California Bonus Labor Laws

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 passed <ahref="https:"" dlse="" wages.pdf"="" target="_blank"> </ahref="https:>several updates to its labor laws for 2015. All legal codes relating to bonuses can be found at the website in the Department of Industrial Relations section on wages.

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

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  • 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.


If you are eligible for a discretionary or unearned bonus, you must be working for the company at the time the bonus is paid to receive the money. If you resign before you are to receive a discretionary bonus payment, your employer has the right to deny you the bonus.