SETTING THE STAGE

Employers who reserve the right to set compensation rates and pay random, unexpected discretionary bonuses should include a clear handbook policy confirming these points.

Policy Drafting Tips:

• Confirm compensation rates are set and/or revised upward and downward at the company’s sole discretion in adherence with the California Fair Pay Act;
• Include a list of determining pay rate factors, such as the employee’s demonstrated know-how and ability, and the job responsibilities’ variety and demands;
• Remind employees that the occasional bonus not linked to any incentive, contract, policy or promise — such as a holiday bonus — is deemed discretionary; and
• Caution that any offer of a guaranteed or goal-conditioned bonus must be authorized and signed by an official representative.

Take-Away:

Implement and regularly review a comprehensive, clearly written handbook to include the above policy.

We publish this series to educate employers on best practices for a well-written handbook that assists applicants, employees, and management alike. To purchase our 2023 template handbook – which contains the above policy and much more – and accompanying forms or for more information, please contact Office Manager Aimee Rosales at 626.583.6600 or email her at officemgr@tbowleslaw.com.

See also:

• Handbook Helper Episode 20 Overtime Policy- Burning The Midnight Oil (March 9, 2023)
• Disorder Insurance – Workplace Policy Handbook & Forms for 2023 (March 2, 2023)
• Do The Math – California Supreme Court Sets Out New Formula for Overtime When “Flat Sum” Bonuses Paid” (March 22, 2018)

Cindy Bamforth
March 24, 2023