The financial industry is one built on commissions on the sales side and bonuses in the back office. While sales staff can often readily determine where they fall on the commission scale to determine their net payout, non-sales personnel do not typically have that luxury. Non-sales employees such as product engineers, traders and the like frequently receive performance bonuses that are not tied to any predetermined scale or schedule. Just this past week Citigroup and Bank of America reportedly shrunk their bonus pool for certain investment banking, trading and other securities related employees.
Such performance bonuses are usually understood that they are not above and beyond, but rather a necessary part of the employee’s annual compensation. Given that many bonuses may be multiples of an employee’s relatively small annual salary, not receiving a year-end bonus can be devastating for someone who was counting on it. Those who get “stiffed” out of their bonus may find themselves facing the year ahead with uncertainty. Worries like “How am I going to pay my mortgage? Or my child’s tuition?” can quickly become an unfortunate reality.
The first step someone in this position usually takes is speaking with their supervisor or a representative in their company’s HR department. If you have already done this, you were likely told that your bonus was “discretionary” and the firm did not owe you a penny.
In many cases, this is only partially true. While many employment agreements may include a provision that says bonuses are “discretionary,” the law still protects the rights of those who have provided a service but have not been fairly compensated.
Therefore, an individual may be entitled to sue and recover some or all of what they should have received in their bonus, even if the firm used its “discretionary” authority to not bonus the employee. Depending on the individual’s specific circumstances, they may be able to recover under the common law theories of breach of express and/or implied contract, quantum meruit, restitution, and unjust enrichment. State employment laws also offer protections to employees, which can vary from state to state, but may provide an avenue to recover some or all of the withheld bonus.
The attorneys at Malecki Law have experience representing employees in the financial industry in cases resulting from the withholding of an employee’s bonus. If you or a family member had their bonus improperly withheld, contact the securities lawyers at Malecki Law for a free consultation and case evaluation at (212) 943-1233.