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September 22, 2010
Increased Risk in the Changing World of Incentive Pay

In a BLR webinar entitled "Avoid Startling High Fines and Expensive Lawsuits Based on Failure to Pay Overtime on Bonuses," Clint D. Robison, Esq. from the Los Angeles office of Hinshaw and Culbertson LLP offered an overview of incentive pay in recent years:

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  • There is growing competition from nontraditional sources
  • The employment pool is shrinking
  • Shareholders are making greater demands
  • As a result, we expect more from employees
  • One way to increase performance is to base compensation on performance or sales goals

Employers' attitudes about bonuses and decisions about compensation are evolving as they ask themselves questions such as:

  • Will more companies introduce new financial performance measures to annual incentive programs?
  • Is there more discretion in bonus payouts coming?
  • Is there an increasing range of performance for payouts?
  • Are others in my industry engaged in risk assessment plans?

There will be increased risk going forward. Coupled with more incentive pay plans, targeted sectors are seeing compliance reviews from the Wage and Hour division of the Department of Labor (DOL). One bank agreed to pay $3.8 million in back pay penalties.

  • The DOL has over 27 large divisions
  • 300 new officials have been hired for audits
  • Expect more audits in the coming months
  • Audits are not random

Clint D. Robison, Esq. is a an attorney in the Los Angeles office of Hinshaw and Culbertson LLP ( and Chair of its Employment Practice Liability subgroup. He provides counseling, litigation and risk management services to medium- and large-sized public and private entities and handles all aspects of employment litigation and advice including wage and hour matters, discrimination claims, employment contracts, trade secret issues, retaliation claims, sexual harassment claims and Americans with Disabilities Act (ADA) issues.

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