this post was submitted on 21 Jun 2023
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In U.S. law there are generally speaking, two types of bonuses.
Non-Discretionary - A.K.A any bonus that doesn't take into account discretion on part of management and higher. This is usually for bonuses that apply as an "incentive" and have requirements to achieve. Think sales targets for sales teams, on-call incentive structures, and more. This type of bonus is actually considered part of your wage.
Discretionary - A.K.A. any bonus that is paid at the discretion of company ownership. Notably these are bonuses that are not typically communicated in advance, and thus an employee wouldn't know to expect them. They might still expect them from "tradition", but if the only time you ever know about a holiday bonus is when it arrives, it's likely Discretionary. These bonuses aren't guaranteed by anyone - and an employer can indeed to choose not to pay these types of bonuses.
It seems that Twitter failed to pay a non-discretionary bonus and there's a large paper trail of incentives given to employees for this bonus. I really hope the DOL makes an example of them on this case.
From reading the article, I don't think that this is an accurate description of the situation.
I believe that Twitter employees have been getting a discretionary bonus, so normally Musk would have been fine simply not paying it out, but as part of the acquisition he promised that he/the company would pay it out as it had been in previous years, with some stipulations, etc.
So the issue now is that he promised he would pay it, which means that he's obligated to do it, because the employees made decisions based on that promise that cost/lost them money.
It seems like very simple promissory estoppel.
I'm confused - that's almost exactly what I said, albeit in a very condensed form.
Once you take a Discretionary bonus and then make it into an incentive (i.e. This year the Christmas bonus must be earned by doing X, Y, Z) and adding stipulations to the bonus that are tied to worker output turns it into a non-discretionary bonus.
Promissory Estoppel is the basis for why non-discretionary bonuses are a category. There is a perceived promise of a bonus that people work for, but then are denied which can cause knock-on effects for the people to whom that bonus is owed. A bonus is discretionary up until the point it's used to get people to work longer or perform better.
Sure the general term is Promissory Estoppel, but that's a much weaker regulatory framework than Pay and Labor laws around non-discretionary bonuses.
If there is something else I'm not understanding here please enlighten me further. If it's not "accurate" I invite you to help me be more accurate.
I hope they make an example out of Twitter too. Especially since other companies (ahem) are looking to Musk for ideas on how to run themselves.