7 Things To Know About Annual Bonuses

If you are like many workers in California, you rely on the financial boost you receive from annual bonuses. While annual bonuses can help put some cash or a check in your pocket, it is critical to understand the details of bonuses. Our employment lawyers would like to share several important facts about annual bonuses.

7 Essential Facts You Need to Know About Annual Bonuses in California

1. There Are Two Types Of Annual Bonuses

California law recognizes two main types of bonuses. Discretionary and non-discretionary bonuses. Both types can be annual bonuses.

2. Discretionary Bonuses Are Gifts

Also known as unearned bonuses, discretionary bonuses are a “gift” from your employer. Legal professionals refer to them as unearned bonuses because discretionary bonuses have nothing to do with the number of hours you put in or other measures of work performance, such as your efficiency or ability to meet quotas.

Christmas bonuses are perhaps the most well-known type of discretionary bonuses, but employers can give out discretionary bonuses at any time of year or for any reason.

3. California Law Does Not Protect Unearned Bonuses

Employers are under no legal obligation to pay discretionary bonuses, even if they have in the past. If your boss gave you a Christmas bonus for the past 9 years, for example, they don’t have to give you a bonus this year.

4. Non-Discretionary Bonuses Are Earned

Employers provide non-discretionary bonuses when workers complete work or reach pre-determined milestones in their work, such as reaching a sales target. Also known as earned bonuses, non-discretionary bonuses are considered wages.

5. Two California Labor Codes Protect Earned Bonuses

Labor Code 204: Non-discretionary bonuses are wages and workers are entitled to timely payment; this labor code requires employers to pay earned bonuses in a timely manner, and to print the bonus information on the workers’ pay stub.

Labor Code 201: Employers must pay terminated workers any earned bonuses and other unpaid wages immediately; they must pay employees who quit within 72 hours of their last day.

6. Your Boss Cannot Withhold An Earned Bonus

If your employer has promised a bonus related to your performance, they must pay it within a reasonable amount of time. Your employment lawyer may be able to secure payment for an earned bonus.

7. Earned Bonuses Can Affect Your Overtime Pay

Your overtime pay rate is based on your regular rate, which includes your base hourly rate plus any bonuses you receive. This means your non-discretionary bonuses increase your overtime rate.

Do You Have Further Questions About an Annual Bonus? You Need to Know Your Rights About Bonuses! Contact Your California Employment Attorney At D.Law!

Bonuses are an important part of the pay package for many workers, but some employers refuse to obey California labor laws. If your boss has not paid your earned bonus, take action now by contacting or calling D.Law. Our attorneys are experts in California employment law and worker‘s rights and can help you get the bonus pay you earned while working in the Bay Area, San Diego, Fresno, Los Angeles, and other CA cities.