Q. I am currently in a sales position working from home here in MA (the company is based in NY) and have worked all year for my bonus. Currently I am being pursued by another company but fear that by taking this other job, I will lose any chance of capturing my bonus, and I have already hit payment targets.
In addition, in my original offer letter, the company says that “should my employment end for any reason prior to the trigger date of payment (traditionally payment is four months after the year ends – I found this out later), you will not receive or be entitled to the payment. Is this all legal and do I have any options?
A. Keeping employees “sticky” is part of the design and purpose of a good compensation plan design (by organizational standards), and it sounds like that is what you are covered by. These agreements are very typical with organizations where the bonus pay outs are generous, and the majority of the plans I have seen say you need to be in the job at year end. Yours refers to a trigger date, which may be significantly different than when the bonus is earned, or paid out.
You need to get this detail. A member of the human resources staff should be able to answer the question of what the trigger date is. Perhaps you can get a written definition by sending an email, and asking for the important dates on the earning, awarding, triggering and pay out dates related to your bonus plan.
You may be concerned about having a conversation with your manager because it might raise the idea that you mighty be leaving, but you put plenty at risk by not knowing what you are dealing with. Are there others who have left? Can they help you with their experience?
Before you approach your current employer about leaving, you should discuss your situation with the new employer following the offer.
Depending on the size of the bonus, their hiring need, and the timing of their need, they might be willing to pay you your bonus as a signing bonus. Your conversation needs to address how excited you are about the offer, and the package and you can say “I do have one challenging area. I will be receiving an $XX bonus based on my success in my role. I need to be on the job on XX date to receive that bonus. What flexibility do we have in start date?” This is especially important if you need to be on the job through year end.
If you need an additional four months on the job, that is too long. A direct conversation with your manager might present the best alternative, particularly if you can identify some way in which you can become a valuable business ally in your new role (e.g., by referring clients to your old employer).
Approach your manager to provide your notice, letting him/her know the support you will provide through the transition. Hopefully they will see that you can leave on a positive note, and they may be willing to pay you part or the entire bonus.
These compensation and employment agreements can be complex, and they are legal documents. I consulted with Attorney Josh Black of Bello Black & Welsh LLP , based in Boston. Attorney Black says “If you take this job before the bonus payment date, your present employer will probably not pay you a bonus, and you will have very little recourse.
Your best argument is that the language in your offer letter about a “trigger date” is ambiguous and that you have met the criteria for being paid a bonus by remaining employed until nearly the end of the calendar year. To enhance your position, you should either give your notice after the end of the year or give notice now and offer to remain employed through the end of the year.
But the employer’s position on your potential breach of contract claim would be strong, as you did not remain employed through the “trigger date.”
You could also consider making a claim under the Massachusetts Payment of Wages statute, M.G.L. c. 149 sec. 148 et seq. The statute authorizes the Attorney General or a court to award a successful claimant up to three times the amount in controversy, plus attorneys fees and interest.
While your chances of success on this kind of claim are still low, many employers would consider paying you part or the entire bonus to avoid the expense of defending the claim and to mitigate the risk of paying you more than three times the amount of your bonus. If that does not work, you would still have the option to pursue a claim. But, as I have stated, your chances of success if you bring a claim are low.”