Bonus Plans May Have Unintended Consequences

Daily Journal

California employers have increasingly shared profits at all levels of the work force, a practice which has produced unintended consequences in the form of possible class action exposure for improper bonus calculations. In at least six recent class actions, plaintiffs purporting to represent employees have filed class actions challenging a wide variety of bonus plans whenever a bonus deducts costs when calculating the bonus. Courts have applied statutes designed to protect employee wages in a way that may make it difficult or even impossible to maintain bonus plans, at least for nonexempt employees. This article details the cases that have shaped the legal landscape.