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Can an Employer Ask You to Give Back a Bonus?

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Bonuses are incentives companies provide to their employees above and beyond stated salaries. They are a common form of incentive for managerial jobs and other higher-level positions. However, bonuses are not necessarily guaranteed by the business. Depending on how and when an employee leaves a company, the business may be able to legally reclaim a bonus check.

Giving Back a Bonus: Contracts

An employer absolutely can ask you to give back your bonus after you have left work. While you are still at work, it is a much rarer occurrence. In both cases, the actions of your employer are based on the business contract you signed when entering your position. This contract governs bonuses, when you receive them, how much they are and what actions can allow a company to reclaim the bonus. Leaving a company suddenly is a common reason cited in contracts as are various forms of misconduct.

Bonus vs. Commission

Note the definite difference between a bonus and a commission. A commission is actually part of your compensation and is much more difficult for a business to legally reclaim, since you earned it. A bonus is more akin to a gift than a commission, so it is not tied so tightly to your compensation. If you get a commission, that commission is typically protected, but bonuses may not be under the same rules.

Legal Precedence

Legal precedence in the state in which you work can have a significant impact on whether a business can take back your bonus as can federal legislation. The Wage Payment Act made room for employees to keep their bonuses if the business contract clearly states what employees must do to receive the bonus and if you have fulfilled all qualifications even if you have left the company. But if the law is not clear or if you have not followed business regulations precisely, the business may be able to take back the bonus. States have a variety of formulas and qualifications they use in these cases.

Timing May Be Everything

When it comes down to leaving and taking a bonus, your employer may base the final decision on when the bonus was due. Bonuses due before you left the company or missed the bonus requirements will probably still be given to you and not demanded back again. Bonuses due after you quit, for example, will often be reclaimed by your employer.