Is it legal for my employer to deduct my bonus to pay for a mistake I made that cost them money?

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Is it legal for my employer to deduct my bonus to pay for a mistake I made that cost them money?

Asked on September 26, 2012 under Employment Labor Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

It depends on how your bonus is structured and calculated. If it is based on certain objective criteria (such as, for example, the volume of sales; company EBITDA; etc.) and those targets have been met, then your employer may not deduct money from the bonus; in that case, the bonus is compensation you've earned, and employers may not take money from employee compensation without employee consent.  However, if the bonus is not based on objective criteria but rather on employer discretion (either in whole or in part), then the employer may legally use its discretion to reduce (or eliminate) what it awards you for you having cost the employer money; discretionary bonuses are purely at employer whim or choice.


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