Can I Sue My Employer for Not Paying My Bonus in California?

Can I Sue My Employer for Not Paying My Bonus in California?
Jun 22, 2017

A bonus can be a welcome addition to your regular wages or salary, and it can be expected or a complete surprise. But what if you expect a bonus and your employer refuses to pay it? In order to decide if you can sue your employer, first you need to understand the different types of bonuses and what the law says about them.

What exactly is a bonus, anyway?

A bonus is additional pay that is not a part of your regular work time wages or salary. Bonuses can be a welcome boost to your regular pay and can be given for any reason. Bonuses are not required by law, and it is in your employer’s discretion to decide if you will or will not be given a bonus. However, bonus payments are still considered wages, and as such they are regulated by California law.

There are two types of bonuses: earned and unearned:

  • An earned bonus is when you have met a certain criteria in the company for receiving a bonus, such as earning a certain amount of money for the company, or working a certain number of hours. The company will set a specific threshold for you to meet before receiving a bonus, and once you have met that threshold, you will earn it.
  • An unearned bonus is when there is no specific criteria for receiving a bonus, but it is up to the employer’s discretion to give you one or not. An unearned bonus can be given at any time for workplace appreciation, holidays, work anniversaries, or for any reason at the discretion of the employer.

How do bonuses affect overtime pay?

Bonuses can add to your overtime pay because overtime is not just based on your regular earned wages; when calculating overtime pay, commissions and bonuses are added to your regular earned wages before your additional hours are taken into account. However, this only counts for earned bonuses. Unearned, or discretionary, bonuses are not taken into account before overtime wages are calculated.

What does California law say about bonus pay?

Under the California Labor Code, bonuses must be paid in a “timely” fashion, similar to other wages. This generally means that the bonus should be paid at the same time as other wages during that pay period. They also must be taxed, just like regular wages.

How do bonus payments after termination in California work?

If you have earned a bonus before you leave your position, then you are entitled to that bonus once you leave. If you leave your job or are terminated, you are entitled to your earned bonus at that time. However, you are not entitled to unearned or discretionary bonuses.

Can I sue my employer for not paying my bonus in California?

This is where the earned versus discretionary distinction becomes important: If you earned the bonus by meeting the bonus criteria, then you are entitled to that bonus and you may be able to sue your employer for not paying it. You can also sue your employer if they miscalculate your overtime pay.

However, if your employer provides discretionary bonuses, then you are not entitled to those before or after you leave the company. For example, after you leave an employer, you should expect to no longer receive a Christmas bonus.

If, however, you are unsure if a bonus counts as earned or unearned, or you regularly received a bonus and feel that it was an earned bonus, but have not received it, then you may want to consult a lawyer to help file a wage and hour claim.

Our California employment attorneys at Hennig Ruiz can help you to decide if you can sue your employer for an unpaid bonus. If you feel that you have not been paid your entitled bonus pay, contact us for a free consultation.

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