Employee Bonus Agreement


#1

@Chris Had something REALLY good that he mentioned in a post about employees breaking stuff, he said you could set it up to give them a bonus or something and if they break stuff you can take it out of their bonus. Does anyone do this? I was trying to find the original post but could seem to.

What kind of details do you include in your agreement?

I’ve been trying to find an agreement online without paying my lawyer $150, that’s specific to this type of stuff, but can’t really seem to except a generic one.

What are your thoughts?


#2

Cant take wages away from an employee without their consent.

In order to do what ur suggesting (give an employee a bonus, then deduct damages from it)… u would need an agreement that specifies a blanket amount of money to deduct for damages and they would need to sign it. Then, if u ever do need to endforce it, before u deduct the wages, they need to sign (again) that they agree to the deductions prior to you actually enforcing it- each time.


#3

A bonus isn’t a wage??..It’s not required. Wouldn’t you be able to deduct from that if you want? It’s the owners choice to give out so much.

Don’t tell them an amount. Just tell them the more you break the less of a bonus?


#4

Yes bonuses are considered wages… hence you have to pay taxes on them.

And no you couldn’t “just deduct” from that. That is illegal.

If you’re going to offer bonuses (wages), then the employee has to know how to earn it, which means you have to outline how much they can get. (Also a good idea to put a cap on it).


#5

my previous employer had profit sharing. keep the waste/damage down he paid a share of the profits. damage/waste, lower profit, no sharing. its the only way to do what you are asking, IMO.


#6

The way I was proposed a situation I didn’t like it at the time as I was the empoyee, anyway it went like this:
Each tech is required to purchase their set of tools from you (Which is all BRAND new for the price you pay for it). you decide the set with consultation with staff of what they use on a day to day, you still provide rubbers rags soap, but if they lose a piece of gear they have to either come to you to purchase another or purchase another elsewhere, but they must have in their inventory the kit accessible to them always.

This never ended up being put in place as a purchase, we were just given a kit that contained 3 squeegees 6",18" brass and a 24" sorbo, 4"scraper, 12-18" pole, a Flathead and Phillips head screw drivers, banister brush, scrubby pads, doodle bug, soap, rags and a scrim oh yeah and a bucket and a bag to keep all that stuff in, there may have been other stuff but I can’t remember, but the kits were inspected and you were charged out of your wages for any gear that was missing, if you couldn’t show it the following week.

I really liked these kits at the time as we always need something out of the kit and not have it and just have to do a crappy job but then when we got the kit it made things easier, and more streamlined.

Once the ownership is there the staff will be much more careful with loss and damage.


#7

Bonuses can be contingent on various guidelines.

Show up for month ontime, bonus.
Miss a day or late in a month, no bonus.

Loose equip, no bonus.
Break something , no bonus.

You can choose how a bonus is achieved and it is not a gaurantee, that is the difference.

With that, I am not a believer on making an employee accountable for damage. Unless it is repetitive in short periods shows neglect. Our company manual covers this and if was a concern at any point written reprimand would be issued so emoloyee knows the concern prior to termination.

We all know accidents happen, price of doing business.

Neglect and just not caring is different. Every situation can have a common sense approach.


#8

Interesting. Bonuses have never been outlined to me in 9 years. With my current company, I didn’t get one for the first 2 years and then third I got a big one. Previous employer was what ever they felt like at the end of the year which usually was 500, 600 and even a new set of winter tires :slight_smile: they always stated that they don’t have to give bonuses and never outlined how or why.

Interesting. I don’t think my dad’s at GM was outlined either. He just got what he got. And it might just be considered additional income, not wage? Which is why it’s taxed still. My wage is a set amount. My bonus is on another line on my paycheck.

I just don’t see why it has to be outlined to the employee and that is considered illegal…it’s not a set amount so why can’t they deduct from It? If I broke a bunch of stuff and the owner doesn’t want to give me a bonus, he doesn’t have to.

I dunno. Maybe it’s different where you are, maybe my companies aren’t doing it properly themselves. Either way, it’s good to find out for sure.


#9

A quick google search would answer ur doubt.

Bonuses are considered wages/income… even if u got tires, gift cards, cash, etc. And must be taxed accordingly.

Therefore an employer cannot take ant part of ur bonus with ur consent/agreement. In fact, if an employer took part of ur bonus because u damaged something, then u could sue ur employer for up to 3 times the amount. So no… taking bonuses to cover damages is not the way to do it.

The way to do it is simple, write an agreement upon hire that if the employee damages anything he will be charged up to $700. (Or whatever amount). The emoyee signs it.

Then if u have to enforce it, when damages occur, u write an “agreement” that says you are taking (What ever amount) out of employees next paycheck(s).

There’s no need to get creative.


#10

Supplemental wages ok, and taxable. Yes. Get that. Any income of course. I’m not questioning about it being taxable. I did consider it separate income other than my set wage, which they consider supplemental. Anyways…

I’m confused about the bonus agreement part. What I am saying to you is that I haven’t had a bonus agreement from two companies now. They give, if they want to. Its not required.

So, how is taking away from their bonus not acceptable/illegal? If they are giving a bonus by free will - say they plan on giving 1000(but you don’t know this) but you break a few things…maybe make them mad, what ever - end of year comes and they give you 800.

How would you know and how is this a legal issue? Do employers require a bonus agreement? Is my current employer doing it wrong and my past employers?

And I’m asking you and the pros here about it. I don’t need to worry about that for my company any time soon so I am asking here, as we are on the topic.


#11

If there was a company handbook, the bonus structure should be outlined in that. If the other companies were small mom and pop, they may not have known to do this. Any regular sized or big company especially with an HR department would be able to point you to the bonus structure.

Employees need to be fully informed about their rights and privileges, including their compensation and benefits, and that includes the potential rewards (bonuses) that they can get. This will inform them in advance what they have to do to earn these rewards or bonuses.

If you left the company and were expecting a bonus (for whatever reason [like maybe u got one last year]) and the company decided not to give u one, and u sued that company, then the company would have to prove exactly how they give out bonuses (in the past) AND prove that you knew exactly how to get a bonus.

(Think of a racial lawsuit in which one person sues because they didnt get a bonus but another did and there was no outline on how to exactly get a bonus, and it should be clear the importance of outlining to all employees how you get a bonus)

A company cannot charge you for damage to or the loss of tools. Therefore they cannot negate your bonus (wages) because u broke something or lost something UNLESS it was proven u were negligent. Even then, still need ur consent.

Moreover, if the pay/bonus structure changes, employers must inform employees.


#12

Very interesting. I should check the handbook. I’m very curious now.

Great reply. Thanks


#13

It’s not. A verbal bonus is not a legally binding document. Even if you told an employee they’ll get $500 if they don’t keep losing or breaking tools and they come through, at the end of the day you are in no way obligated to pay them. It is legal to deduct losses from a paycheck if you have that written in their contract, it is quite common in the truck driving industry because safety violations are so common and the fines can be very high. It makes employees more accountable. I tell my employee he will get a bonus if he remembers to pick up everything I leave behind, it works quite well.


#14

I’m trying to follow your logic here, but struggling.

If the money is entitled to the employee, it’s not a bonus, it’s part of his pay package. I used to get performance bonuses. Don’t meet the level set, don’t get the bonus.

It seems like an employer could set any parameters he wants for a bonus - show up on time every day in a month = 50 dollars. Go a month without losing equipment = 50 dollars. What ever you want to set up, just make it clear.

Where you could have a problem is if you deducted from a bonus for reasons not stipulated in the agreement - employee meets a performance threshold but you deduct for the pole that he lost/broke.

And yes, it’s all taxed. Just like tips for waitresses etc.


#15

According to FSLA… an employer cannot charge an employee for damaged/lost tools… unless proven negligence…

An example:
Company bonus structure says if u have all ur tools at end of day u are ENTITLED to a bonus of $10… you are the only employee that drives in ur vehicle but at the end of the day u realize u left a tool behind… at this juncture because u were negligent, the employer can choose to not give u a bonus AND charge u for the tool.

Same scene but ur tools were stolen. The truck window was smashed, u had the truck locked. Thus u were not proven negligent, therfore u are still due that bonus and not be charged for the theft.

Same scene… u accidentally broke a razor blade… the blade cost $10. U we’re not negligent because it was a constriction clean with cement. At the end of the day, u are still entitled to that bonus and u cannot be charged with damage. The damage is now a “business loss”

New scenario, at hire, u sign something that says if u lose the phone they give u, then u have to pay $500. Again, negligent (u lost it) and u agreed to pay $500

New scene, at hire u sign something that says if foundd at fault in an accident u will be charged up to $700. Someone rear ends u and u don’t get a ticket (not at fault), then company can’t charge you.

Hope that helps.


#16

So a company HAS to have bonuses outlined in the handbook?

What about companies that don’t? You said it yourself, small businesses may over look it. So what does that mean? Is this against the law? Are they not allowed to give a bonus out if they want? With out having a bonus structure?

Because if it isn’t against the law and the companies can do what they want, then an owner can deduct from the unknown bonus value. That’s where my logic is coming from. Their company, their money. Some years bonus, some years no bonus. No set perimeters. Two years nothing, 1 year, say 3k. Who says it couldn’t have been 3.5k but due to say, breakage, they decided to keep more for the company. There aren’t set perimeters and this method WOULD work.

Unless it’s illegal to not have a bonus structure. Which seems stupid. Their business, their choice.

Could he not just skip writing up an agreement and tell his employees that depending on productivity and other things, come year end, they could receive a bonus? And then come year end, the owner decides what to give them?


#17

Yes. Its against the law (FLSA) and the business could be sued.

Small businesses get away with it most often because they are not sued. They are not sued because the ppl who (usually) work for a small business (like u did) don’t know they can sue.


#18

A bonus is extra, as in NOT part of your wages. You can give employees whatever you want. There are no laws that you have to give X or you have to give it in any way other than what the employer wishes.

Some STATES may regulate it, but my state of Indiana, certainly doesn’t.


#19

Thought so.


#20

According to FLSA bonus IS considered wages. I wouldnt argue with that.