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Failure to Pay End of Year Bonus

a woman holding an envelope and paycheck above a laptop keyboard

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 employers aren’t obligated to offer bonuses, they are required to follow through when they make these promises. If your bonus is being unlawfully withheld, the attorneys at Maginnis Howard may be able to help. We have significant experience handling bonus and other benefit issues for highly compensated employees.

Bonuses and Commissions

Although employment agreements are not required in North Carolina law does not re, 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 specify an employee forfeits promised year end bonuses if their employment ends before the bonus dispersal. Some employers argue their discretion supersedes even written contracts. 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.

Bonuses under North Carolina Law

When determining whether an employer owes a bonus the first documents to consider are employment contracts or handbooks. In the absence of these written employment documents, courts will consider other evidence of the bonus. This can include oral promises or contracts, and the existence of past bonuses. 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 must 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.

Many states do not consider bonuses and other incentive compensation as “wages.” That is not the case in North Carolina. The North Carolina Wage and Hour Act does consider an end of year bonus as wages. 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.

Representation for Unpaid Bonuses

To speak with a North Carolina attorney about unpaid bonuses, commissions, vacation pay, or other wage issue, contact Maginnis Howard. 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.