Question to Ask the Workplace Doctors about changing bonus rules:
The owner of my company has literally stolen money from his employees. I work for a small telecom-related business. The owner/president of the company had established a program whereby employees would get paid an hourly rate, plus a monthly “guaranteed bonus”, the amount of which depended on which department you worked in, and how well the company did that month. My “guaranteed bonus” was between $1000 & $2000/month, with $1000 being the minimum amount I would receive every month. The key aspect of this is that the “guaranteed bonus” was not paid in the same month it was earned.
The “bonus” was paid two months after the month it was earned. So, “bonus” money that you worked for in August was not paid out till October. When new employees are hired, they are not paid bonus for the month they start, or for the next month, as they are only earning the money that is paid two months later. Additionally, employees who were to resign were still owed two more “guaranteed bonus” checks, which were paid in the following months. Starting in January of this year, we were informed that the pay policy would be changed. The “guaranteed minimum bonus” would now be rolled into our regular pay, and our hourly rate would be increased accordingly. Fine, but what happens to the bonus checks that we earned in Nov & Dec? They disappear. What happens if you quit sometime after January? You don’t get any additional bonus checks. The company is spinning this as though they are just rolling the two checks into your pay, and it equals out at the end of the year.
Sure, this is true, but there are still the two bonus checks unaccounted for. The owner, when I confronted him about this, merely said that we didn’t truly earn the bonuses because business had been slow, and that he didn’t feel like it was unfair. But I still do. After that, I put in my two weeks notice, and I was called into the Vice President’s office the next day. I explained my concern to him, and we had a heated discussion about it.
After which, he offered me a huge raise to keep me there, which I would have been a fool to turn down. But the bonus money is still gone, and will not be paid. I don’t see how this can be legal. Some other employees have talked about filing a lawsuit. What can be done about this, and do you think a lawsuit would hold up in court?
Signed, Not Even A Kiss
Dear Not Even A Kiss:
You may wish to consult a labor attorney about this. Usually attorneys will provide a free consultation. Another source of free information is your state’s Department of Labor. State law governs many aspects of wages and many states have laws governing how and when promised salaries and bonuses are paid. The Internet would have your state’s Department of Labor information. The following issues would have an effect on your standing:
1. Was there a written contract about the bonus? If so, did you and the others sign it?
2. Is there something in writing that is given to new employees indicating they will get a specific bonus?
3. How long has the bonus been paid in the former way? Prior to that were there bonuses and if so, how were they paid?
4. Was the bonus paid with the regular paycheck and taxed as well as having Social Security and Medicare taken out, or was it paid separately and only taxed? The law has changed about that and many bonuses must deduct fully, but that is not an area of expertise of mine so I do not know if any part of that could be used to show that it was in fact, an expected part of your pay check.
5. Have you done the math to see what financial impact the change will have? If, in fact, you will eventually get the same amount by year’s end, you may be viewed as not suffering a loss.
6. There is the obvious issue that a bonus is, in fact, a bonus–not a salary. Calling a bonus a guaranteed bonus effectively removes it from the bonus category and places it in a salary category. Likely there was some financial or tax benefit to your employer for paying you in that way. Apparently that is no longer the case. It could be that some aspect of that needs to be looked at anyway. It may be that you do not have a legal standing–but you might. And it will take someone who is knowledgeable with the intricacies of labor law in your state, to fully advise you.
I would suggest that you gather every piece of documentation that refers to this matter–as well as copies of new employee materials–and write an overview of how all of this used to work and how it will work in the future. Also have pay stubs from bonus checks and regular checks, if those are available. Include information about the size of the organization, the status as a corporation or other, the number of employees and anything else that will establish clearly the kind of company it is. Those things often effect regulations. All of that information will give your adviser–either legal or through government, the necessary information. Best wishes as you tackle this frustrating and financially upsetting issue. Think WEGO as you speak up for yourself.
Tina Lewis Rowe