Can a employer set a target that is out of the control of the employee for their bonus payment?

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Can a employer set a target that is out of the control of the employee for their bonus payment?

Asked on February 25, 2012 under Employment Labor Law, Alaska

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Yes, employers may set targets or criteria for bonuses that are outside of an employee's control--for example, it's not uncommon to link a bonus to the company's overall accomplishiment of certain revenue or profit (e.g. EBITDA) goals, which are clearly things that the average rank-and-file employee has very little, if any, input into. Remember, a company is under no obligation to offer employees bonuses at all--it is completely voluntary to do this, and the law does not require bonuses. As offering a bonus is voluntary, the company may put any terms or conditions it likes on it.


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