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Bonus Payments (including Incentive Compensation)
National Summary
Many employers offer their employees various types of bonuses—including performance awards, gain-sharing systems, and profit sharing. While bonuses are generally used to reward performance, awards are not directly tied to job performance and are usually offered for perfect attendance, for providing new hire referrals, to recognize an outstanding employee, to motivate employees to work safely, or to reward employee suggestions. There are various legal and tax considerations for employers giving awards and bonuses to their employees. Promised bonuses may be construed as contracts by the courts, while the Fair Labor Standards Act (FLSA) requires employers to count nondiscretionary bonuses in an employee's regular rate of pay for the purpose of calculating overtime.
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170478news.aspxNews Cracking the Code: Adding Bonuses to FLSA Overtime Calculations 04/16/2024National
160480tools.aspxChecklists Bonuses Checklist 02/20/2017National
159000tools.aspxPolicies Bonus Payments 01/13/2017National
160483tools.aspxChecklists Incentive Compensation Checklist 05/26/2016National
168609index.aspxQuestions & Answers An employee got a signing bonus last year, but has left the organization. We want to 'claw back' the bonus. How do we do this? 09/14/2015National
167568index.aspxQuestions & Answers We would like to have a monthly drawing for a cash bonus. Are there other legal issues we should consider? 06/26/2013National
167325index.aspxQuestions & Answers Are we required to pay a holiday bonus to employees on military leave? 12/31/2012National
160242index.aspxQuestions & Answers We provide performance bonuses for our employees based on the company's financial performance. Is there is a "standard" or ideal goal we should reach for for each employee depending on their position? 12/10/2010National
159273index.aspxQuestions & Answers An audit revealed that I overpaid an employee by $5,000 in 2008 in the form of a bonus. How do we go about recovering this from the employee, and what are the tax implications to the company? 09/21/2009National
158990tools.aspxPolicies Bonus Plan (Standard II) 06/01/2009National
156435index.aspxAnalysis Bonus Payments 03/04/2009National
155928index.aspxQuestions & Answers Our managers have the potential to earn a bonus each quarter. They have to meet specific criteria. My question is: If a manager decides to leave employment in the middle to end of the quarter, and he or she has met all the criteria for earning the bo 03/28/2008National
155829index.aspxQuestions & Answers Our company is looking to set up a rewards and incentives program. Do you have any sample policies? 01/08/2008National
155813index.aspxQuestions & Answers I have been told that 25% must be withheld for federal withholding on bonus payments. The only reference I found said that this applied to supplemental payments over $1,000,000. Can you verify if this is correct? 12/27/2007National
155348index.aspxQuestions & Answers We are thinking about giving a time-off bonus in lieu of a monetary bonus to an employee for that employee's help through a transition period. Is this legal? 10/24/2006National
155338index.aspxQuestions & Answers Under what circumstances must an employer pay a promised bonus? 10/10/2006National
155045index.aspxQuestions & Answers What are the withholding requirements for bonus payments? 04/25/2006National
154961index.aspxQuestions & Answers Under the federal Fair Labor Standards Act (FLSA), when must bonus payments be included in a worker's hourly rate? 02/07/2006National
154506index.aspxQuestions & Answers How will the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 affect retention bonuses paid by companies who have filed bankruptcy petitions? 08/01/2005National
159001tools.aspxPolicies Employee Referral Program 06/16/2005National
158998tools.aspxPolicies Employee Service Awards 06/16/2005National
158999tools.aspxPolicies Progression Pay Increases (Hourly) 06/16/2005National
153020tools.aspxPolicies Attendance Awards 10/15/2003National
152918tools.aspxForms Merit Rating 02/06/2003National
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