The two types of bonuses

There are two main categories of bonuses under California law: discretionary and non-discretionary, sometimes referred to as unearned and earned.

Discretionary bonuses are paid as ‘gifts’ during the holidays or other significant occasions. These bonuses are not dependent on the number of hours worked, efficiency, quotas, or any other production or work performance measure. They aren’t part of your compensation package, either. Instead, they are paid at the discretion of your employer. An example of a discretionary bonus is a Christmas bonus. Even if you have received a Christmas bonus from the same employer for nine years, that employer is under no legal obligation to pay a Christmas bonus in the tenth year.

Non-discretionary bonuses are earned – they are paid as part of a contractual work-performance policy or a mutual understanding between you and your employer. Non-discretionary bonuses are typically connected to predetermined performance measures, such as reaching a sales target. Crucially, these bonuses are considered wages. According to California Labor Code Section 200 , employers are obligated to pay all earned bonuses when an employee meets the agreed-upon performance target.

The significance of non-discretionary bonuses

If you believe you have experienced unfair or unjust treatment in the workplace because of your disability, the

Non-discretionary bonuses are wages, and that means they are protected under the law. For one, these bonuses must be paid promptly following a successful work performance target, as outlined in Labor Code 204.

They must also be upheld even if you quit your job or are terminated. Under Labor Code 201, employers are liable to pay all wages owed (including bonuses) immediately following termination. If you quit, unpaid wages are owed either within 72 hours of your last day at work. If you give your employer 72 hours’ notice, unpaid wages are owed on your last day.

Finally, non-discretionary bonuses are significant because they affect your overtime pay. Your overtime pay rate is based on your ‘regular rate.’ Your ‘regular rate’ is not just your base salary – it includes non-discretionary bonuses. Bonuses earned, therefore, increase your overtime pay rate.

My employer hasn’t paid my earned bonuses – now what?

If you have reached a predetermined performance target, but your employer has failed to pay the agreed bonus, the first step is speaking to your employer directly. In some cases, unpaid bonuses are little more than a misunderstanding or miscalculation. You might find that your employer is on your side and ready to right their unintentional wrong.

A quick word of warning: When talking to or emailing your employer about unpaid bonuses, do so cordially. You don’t want to aggravate the situation unnecessarily. Plus, if your unpaid bonuses case escalates, all communications between yourself and your employer become evidence. So if you wouldn’t want it read aloud in the courtroom, don’t say it or send it.

Contact a reputable employment lawyer if your employer knowingly refuses to pay your earned bonus. These kinds of bonuses are guaranteed compensation – your employer has no right to withhold these funds from you.

How an employment lawyer can help your unpaid bonuses case

An experienced attorney can ensure you receive the funds you are owed under the law. Bonuses are wages, and if your employer is contractually obliged to pay a sum when you reach a target, they cannot refuse or delay it.

The law may not always seem straightforward, but with the right help in your corner, you can protect your rights. An employment lawyer can give you the best shot of achieving a positive outcome. Here’s how:

An employment attorney can collect all the relevant evidence and information relating to your case. This includes your employment contract and communications between you and your employer. They may also uncover whether your employer has failed to pay other employees their earned bonuses.



Then, a lawyer can apply the law to the facts of your case. Every situation is unique – it takes a robust understanding of California employment law to build a solid case, particularly if the evidence isn’t cut and dry.

Finally, an employment attorney can build an evidence-backed strategy that helps you avoid the common missteps and mistakes made by employees filing a claim against their employer. In some cases, this strategy might include increasing the damages owed.

How to protect yourself against future unpaid bonuse

You are owed money you earned. It sounds simple, yet unpaid bonus claims are not uncommon. To protect yourself against the risk of future unpaid bonuses, keep the following tips in mind:

Detail the terms of your employment agreement as accurately and clearly as possible – including the specifics of any non-discretionary bonuses your employer offers. The more precisely you can do this, the better. Gaps and ambiguity may give your employer the room needed to wriggle their way out of their obligations and get off without penalty.

Understand the compensation you are entitled to. If you know that meeting goal X means receiving bonus Y, you are empowered to take action when your employer fails to follow through on their promises. You can fight what you don’t know.

If you are in the negotiation stage with a new potential employer, enlisting the well-trained eyes of a lawyer can give you the peace of mind you need to proceed with confidence. Of course, no lawyer can predict the future, but qualified legal counsel can highlight red flags in your contract and propose additions or amendments that safeguard you in the event something goes wrong.

Claim the money you are owed

If you believe you have a legal claim against your employer for an unpaid bonus, act now to claim the money you are rightfully entitled to.

Contact us at Employee Law Group. With three decades of experience behind us, we can help you navigate employment law and achieve the outcome you desire. Schedule your confidential consultation today.