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

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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

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 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.


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