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I'm a professional employee in the state of California. I…

Hi! I'm a...

Hi! I'm a professional employee in the state of California. I signed an employment contract that states my bonus is earned Jan 1 - Dec 31st but I need to stay employed with the company until March 1st of the next year. If I voluntarily leave on Jan 1st, do I have any rights to the bonus?

Lawyer's Assistant: Is the employment agreement "at will," union, full time or part time?

At will full time

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

No thank you

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Answered in 2 minutes by:
10/29/2017
DamienJD
DamienJD, Attorney
Category: Legal
Satisfied Customers: 5,147
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Hello: My name is ***** ***** I am an attorney. Please give me a moment to review your question. I may ask some questions to clarify issues.

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Technically, if the employee terminates after the end of a defined bonus plan period (e.g. 12/31), then the employee would be eligible to receive the full bonus because it would be considered "earned". However, the agreement you have is very typical. Most people would bite the bullet and wait until they receive the bonus in March or risk not receiving it or it is being less than expected. Bonuses are discretionary in most cases. Here is a quote I saw regarding it: "Every single top executive I have met who was owed a bonus -- never quit before the bonus was paid. Or if they did, their next employer paid it so they could leave early. So, either wait for your bonus to be paid out, or if you are lucky, your future employer will “keep you whole.”

We can continue to discuss if you want to do so. Or if I misinterpreted your question, let me know. Or if you have a follow-up question, let me know.

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Customer reply replied 8 months ago
I read some California law and it stated the same as you have but also "Prorated" payout is possible. Are there now circumstances I can ask them to pay me based on California law?Thank you!

Let me check. This could take a few minutes.

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You are welcome. I found that prorated payout applies to commissions and possibly earned bonuses. Earned bonuses mean, for example, that an employee gets a bonus based on how many hours someone works. Discretionary bonuses, which is most likely what you have, are not included in determining an employees regular rate of pay and therefore do not impact overtime calculations. Specifically, California labor law defines a discretionary bonus as: “sums paid as gifts at a holiday or other special occasions, such as a reward for good service, which are not measured by or dependent upon hours worked, production or efficiency, are not included for purposes of determining the regular rate of pay.”

So, the prorated aspect would be applied to commissions or earned bonuses not discretionary bonuses. I know that may not be exactly what you would want to hear but it is better to know what can happen in this type of situation.

If you want to discuss further, just let me know.

DamienJD
DamienJD, Attorney
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Customer reply replied 8 months ago
Thank you! My bonus is determined based on my rating though. In other words, it is a target bonus. If I perform poorly I could receive $0 or if I am rated #1 in the company I could earn double the target. Since it is based and calculated on perfromance ratings, does that change things?
Customer reply replied 8 months ago
Hello Damien, Does the definition of bonus change if it dependent on performance?
The definition of bonus is either an earn bonus or a discretionary bonus. So if it depends on how well you did then that would be considered a discretionary bonus. .
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Customer reply replied 8 months ago
Thank you!

You are welcome!

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