Can an Employer Demand You Repay a Bonus Received Before You Give Notice

Sometimes my fellow members are very myopic in their view of the law as written in statutes and regulations as opposed to an examination through the case law of the State.

Some keep speaking of agreements and contracts that will control the situation of the employment and the bonus but in this case there are none. But it is not that clear cut and I suggest that a reading of the Massachusetts case law on employee and bonus contracts may change your mind.

An employment contract can be terminated "at will" by either the employer or employee at any time. There may be a time frame for the notification of termination (30 days, 2 weeks or whatever, or no stipulation at all), depending on if it is a written contract or a verbal contract. But the fact remains, that either can terminate the contract. And from what I have read now in the Massachusetts case law, the employer has the upper hand in this situation.

But the more important doctrine here is that of "bad faith". I disagree with those of you who have said that the employer has the burden of proof to establish that the "bonus" is not a retention bonus looking forward. And that OP is entitled to it whether she stays with the company or not just because it was paid, agreement or not.

OP is going to have to prove that the bonus was not taken in bad faith knowing that she will be leaving the company.

Budwad, which one of us works in Human Resources in Massachusetts? You or me?

You may be the smartest person on the planet when it comes to Human Resources in Massachusetts, I am just telling what I found in my research on the issue. Human Resources is not the practice of employment law, is it? You may be correct and I may be wrong or maybe not. :friendly_wink:

Human Resources professionals have to be very much aware of employment law, thank you, and I have direct experience on this point. Since 49 out of 50 states are at-will states (and the 50th recognizes the at-will doctrine in some situations) the fact that Massachusetts is an at-will state is irrelevant. There is no evidence whatsoever in what the OP has posted that any contract existed; it appears to be a case of the employer deciding after the fact that there was a one-year stay provision. There cannot be a bad-faith issue if the poster had no idea that he was expected to stay a full year to get the bonus.

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Quoting budwad

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Sometimes my fellow members are very myopic in their view of the law as written in statutes and regulations as opposed to an examination through the case law of the State.

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I think most of the people in the forum have only passing familiarity with state regulations, although they're rarely going to provide much insight into the issues raised in most forums. Statutes, quite obviously, can be important. Case law can shed light on how courts interpret statutes. If somebody has case law that suggests that another person has misinterpreted a statute, they should share it.

What statute or regulation do you believe has been misinterpreted, and what case law have you found that clarifies the issue?

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Quoting budwad

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Some keep speaking of agreements and contracts that will control the situation of the employment and the bonus but in this case there are none.

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You mean that there are no written contracts. There certainly is a contract, even if it boils down to a simple exchange of services for compensation.

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Quoting budwad

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But it is not that clear cut and I suggest that a reading of the Massachusetts case law on employee and bonus contracts may change your mind.

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What is not clear cut, and what case law are you looking at?

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Quoting budwad

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An employment contract can be terminated "at will" by either the employer or employee at any time.

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That's implicit to an at-will employment relationship. Nobody appears to have any confusion on that point.

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Quoting budwad

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But the more important doctrine here is that of "bad faith".

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You mean, in the sense that case law holds that "every contract implies good faith and fair dealing between the parties to it." As good faith is presumed, bad faith must be proved. Also, an allegation of bad faith is not a magic bullet -- if the plaintiff cannot prove that there was an agreement for the defendant to remain employed, there's no "bad faith" in the employee's accepting a paycheck or bonus. If the plaintiff cannot establish the terms of a contract pursuant to which the defendant agreed to remain employed for a period of time following the bonus, then the plaintiff cannot establish any contractual violation, let alone any basis to allege "bad faith" as a basis to recover the bonus. If the plaintiff can establish such an agreement, then "bad faith" is irrelevant to its right to recover.

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Quoting budwad

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I disagree with those of you who have said that the employer has the burden of proof to establish that the "bonus" is not a retention bonus looking forward.

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If you check Massachusetts case law, or for that matter any state's case law, you will find that a plaintiff alleging a breach of contract has the initial burden of proof. As part of its prima facie case, the plaintiff must establish that a contract exists, must establish its terms, must establish the breach, and must prove damages. If the plaintiff fails to meet its initial burden on any of those elements, the plaintiff loses.

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Quoting budwad

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And that OP is entitled to it whether she stays with the company or not just because it was paid, agreement or not.

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The OP's right to retain the bonus depends upon the terms of any agreement reached with the employer.

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Quoting budwad

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OP is going to have to prove that the bonus was not taken in bad faith knowing that she will be leaving the company.

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That is simply not correct. The defendant does not even have to say a word or offer a shred of evidence until the plaintiff's prima facie case is established.

i think my boss and i had two different ideas about what the bonus was about. i asked and wrote in emails back in august that i wanted a pay raise to $XXX and i was only being paid @XXX at the time. he said he could provide an educational bonus since i am in school for my masters and i continuously said i do not want or need an educational bonus, i would rather have this money spread out on my paycheck on a per month basis so that it is a part of my salary.

we had different ideas about the bonus and what it meant. i wanted that money as part of my salary, it was paid as a bonus, and now it is being claimed that since i didnt stay while i was in school (i just started in september) that i owe the money back.

again, i never wanted it to be for school. on my paycheck it does not say school bonus. it just is a bonus.

Boston, I have some experience with bonuses and deferred comp in Massachusetts. In the absence of a signed agreement that upon receipt of the bonus you will stay with the employer for a year AND that the bonus is forfeit if you don't, the chances that the Commonwealth of Massachusetts will require that you repay the bonus are very slim indeed, and the only reason I don't say non-existent is that I don't do superlatives.

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again, i never wanted it to be for school. on my paycheck it does not say school bonus. it just is a bonus.

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You do not get to set the terms of the payment nor do you get to determine how the payment is characterized. As long as you are receiving minimum wage, the employer can call the "bonus" anything he wants. Your option, if it is not money you wish to accept under the terms stated is to refuse the money.




given this latest statement I believe there was no meeting of the minds regarding the contract underlying the payment. As such, the employer would have a right to rescind the contract and demand repayment of the money.


now, to your benefit, the employer can make a demand for the money but if you refuse, the employer is relegated to suing you and proving his argument in court. If he refuses to sue, you keep the money. If he loses in court, you keep the money.

If he wins, obviously you will be repaying him the money

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Quoting cbg

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Human Resources professionals have to be very much aware of employment law, thank you, and I have direct experience on this point. Since 49 out of 50 states are at-will states (and the 50th recognizes the at-will doctrine in some situations) the fact that Massachusetts is an at-will state is irrelevant. There is no evidence whatsoever in what the OP has posted that any contract existed; it appears to be a case of the employer deciding after the fact that there was a one-year stay provision. There cannot be a bad-faith issue if the poster had no idea that he was expected to stay a full year to get the bonus.

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First, I am not speaking of at-will states here. I am speaking of at-will termination of an employment contract.

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There is no evidence whatsoever in what the OP has posted that any contract existed;

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Agreed.

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it appears to be a case of the employer deciding after the fact that there was a one-year stay provision

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Where do you get that presumption when OP wrote this?

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it was basically just given to me so that I would stay at the company.

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Because if we take the OP's word, and there is no reason not to, the one-year provision was neither discussed nor agreed to until after the poster had given notice.