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December 30, 2010
Organizations Paying Out More for End-of-Year Bonuses, BLR Poll Reports

More organizations are paying out more for end-of-the-year bonuses (28%) than in 2009 (7%), reports a recent BLR poll. The percentage of employers who don’t give end-of-the-year bonuses remained relatively unchanged, just under 30 percent.

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The poll asked respondents, “How will your organization's end-of-the-year bonuses compare with those given last year?” The results are shown below and compared with the 2009 poll results.

Compared to last year ...
We don't give end-of-year bonuses.
We'll pay out more than we did last year.
They'll be about the same as last year.
We'll pay out less than we did last year.
We had to eliminate them this year.

Bonuses can become an integral part of a company's compensation package. They can be used as an incentive to retain top performers and can be used to eliminate or reduce annual salary increases.

However, like other forms of compensation, there are several legal considerations employers should be aware of.

Promised Bonuses - Employers have been held legally responsible for the payment of bonuses expressly promised to employees as incentives.

Fair Labor Standards Act (FLSA) - Under FLSA, bonus payments are divided into discretionary and nondiscretionary types. Nondiscretionary bonuses are included in an employee’s regular rate of pay for the purpose of determining overtime, while discretionary bonuses are not included in an employee’s regular rate of pay to determine overtime.

Family Medical Leave Act (FMLA) – FMLA regulates when employers can and cannot deny bonuses to employees who have taken FMLA leave.

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 - The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 affects retention bonuses provided by employers that have filed for bankruptcy. The law establishes rules on when bonuses may not be paid, and when bonuses are allowed.

Participate in this week's Compensation poll.

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