California Bonus Labor Laws | Sapling

California Bonus Labor Laws

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Written By
Jenny Hansen
Jenny Hansen
Jul 21, 2010
2 minute read

Payments of bonuses or commissions are a form of wages in California. There are two kinds of bonuses: discretionary and earned. The state treats these two forms of income differently. The most important distinction is that earned bonuses affect the rate calculation of hourly wages when determining overtime for non-exempt, or hourly, employees, while discretionary bonuses do not.

California Labor laws are very clear about when wages and bonuses must be paid out.

  • If your employment is terminated by an employer, all wages owed must be paid to you that day. Commissions and earned bonuses count as wages; discretionary bonuses do not.

  • If you quit, your employer must pay you within 72 hours. However, if you have resigned with at least 72 hours' notice, your employer must pay you on your final day with the company.

Your now ex-employer must pay your final check within 72 hours of the time you walk out the door, or it owes you a penalty equal to a day of wages for each day it falls beyond the deadline. The maximum penalty is 30 days' worth of pay.

If a company terminates an employee before bonus time, it may or may not have the right to then withhold the bonus. Commissions that have been earned must be paid, but discretionary bonuses are murkier.

You are only entitled to the bonus if it was not conditional to employment. In other words, if the bonus was contingent only upon completing a task, whether you stayed with the company or not, if you completed the task, you get the bonus.

Jenny Hansen

Jenny Hansen has trained on technology for 20 years, working at Fortune 500 companies such as Xerox, Nestle Foods and Capital Group. She is a technical writer and member of the Microsoft Insiders User Group and does social media and…

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