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Claim Your Free Copy of Overtime Primer: Highlights from the New Regulations

The federal DOL overtime regulations go into effect this year. Are you ready?


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This report includes a summary of key changes, including the salary level test and salary basis test.

As a bonus, we've included a handy flowchart to help you determine exemption status under the FLSA.

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February 18, 2002
Bonuses Coming into Question
Why
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do companies in financial trouble shower millions of dollars in bonuses on executives and other employees?

The question is being asked more and more often, USA Today reports.

The practice isn't new, according to the newspaper. Employers facing bankruptcy or liquidation say they need bonuses to hold onto to key employees.

But detractors are pointing to the size of the awards and the message they send to other employees, who may be facing layoffs and reduced severance and health benefits.

The examples, according to USA Today, include these:

- Federal lawmakers are looking into why Enron reportedly paid $55.5 million in bonuses to more than 500 employees as the company was filing for Chapter 11 bankruptcy protection Dec. 2.

- Steelmaker LTV plans to give bonuses to more than 200 employees, raising questions from lawmakers and creditors in bankruptcy court. LTV wanted to give roughly $9 million, depending on specific scenarios to key executives and employees, but creditors complained the amount was too high.

- Some Burlington Industries employees opposed a company plan to award bonuses to top managers while it seeks bankruptcy protection. More than 70 managers at the textile company would get bonuses; the total plan could reach $13 million.

- Polaroid retirees took legal action in bankruptcy court to try to halt plans by the company to give millions of dollars in bonuses to top executives. Officials withdrew the motion for a retention bonus plan after an initial payment of $1.55 million was approved.

To read the USA Today article, click here.


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