Bonuses, Clawbacks And Bad Behavior

Bonuses, and an employee's right to receive them, have always been ripe for litigation brought by former and sometimes current employees. In particular, departing employees who leave (whether voluntarily or otherwise) may claim they earned a bonus and that the employer's failure to pay it on their termination constituted a breach of contractor even a violation of wage payment laws.

They may bring such a claim even in the face of policies providing that the bonus is discretionary, or that the employee must be employed on the date of payment and not under notice of termination to be eligible, or other policies or practices that ostensibly limit the employer's obligation to pay.

Recently issued SEC regulations and announcements from the U.S. Department of Justice with regard to bonus policies, however, impose new obligations on employers, and new areas of liability.