Conditions behind a signing bonus can vary

DEAR CARRIE: Does an employer have to pay an employee a sign-on bonus if the employee resigns before the check is issued? -- Earned bonus

DEAR EARNED: The answer depends on what was promised and when. 

"The devil is in the details, and the details are found in a two-step process, when it comes to signing bonuses," said Alan Sklover, senior partner of Sklover, Donath & Felber in Manhattan.

The signing bonus is a payment an employer makes to a newly hired employee for agreeing to join the business. The agreement can be written or oral, Sklover said. The first step in determining whether the employee who resigned is still due a signing bonus is to look at the terms of the agreement.

Key points to consider are: Did the employer agree that the employee had earned her signing bonus the moment she shook hands? Or, was it the moment she signed an agreement to come to work? Or, was it the moment she first started work? Or did the parties agree that she earned her signing bonus only if she stayed long enough for the check to be written? Or did she have to remain for a week, month or year after receiving the check?

"It is common to see such limiting conditions on signing bonuses," Sklover said.

Written or videotaped evidence makes it easier to prove the terms.

"The party who is making a claim must be able to prove that the claim has a basis in fact," he said. "That's much easier when there is a written, e-mail or videotape record to review; when it's spoken, we have the problem of differing memories."

The second step concerns what happens when people don't discuss the timing of the signing bonus, something that is not unusual.

"It is quite common for people not to discuss when, precisely, the signing bonus would be considered earned," Sklover said.

When that happens, a court will look to what it considers to be "reasonable under the circumstances," Sklover said. "While it would not be reasonable to assume that an employee must stay for 10 years in order to have earned a signing bonus, it also may not be considered reasonable for an employee to have earned a signing bonus if she did not stay on as an employee even long enough for the check to get written."

But he said he has seen instances in which employers seem to have delayed the bonus checks until deciding whether they want to keep the employee, "a sure sign," he says, "of employer bad faith."

If the facts are on the employee's side, and she can prove it, he says, "she should have no problem collecting, either from the employer, or through a small claims or other court in the county of her residence." 

DEAR CARRIE: I read your reply to the "Illegal Deduction" question that involved a company deducting from an employee's wages for its mistake. Sometimes payroll managers make mistakes. I do the payroll weekly for over 250 employees. Why did the employee keep the money and then complain when he had to give it back? And what would have happened if the employee did not come back to the job and the employer was out the money? -- Recoupable funds

DEAR RECOUPABLE: You are referring to last week's column question from the employee whose pay was docked to make up an overpayment of five vacation days. Expecting that an employee who was overpaid might quit still wouldn't make that docking legal.

As the column said, the company could have docked her future vacation pay instead. If the employee left, the problem is no longer a labor law issue. But the company could still recoup the money by negotiation or through a lawsuit, the state Labor Department said.

Click here for more on signing bonuses at www.salary.com/advice/layouthtmls/advl_display_nocat_Ser5_Par18.html

Click here for more on deductions at www.labor.ny.gov/workerprotection/laborstandards/faq.shtm