the agenda of the upcoming meeting. This approach is more direct and focused, and in my experience, more likely to be effective.
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I hope this has been helpful. If so, we’d love it if you told a few friends about our blog. Thanks for writing in, and Good Luck to your husband!
Best, Al Sklover
© 2011 Alan L. Sklover, All Rights Reserved.