Was I entitled to the guaranteed bonus on my offer letter?

UPDATED: Sep 30, 2022

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Was I entitled to the guaranteed bonus on my offer letter?

I accepted an offer to work as an Audit Manager for a CPA Firm on January 4,
2016. On my offer letter it states specifically, ‘Per our discussion, your base
salary will be XXXX per year. In addition, you will receive a guaranteed bonus
of 7,500 on December 31, 2016, if still employed by the Firm on that date.’

In November, the Firm decided to demote me. My salary was reduced by 18 but
they allowed me to keep my title as Audit Manager. I was not paid my supposed
guaranteed bonus of 7,500 even though I was still employed by the Firm on
December 31, 2016. I am still currently working for them. Is this something I
can legally claim?

Asked on July 28, 2017 under Employment Labor Law, Massachusetts


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

The issue is whether the offer letter constituted an enforceable contract or not. To be an enforceable contract in an employment contract, it mus have been for a set or specific term: e.g. it was a one-year, two-year, etc. contract. If did have a specific term, then unless you gave them grounds to terminate you "for cause" (e.g. violating insturctions or policy; theft from work; excessive absenteeism; etc.), you would have been guaranteed the job *and* compensation outlined in the letter/contract for that period of time--and so should have gotten your bonus.
However, unless you were guaranteed this position for a set time, the letter did not alter the employer's ability to demote you, or change either your job or compensation--such as by removing a bonus. That is because except to the degree your job is contractually guaranteed for a given or set period, the employer retains their discretion, under the doctrine or principal of "employment at will" (which is the law of the land except to the extent modified by contract) to alter your employment or teminate you at will. Therefore, unless you had a contract for a set period, your employer could demote you and take away your bonus.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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