Can anemployer withhold an incentive bonus that an employee earned?

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Can anemployer withhold an incentive bonus that an employee earned?

My wife, a salaried Nurse Practitioner, is being told that her incentive bonus will be withheld due to a Medicaid overpayment issue that she, an employee didn’t even knew existed for the past 3 years. Her boss, the owner of the practice negotiated a deal with a state representative 3 years ago. Now KY Medicaid is asking for 350k from the practice for overpayment. 1. Can an employee be held liable for the expenses an employer accrues by mismanagement? 2. Can the employee be held liable for something the employee had no knowledge of happening nor proper authority to make changes to?

Asked on August 19, 2010 under Employment Labor Law, Kentucky

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

1) The issue about the incentive bonus is: what are the terms of the bonus? For example, many bonuses will list certain criteria, but then note that payment or award of the bonus is at employer discretion. If that is the case, the employer can excercise its discretion to not grant a bonus--even if that seems unfair.

2) Similarly, while the employee can't be made to herself pay the money--unless she's actually sued by her own employer and losses--if a bonus is discretionary, the employer can choose to not grant it. Also, if she is an "employee at will" (not contract), then the employer could discipline, demote, reduce salary, terminate, etc. her--again, even if it's unfair.


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