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Can a company refuse to pay bonuses included in work contracts?

On Behalf of | Dec 5, 2023 | Wage & Hour Laws

Employment compensation often requires intense negotiation when someone starts a new job. Base pay is only one consideration. People may also receive competitive benefits packages that include various types of insurance and paid leave.

Beyond that, bonuses may be available for those in certain positions. Someone might receive a retention bonus if they stay with the company for a set number of months. There might also be performance or incentive bonuses available based on company performance or individual sales.

Do workers have any rights when they meet the criteria for a bonus but the company won’t pay them as promised?

California treats bonuses like wages

Provided that a worker has not misunderstood the right to a bonus, a company has an obligation to pay them in accordance with their employment contract. Many workers make the mistake of assuming that the company offers bonuses or that they are eligible for the same bonuses as other workers.

It will often be the terms of someone’s employment contract that establish whether or not they are eligible for a bonus. If they are in a position where bonuses are possible and they meet the company standards for a bonus, the workers should be able to count on receiving those funds in full and in a timely manner in accordance with the terms of their contract.

The refusal to pay a bonus could lead to a wage claim just like a refusal to pay a worker for their daily work. In some cases, workers may simply need to present documentation to management or human resources about their eligibility for the bonus. Other times, litigation may be necessary.