HANDBOOK HELPER EPISODE 22Policy Should Establish Management’s Discretion on Pay Rates « Law Offices of Timothy Bowles | Top Employment Law Firm in Los Angeles


Policy Should Establish Management’s Discretion on Pay Rates


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.


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:

Cindy Bamforth
March 24, 2023

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