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Bonus Payments (including Incentive Compensation)
National Summary
Many employers offer their employees various types of bonuses—including performance awards, gain-sharing systems, and profit sharing. While bonuses are generally used to reward performance, awards are not directly tied to job performance and are usually offered for perfect attendance, for providing new hire referrals, to recognize an outstanding employee, to motivate employees to work safely, or to reward employee suggestions. There are various legal and tax considerations for employers giving awards and bonuses to their employees. Promised bonuses may be construed as contracts by the courts, while the Fair Labor Standards Act (FLSA) requires employers to count nondiscretionary bonuses in an employee's regular rate of pay for the purpose of calculating overtime.
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TopicTypeTitleDateState
93812faqs.aspxBonus PaymentsQuestions & Answers We would like to have a monthly drawing for a cash bonus 06/26/2013National
92543faqs.aspxBonus PaymentsQuestions & Answers We are considering a discretionary bonus plan. Do you have examples of some criteria that we can use to distribute the funds? We don't want it to be a non-descretionary plan, but would like it to be incentive driven. 11/01/2012National
90550faqs.aspxBonus PaymentsQuestions & Answers Does BLR have sample Discretionary Bonus Plan documents? 12/05/2011National
81867faqs.aspxBonus PaymentsQuestions & Answers We plan to pay bonus to one Vice President who had remarkable performance. This bonus is very particular and not for every employee. What should we do to avoid misunderstandings by other employees? 03/08/2010National
81243faqs.aspxBonus PaymentsQuestions & Answers What is the dollar limit of a cash award that does not need to be included in reportable wages or is there a minimum limit? 11/18/2009National
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