BONUS

LIZD · July 2003

IF AN ER HAS GIVEN A LONGEVITY BONUS AND THE BOD HAS APPROVED THIS PROCESS, IT WAS VOTED ON TO BE PRESENTED AT THE SAME TIME EVERY YEAR. AN EE HAS RESIGNED AND PUT A FORWARD DATE ON HER RESIGNATION SO AT THE BONUS TIME SHE WAS STILL CONSIDERED AN EE. EE HAS SUFFICIENT ET (IE VACATION TIME) TO COVER THE PERIOD OF HER PHYSICAL LEAVING TO RESIGNATION DATE. SHOULD EE BE CONSIDERED FOR THE BONUS OR IS THIS NOT ALLOWED UNDER EMPLOYMENT LAW?

skyrocket · July 2003

I am not aware of any law that requires a bonus payment. However, if you have a formal bonus plan, you are required to follow the procedures outlined in the plan. It would appear that your plan has not addressed this situation. In other words, you do not have a requirement that an individual must be actively at work on the date the bonus is payable in order to be eligible for this bonus. It is understandable that this would not be addressed because how many of us would contemplate an employee resigning with accumulated vacation.

You really need to look at the language of your policy or any other written documentation given to employees about this plan. The words you use mean everything.

I don't know if you have any state laws addressing voluntary termination - but in California (which has more laws than most states protecting employees)if an employee gives notice of termination, you are not required to accept a date set at some point in the future. You are perfectly permitted to make the termination effective immediately. You must (in California) pay all accrued vacation at the time of termination. In this case, were you to accept the termination effective immediately and not at the end of the "vacation", the individual would not be eligible for the bonus unless your policy is not clearly written.

If you feel your policy is not clear and precise or if you have state laws affecting voluntary terminations, you should get a legal opinion because it is obvious that this employee believes that he/she is entitled to this bonus and will not be happy if it isn't provided.

System · July 2003

LIZD,

I posed your question to Anne Williams, who's the editor of our two [link:www.hrhero.com/benefitslaw.shtml|benefits newsletters,] Benefits & Compensation Law Alert and Benefits & Compensation Law for Nonprofits.

She said some bonus programs are covered by ERISA, and it's illegal to fire someone in order to interfere with their receiving an ERISA benefit. To be safe, you'd need an attorney to figure out whether your bonus plan falls under ERISA. If you don't have one, you could contact the attorneys who write New Hampshire Employment Law Letter.
[url]www.HRhero.com/findanattorney.shtml[/url]

James Sokolowski
HRhero.com

juju · July 2003

We consider our employees' term dates as the last day they physically work. We do not allow them to extend their term date with benefit time. We pay out accrued and unused vac and holiday time after termination. If we had an employee doing what yours was doing, we would use her last day worked as her term date and pay out the time she had requested to take. If she was not eligible for the bonus so be it.

I guess it all depends on what policies you have in place for this kind of scenario...

lharper · August 2003

I'm jumping in here with a question of my own since I can't seem to find how to send my own question!

We are trying to put a bonus program together for the sales team based on profitability of the company. Also, want to address profit sharing in general for all company employees. Any ideas about how to set this up? goals? pitfalls?
Thanks for the help.

BONUS

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