Provided by: Jennifer Kirschenbaum, Esq.
December 3, 2019
I am getting ready to brace myself for employee demands for bonuses. What is the best approach here? I usually give everyone the same amount ($100 for staff) and then a few get a little more that are merit based. Is this ok?
Thanks, Dr. S
Depends. We have to be careful you are not setting yourself up for a claim of disparate treatment among the employees. Under NYS law, and other similarly situated states, Employers are absolutely legally entitled to award discretionary bonuses, but the fact a bonus is discretionary should be documented by contract or policy.See Buckman v Calyon Sec. (USA), Inc., 817 F.Supp.2d 322, 338 (S.D. N.Y. 2011). So here, where everyone gets $100 except for a few on "merit basis", I would ensure you have a policy that bonuses are 100% discretionary and then I encourage you to internally document why some are being awarded a merit based additional sum than everyone else. Documentation can be as simple as an email to your office manager or controller distributing payment and a rationale as to why some are receiving more than others. Documenting the discretionary bonus is also easy - we can capture in a policy or the employee handbook, or by individual contracts. Similarly, if we are not awarding a bonus to any employee, while others are receiving, you may elect, as a best practice, to document as well.
For assistance in proper papering of policy, including bonuses, email (email@example.com) or call Jennifer directly.