Legal Question in Business Law in California

I have an annual bonus based on Ebit, the company runs on a calendar year. I was handed the terms (profit goals) of our company which my bonus is based on in July. This based on a calendar year goal. Is this legal in California?


Asked on 7/29/13, 4:37 pm

1 Answer from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

An employer in California can set, revise, increase, decrease, etc. employee compensation at will, except (a) not contrary to the terms of an express contract such as a union collective-bargaining agreement or an individual employment contract with the employee; or (b) retroactive reductions in pay are not permissible.

Without more details, I can't really tell whether what your employer did amounts to a retroactive reduction in your pay.

It sounds more like the employer was only giving you additional information regarding how the bonus amount is calculated each year end, rather than giving you retroactive (after-the-fact) notice of a reduction in earnings to which you were already entitled. This is in part because earnings cannot be known until the company's financial year ends, so expectations in, say, June, are just speculative.

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Answered on 7/29/13, 5:00 pm


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