Fringe Benefits in New York
An employee’s right to receive paid leave, bonuses and severance pay depends on the terms and conditions that the employer has established either by a written policy or past practice for earning these wage supplements.
Paid Leave
When an employer does decide to create a benefit policy, that employer is free to impose any terms and conditions it chooses regarding an employee's right to receive such paid leave. Once an employer establishes such a benefit policy, the employer must notify its employees of the policy in writing or by publicly posting the policy. Under New York law, the policies subject to this notice requirement are sick leave, vacation, personal leave, holidays and work hours. An employer's failure to comply with these notice requirements may prevent the employer from denying these benefits to one of its employees.
Bonuses
Under New York law, a bonus will be deemed as "wages" only if the bonus compensation is directly linked to the employee's own job performance and is therefore considered to be a "non-discretionary" bonus. In cases where the bonus compensation is based on discretionary factors such as the profitability of the employer's business, then the bonus is "discretionary" compensation which does not constitute "wages" under N.Y.S. law. An employee may still have a breach of contract claim for an unpaid discretionary bonus where the bonus compensation is offered by the employer as an inducement for the employee's continued employment and the employee reasonably relies upon such an offer in continuing his/her employment. Moreover, the regular payment of bonuses by an employer may constitute a past practice giving rise to an implied contractual obligation to continue the payment of the bonuses to its employees.
Severance Pay
Although severance pay is not required by either federal or N.Y.S. law, an employer's written policy or past practice of providing severance pay to its employees upon their employment terminations may establish a legal obligation to pay severance pay under either the federal law known as ERISA or as a breach of contract claim under N.Y.S. law. In these cases, an employee's severance pay entitlement must be reviewed on a case-by-case basis.
If you have any questions or need more information concerning your specific wage and hour issues, please call us at (914) 949-2700 or use our email form to get in touch with New York Labor and Employment Attorneys.