Failure to Pay End of Year Bonus


Is your employer trying to avoid paying an end of year bonus? End of year bonuses are oftentimes the most anticipated and important bonus awarded to an employee. Although there is no obligation for an employer to offer these end of year bonuses, if they are promised and are not discretionary, they must be paid. If your bonus is being unlawfully withheld, the attorneys at Maginnis Law, PLLC may be able to help. We have significant experience handling bonus and other benefit issues for highly compensated employees. For example, we are currently representing an individual who was entitled under the terms of his contract to receive a percentage of all company sales in his assigned territory. When the employer balked at paying the end of year bonus due under his contract simply because it was too high, we filed a lawsuit on the employees behalf.

Unpaid Bonus AttorneyAlthough employment agreements are not required in North Carolina, they are common for executives or other employees for which bonuses or commissions are an important component of their compensation structure. Bonuses allow employers to keep compensation systems flexible and may motivate and incentivize top performers. Bonuses and commissions often necessitate the use of a written plan or policy to ensure clarity and avoid unintended consequences, including lawsuits.

Claims for an unpaid end of year bonus typically arise when the employee leaves, whether voluntarily or through termination. Many bonus plans state that a year-end bonuses are forfeited or eliminated if they are not paid while an individual is employed. Even if a bonus plan or policy is written, employers often argue that they have absolute discretion over paying bonuses. In these situations, courts may distinguish between bonus plans where an employer retains discretion over whether the bonus will be paid at all and those bonus plans where an employer retains discretion to determine the amount of the bonus.

Written employment contacts, handbooks, or bonus plans are the first documents to consider in analyzing whether a bonus should be paid. In the absence of these written employment documents, courts will consider other evidence of the bonus, including oral promises or contracts, and whether bonuses have been paid in the past. Typically, the most important factors to consider are whether the bonus is guaranteed or simply discretionary, how the bonus is calculated, and when the bonus is to be paid. In North Carolina, oral employment agreements to make bonus payments are enforceable, however, the employee most still prove the amount of the bonus, the method of calculation, and when the bonus has vested. Most year-end bonuses vest either at the end of the calendar year or fiscal year.

In many states, bonuses and other incentive compensation are not covered as “wages.” That is not the case in North Carolina; an end of year bonus is considered wages under the North Carolina Wage and Hour Act. Employers that violate the North Carolina Wage and Hour Act by not paying bonuses may be subjected to liquidated damages in the amount of the unpaid wages, and may have to pay the employee’s attorneys’ fees.

To speak with a North Carolina attorney about unpaid bonuses, commissions, vacation pay, or any other wage issue, contact Karl S. Gwaltney, a wage and labor attorney at Maginnis Law, PLLC. Karl S. Gwaltney provides free consultations for individuals owed bonuses, commissions, or other wages and is oftentimes able to take certain wage and hour/overtime cases throughout North Carolina on a contingency fee basis. Contact the firm to discuss your overtime claim today or submit a confidential new case inquiry here.