Earlier this month, I talked about how a new case from the Connecticut Supreme Court could have an impact on bonus plans for employers. The Connecticut Law Tribune this week (subscription required) echoes many of my sentiments.
The Tribune states that some employment lawyers believe it is going to have a "wider impact", while others believe that it could enable employers "to escape paying what an employee considered to be a promised bonus."
Management-side lawyers suggest that some businesses may wish to revisit their policies to make the standards for awarding bonuses a little less precise. They may also want to announce to employees that bonuses are discretionary and subject to change. But while that might offer legal protection, it might also make top workers unhappy.
“Where it would be a concern is where the bonus was used to recruit someone, or keep them onboard,” said employment attorney Michael Harrington, who represented Reardon. “I’d be concerned about front-line employees being promised a bonus, where actually the employer has something very different in mind.”
The Tribune article goes on to cite a portion of my blog where I suggest that if an employer had a "set formula" in their bonus program that provided no explicit discretion on the payout, the court might be more inclined to view that as "wages".
In any event, the article reinforces what I said earlier; "Employers may consider reviewing their current bonus arrangements to determine their exposure in light of this decision. "