In short, it depends. When it comes to the enforceability of employee bonuses in New York, an employer may be legally obligated to honor a promise to pay an employee bonus if the bonus is part of a binding agreement. In other words, whether written, oral, or implied, if there is an agreement with a promise to pay, then the employer must generally honor it.
Courts have consistently held that when a bonus is tied to specific performance metrics or forms part of an employee’s compensation package in an employment contract, it may be enforceable under contract law. If the bonus is non-discretionary and the employee has met the stated conditions, failure to pay may constitute a breach of contract.
Additionally, under New York Labor Law Section 193, earned bonuses may be considered wages, and withholding them could trigger statutory penalties. However, purely discretionary bonuses, such as those not based on measurable criteria or not promised in advance, are generally considered an unenforceable promise.
As far as the law, the New York Court of Appeals in the Ryan v. Kellogg Partners Institutional Services (2012) case recognized that a promised bonus, once earned, qualifies as wages under the Labor Law. This then entitles the employee to remedies such as liquidated damages and attorney’s fees.
All in all, employers must exercise any discretion in good faith, and attempts to retroactively alter bonus terms may be deemed unlawful. Courts will also consider the employer’s past conduct, such as consistent bonus payments, as evidence of an implied contractual obligation.
Should you have any questions regarding whether or not your employee bonus must be honored, it is recommended to set up a legal consultation in New York with a New York employment lawyer familiar with handling such cases. They can advise you as to whether or not your employee bonus is enforceable.
Is an Employee Bonus Only Good for Future Work?
In New York, a bonus typically only becomes enforceable when it’s promised in return for services yet to be performed. For a bonus to form part of a valid contract, there must be mutual consideration. This means that both the employer and employee receive something of value.
If the bonus is offered after the work is completed, it often lacks legal enforceability due to the absence of that consideration. Courts generally uphold bonuses tied to future results because they align with contractual principles and incentivize ongoing efforts.
That said, when an employee fulfills specific criteria that make a bonus non-discretionary, it may qualify as “earned wages” under New York Labor Law Section 193, regardless of when it’s paid out.
Can an Employer Take Away a Bonus in New York?
In short, it depends. Once again, in New York, once an employee earns a non-discretionary bonus by meeting pre-established requirements or performance standards, the employer is typically obligated to pay it.
These earned bonuses are treated as “wages” under New York Labor Law Section 193, and cannot be withheld or deducted without legal justification. The ruling in the William Mattar, P.C. v. Riley (2025) case reinforces this standard by ruling that delaying or conditioning the payout of a bonus already earned, such as requiring continued employment, conflicts with both public policy and statutory labor protections.
In contrast, discretionary bonuses, which depend solely on the employer’s judgment and are not tied to specific achievements, remain outside the scope of wage protections. In fact, New York’s highest court clarified that bonuses linked to the employer’s profits or subjective performance evaluations do not constitute wages under Labor Law Section 190(1).
Because these bonuses are not guaranteed, an employer retains the right to modify or cancel them without breaching the law. All in all, clear policy language is essential to help distinguish between the two types and avoid legal pitfalls.
Can a Promised Employee Bonus Be Enforced Even if It’s Not Considered a Contract?
In New York, a promised bonus may still be enforceable even if it doesn’t meet the formal requirements of a contract, under the legal doctrine of promissory estoppel. This legal principle allows for courts to uphold a promise when an employee reasonably relies on it to their detriment.
For example, if an employer assures an employee of a bonus and the employee takes significant action based on that assurance, such as making a financial commitment, then the court may enforce the promise to prevent injustice. The key elements for proving promissory estoppel include a clear promise, reasonable and foreseeable reliance, and actual harm resulting from that reliance.
Although New York courts generally prefer to enforce written agreements, they have recognized promissory estoppel in employment contexts where denying the bonus would be inequitable. This approach is especially relevant when the bonus was promised for past performance and no formal contract exists.
However, the burden of proof for demonstrating that the court should enforce the bonus lies with the employee. The employee must show that their reliance was justified and that the employer’s promise was sufficiently definite. Consulting New York lawyers familiar with detrimental reliance is recommended to evaluate whether the facts support such a claim.
If an Employee Is Terminated, Must an Employer Still Honor a Promise To Pay an Employee Bonus?
Once again, if an employee in New York has already earned a non-discretionary bonus before being terminated, the employer is generally required to pay it. This is true even after the employment ends.
These bonuses, which are tied to specific performance goals or contractual terms, are considered “wages” under New York Labor Law Section 193. Courts have held that once the conditions for earning the bonus are met, the employer cannot retroactively impose continued employment as a requirement for payment. Attempting to withhold such compensation may expose the employer to liability for unpaid wages, including penalties and interest.
However, if the bonus is discretionary, like being based solely on the employer’s judgment or company-wide financial outcomes, then it may not be enforceable after termination. Employers often include language in bonus plans requiring the employee to be actively employed on the payout date, and if clearly stated, such conditions can be upheld. This generally occurs during employment contract negotiations.
Importantly, if the employee was terminated without cause and had already fulfilled the bonus criteria, courts may interpret the agreement made in the contract negotiation in favor of the employee, especially if denying payment would result in unfairness or violate public policy.
How Can a New York Employment Lawyer Help Me?
If you are having an issue regarding a bonus, then it is recommended to meet with an experienced New York employment lawyer. LegalMatch can assist you in locating and setting up a consultation with an employment attorney near you who handles such cases.
An employment lawyer will be able to evaluate the specific facts of your case and recommend your best course of legal action. They will then be able to assist you in handling your claim and giving you your best chance of a successful outcome.
Often, this will begin with them negotiating with your employer. However, if negotiations fail, they can then guide you through the administrative process. If that then fails, they can file a private civil lawsuit on your behalf and represent you in court, as needed.
