In the majority of situations, a court will only require an employer to honor their promise to pay an employee bonus if that promise was part of their employment contract. Typically, under employee bonus payment laws, an employer promises a worker a bonus in exchange for the worker promising to deliver certain results with their work.
This means that bonuses are promised in anticipation of future work performance instead of as a reward for work already completed. When an employer only promises a bonus after a worker has reached a goal for the employer, a court will most likely consider it to be an unenforceable promise and not part of a contract.
In many situations, bonuses and the goals that a worker has to reach to obtain one are often determined during contract negotiation of the worker’s employment contract. To find out more about the enforceability of employee bonuses, an individual should schedule a legal consultation in California.
Is an Employee Bonus Only Good for Future Work?
Whether or not an employee bonus will be enforced will depend on whether the court finds that a contract existed between the worker and employer. Courts are not there to make parties keep their promises.
Instead, a court will enforce a contract under the applicable laws of California. In order to enforce an agreement that includes a bonus provision, the court has to determine that a contract existed between the worker and their employer that has a bonus provision.
For contracts to be valid and enforceable, both parties have to exchange something of value. This means that employers have to obtain something of value in order for the promise to pay a bonus.
The worker then has to promise to meet a goal or produce a result in exchange for their bonus. With bonuses, the employer’s benefit is from the worker’s promised future results.
This is not applicable, however, if the bonus is promised after the worker has already achieved the desired result. This is because the worker did not provide anything in exchange for the promise of a bonus, which means no contract was formed. In other words, the employer cannot provide a bonus for something they already got from the worker.
How and when bonuses will be provided during employment is typically determined during employment contract negotiations.
Can an Employer Take Away a Bonus in California?
In California, if an employer promised a bonus as part of an employment contract and the worker provided the result or performance promised in the contract, the employer should not be able to take away the bonus. For example, if the worker is in sales and meets their sales goal, the employer will have to pay the bonus as described in the contract or they would be liable for breach of contract.
If this happens, the worker may be able to file a lawsuit against the employer for their losses. The employer may also be able to offer to renegotiate the employment contract and take out the provision for the bonus. In that situation, the worker would have to decide if they wanted to continue their employment without the possibility of a bonus.
California lawyers can help workers review their employment contracts and any revisions that their employer suggests.
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Can a Promised Employee Bonus Be Enforced Even if It’s Not Considered a Contract?
In some situations, a court may enforce an employer’s promise to pay a worker a bonus even when a contract is not proved. It is possible for a court to enforce the employer’s promise to pay the bonus based on the legal theory of detrimental reliance.
It is important to be aware that a court will typically reserve detrimental reliance for cases that involve the possibility of an injustice occurring. California recognizes claims of detrimental reliance, but it is important to consult with a local lawyer who can further explain the requirements in detail.
This legal theory may be available to a worker who relies on an employer’s promise to pay a bonus and is then detrimentally affected because of that reliance and suffers an injury or loss. In order to have a successful claim in this situation, the employee would need to show several elements, including:
- The employer made a promise to the worker
- The worker relied on that promise and took an action based on that reliance
- That reliance by the worker was foreseeable and reasonable
- The worker suffered a detriment because they relied on the promise
- Failing to enforce the employer’s promise would result in an injustice
For example, suppose an employer promises a worker a bonus, and that worker plans to use that bonus as a down payment for a home. Suppose the worker confirms that the employer will give the bonus and shares the reason for asking.
Based on that assurance, the worker moves forward and purchases the home. In this situation, it is not likely that a contract was formed, the worker may be able to claim detrimental reliance if their employer did not pay their bonus.
If an Employee Is Terminated, Must an Employer Still Honor a Promise To Pay an Employee Bonus?
If a worker who was promised a bonus in a valid employment contract is terminated, their employer may still have to pay them a bonus, depending on the specific circumstances of the situation.
The main issue in this particular situation would be whether or not the worker fulfilled their obligations for obtaining the bonus under their employment contract. In the example of a salesperson, if they achieved the required sales goals to receive the bonus before they were terminated, the court may require the employer to pay the bonus.
How Can a California Employment Lawyer Help Me?
If you have any questions related to your California employment contract or bonuses, it is important to consult with a California employment lawyer. This is especially true if your employer promised you a bonus that you did not receive.
Your employment attorney can review the facts of your unique situation to determine if there was likely a contract between you and your employer. Your attorney will be able to give you advice about the steps you should take to recover what was promised to you.
If you are considering taking a new job with an employer who has promised you a bonus, it is important to have your lawyer review the employment contract before you sign it. This can ensure that it is a valid and enforceable contract under California law.
If you are an employer who wants to give your workers the ability to earn bonuses, you will want to have an employment attorney to provide advice on how to structure your contracts and agreements. It is also important to have your California employment lawyer explain how you can avoid issues regarding bonuses and your workers.
You can use LegalMatch to find an employment lawyer in your area of California who can help resolve any issues related to a bonus, whether you are a worker or an employer. It is free to use the lawyer matching services provided by LegalMatch and only takes around 15 minutes to submit your concern.
