Discretionary Bonus Program - Can a company refuse to pay if the goals are met?

My company has indicated to me that I am eligible for a bonus program. This program is in addition to an annual salary that I receive. The bonus program requires that I meet certain goals throughout the year. If I meet the goals, can the company change their mind and not pay me the bonus? If so, can I sue for breach of contract?

1 answer  |  asked Mar 27, 2008 12:42 PM [EST]  |  applies to Pennsylvania

Answers (1)

Christopher Ezold
An employer may not refuse to pay you wages or bonuses that you have earned.

Before I respond to your inquiry, I must state that we have not spoken, I have not reviewed the relevant documents and facts, and I do not represent you. Therefore, my discussion below is not a legal opinion, but is informational only. Finally, my discussion applies only to issues to which Pennsylvania or Federal law apply, unless otherwise specified.

That being said, an employer may not refuse to pay you wages or bonuses that you have earned. Whether you have earned the bonus and whether the employer may determine the amount of the bonus in its discretion are likely the main issues. If it is a true 'discretionary bonus plan' then having met your goals may only make you eligible for a discretionary bonus; that is, for a bonus that can be at any amount the employer wishes, including zero.

If you have earned a bonus AND it is for a determinable amount that the employer may not change in its discretion, then you may have a claim for nonpayment of wages; under the Pennsylvania Wage Payment and Collection Law, you would have a right to your wages/bonus, a 25% penalty and your attorneys' fees.

If you would like to discuss this matter further, please feel free to contact me at the below address(es) or number.

/Christopher E. Ezold/
Nancy O'Mara Ezold, P.C.
One Belmont Avenue,
Suite 501
Bala Cynwyd, PA 19004
(610) 660-5585
Cezold@Ezoldlaw.com

posted by Christopher Ezold  |  Mar 27, 2008 1:46 PM [EST]

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