Can an employee bonus be taken back?

UPDATED: Oct 1, 2022

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Can an employee bonus be taken back?

My employer gave me my bonus via direct deposit into my bank account but then decided to take it back due to performance issues. The bonus was based on unsatisfactory or below annual review which has not taken place yet and the individual making this decision does not do my review and is not my direct boss. This incident has caused me to resign my position at the aforementioned employer. Is this legal?

Asked on November 15, 2018 under Employment Labor Law, Indiana


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

No, it is not legal: once the bonus is given to you, it is your bonus. The only way or time they could legally take it back would be if it could be shown to be based on a pure mathematical error or other objective mistake, when you knew what the criteria were and so could see for yourself that it was in error: e.g. when you are entitled to a bonus equal to 10% of your salary but received a 15% bonus by mistake. Only a provably objective error according to criteria of which you were aware allows the employer to take the bonus back. Otherwise, even if in retrospect they regret giving you the bonus, once they gave it to you, it was your money and they no right to reclaim it. You could sue them for its return.

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