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Patrick, Esq.
Patrick, Esq., Lawyer
Category: California Employment Law
Satisfied Customers: 6254
Experience:  Significant experience in all areas of employment law.
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Hi - i am a resident of California and went to work for my

Resolved Question:

Hi - i am a resident of California and went to work for my employer in San Francisco in 2011. The terms included a sign on bonus of $40,000 that was structured as 50% forgiven after first year of service and 50% after second year of service. After 60 hour work weeks with no end in sight and promised support of an admin that did not materialize, i resigned. HR is tryign to collect $20,000 - the 1/2 of the sign on bonus because i am resigning before maturity date and trying to take it out of paid time of accrued. What can i do in California to prevent this? Thank you
Submitted: 1 year ago.
Category: California Employment Law
Expert:  Patrick, Esq. replied 1 year ago.
Hello and thank you for entrusting me to answer your question. I am very sorry to hear about your very negative experience at this job and the fact that they are now trying to get you to pay back part of your signing bonus.

The signing bonus structure you describe is somewhat unusual and treads ambiguous legal ground. This is because, as a general principle, earned wages cannot be forfeited. Thus, in any situation where an employee is forced to "give back" money that the employer has paid, things can get a bit confusing.

Such a signing bonus would be legally enforceable only if it clearly and unequivocally stated that continued employment for X years or months was a prerequisite to retention of the bonus. In that sense, the bonus would not be a "wage" paid at the time the offer of employment is accepted, but rather a carrot-and-stick financial incentive that "vests" upon completion of the designated periods of employment--much like stock options.

An individual in your circumstance would need to argue that the signing bonus constituted a "wage earned" at the time it was initially paid, and as such, cannot be forfeited. However, if the contract clearly stated that the bonus would not be "earned" until completion of certain lengths of employment, this may be a losing argument.

Generally, the best course of action would be to submit the matter to the Department of Labor Standard Enforcement for them to decide how the payment of your bonus should be characterized. To file a wage claim with the DLSE, visit this link: http://www.dir.ca.gov/dlse/howtofilewageclaim.htm

So to summarize, a signing bonus structure such as what you have described is unusual and presents an issue with regard to forfeiture of wages earned. However, assuming the agreement clearly set forth that the bonus was not a vested "wage" but subject to revocation, as appears was the case for you, it is possibly enforceable in much the same way as stock option incentives. Disputes such as this are often best resolved by filing a wage claim with the DLSE, which can issue an order regarding the nature of the bonus payment.

I sincerely XXXXX XXXXX this information helps you and I wish you the best.

If you do not have any further concerns, I would be very grateful if you would give my answer a positive rating and click submit, as this is the only way I will receive credit for assisting you. If you have any additional concerns that you would like me to address, please feel free to let me know by hitting the REPLY or CONTINUE CONVERSATION button and I will be more than happy to continue assisting you.

Finally, please bear in mind that none of the above constitutes legal advice nor is any attorney client relationship created between us.

Thank you and very kindest regards.
Patrick, Esq., Lawyer
Satisfied Customers: 6254
Experience: Significant experience in all areas of employment law.
Patrick, Esq. and 3 other California Employment Law Specialists are ready to help you
Customer: replied 1 year ago.


Thank you very much, at the onset you have helped me craft a reply to alert them i am investigating the manner. The HR person tried to use my accrued PTO and threatened me with a demand i must pay this back on my last day but i did not respond so they can not use my PTO to pay this because i did not agree. In fact, they also owe me sales commision that i am crafting a demand for on my last day because in California the sale has been signed and the Partner validated the sale, they owe me the commision so this will be an interesting week - hence why in the office working through things to present on Tuesday before i will do any turnover with a client. Thanks,

Expert:  Patrick, Esq. replied 1 year ago.
Larry,

Thank you very much for your reply and for rating my answer. A couple other points for your to keep in mind that may be helpful:

PTO is generally regarded as a "wage earned" and thus cannot typically be forfeited by an employee. When an employee with accrued PTO quits, their employer must generally "cash them out" on the accrued amount.

With regard to both commissions and the "cash out" of PTO, an employee is entitled to payment of these things immediately upon termination or within 72 hours of an employee giving notice of their intent to quit. (Labor Code 201) Failure to immediately pay a departing employee's final "wages" (or within 72 hours of the notice to quit) will typically result in the assessment of a penalty in the amount of the employee's daily rate of pay for each day the wages go unpaid up to 30 days.

So for example, if an employee who makes $100 a day is terminated on on the first of the month but not paid his final wages (which would include commissions and accrued PTO) until the 20th, he would be entitled to a $2,000 penalty from his employer in addition to the earned wages.

All the best to you moving forward.
Customer: replied 1 year ago.
Hi- thank you for the additional information. Interesting point on the 72 hours as i would have expected that to be in effect after my last day versus the date i resigned. But i will combine my response for the sign on bonus, commission and pto stipulating all to be paid within 72 hours of my last day of September 7th and the sign on bonus forgiven as a wage earned that was taxed in 2011 just to make them aware i am prepared to fight for what is mine. Horrible 1.5 years with this firm versus the 10 good years i had at my previous firm they recruited me from in 2011. Time to move on and start my new chapter...
Expert:  Patrick, Esq. replied 1 year ago.
Sorry, I may not have been clear about how the 72 hours work.

Final wages must be paid by the later of either 72 hours from the date on which notice of intent to quit is given, or on the actual quit date. So, if notice is given two weeks in advance, final wages would be due on the last day of employment. However, if notice of intent to quit is given 24 hours before the last day of employment, final wages would be due 48 hours after the last day of employment. I just want to make sure that's clear.

Again, best of luck moving forward.
Customer: replied 1 year ago.
Perfect, thanks again as i was going to give them the benefit of 72 hours after my last day with the combined reports of pto, commission and refusal to repay sign on bonus. Cheers XXX XXXXXX for well wishes.
Expert:  Patrick, Esq. replied 1 year ago.
You are very welcome. Thank you for choosing Just Answer and feel free to contact me with future questions.

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