Fired or Quit Just Before the Bonus Payout: Can a New York Employer Keep It?

Take a hypothetical. A territory sales representative for a medical-supply distributor in Hauppauge earns a salary plus an annual bonus: three percent of her own territory’s sales above quota, computed when the year closes and paid each March 15. The plan she signed has one more line. To receive the bonus, an employee must be actively employed on the payment date. Her territory beat quota for 2025. On February 20, 2026, the company let her go in what it called a restructuring, and on March 15 nothing came.

She did the work before she left; the money was due after. Whether the company can keep it turns on one question: was the bonus already earned when she left? Our post on oral bonus promises covers a bonus nobody wrote down; this one covers a written plan with a payment-date condition, for anyone fired, laid off or resigning before the check.

Start with the bonus plan

“An employee’s entitlement to a bonus is governed by the terms of the employer’s bonus plan.” The Court of Appeals said it in Hall v United Parcel Service (1990) and repeated it in Truelove v Northeast Capital & Advisory, 95 NY2d 220 (2000).

Truelove, a financial analyst, was paid from a bonus pool that existed only if the firm hit a revenue minimum, was allocated “in the CEO’s sole discretion,” and was paid quarterly, “with each payment contingent upon the recipient’s continued employment at the firm.” He received $40,000 of a $160,000 award, resigned, and was refused the rest. The bonus was not wages: it did not depend on his own productivity, the pool depended on the firm’s overall financial success, and his share “was entirely discretionary and subject to the non-reviewable determination of his employer.” And announcing the number did not vest it: “the bonus plan explicitly predicated the continuation of bonus payments upon the recipient’s continued employment status.”

Consequently, when the bonus is a discretionary share of the company’s success, a written continued-employment condition usually ends the claim, even after the employer has told you the amount.

When is a bonus earned?

The next question is timing. In Pachter v Bernard Hodes Group, 10 NY3d 609 (2008), a commission case, the Court of Appeals held that “the determination of when a commission is earned is governed by the parties’ express or implied agreement,” and the parties “are free to add whatever conditions they may wish.” Pachter had no written contract; an implied one came from more than eleven years of dealings and the monthly compensation statements she accepted.

In Ryan v Kellogg Partners Institutional Services, 19 NY3d 1 (2012), the Court cited Pachter when it applied the same statute to an earned, guaranteed bonus. In practice, the employer points to the payment-date line, and the employee points to the formula, the closed year and the statements that computed the number.

Why earned wages are different

Labor Law § 190(1) defines wages as “the earnings of an employee for labor or services rendered, regardless of whether the amount of earnings is determined on a time, piece, commission or other basis.” Once pay is earned wages, a plan clause cannot take it back.

Weiner v Diebold Group, 173 AD2d 166 (1st Dept 1991), says so. Weiner, a division director, was paid incentive compensation calculated on the division’s revenue and “the amount thereof attributable to the individual participant’s performance,” half at year end and half in installments the next year, and company policy made the second half contingent on continued employment. He left voluntarily and sued for three unpaid installments. The First Department relied on “the long standing policy against the forfeiture of earned wages.” The testimony conflicted and the company had applied its forfeiture rule inconsistently, so a jury had to decide whether the payments were a bonus “subject to forfeiture” or earned wages “also not subject to forfeiture.” The rule it stated: “if the incentive compensation payments were payments of earned wages, the plaintiff could not contract to forfeit them.” The court reversed a judgment for Weiner and ordered a new trial. Weiner quit, and the question was still whether the money was earned, not who ended the job.

Ryan is the Court of Appeals’ version. His guaranteed bonus was tied to his own work as a floor broker, and the Court held it “had been earned and was vested before he left his job.” Not paying it violated Labor Law § 193. The statute now states: “There is no exception to liability under this section for the unauthorized failure to pay wages, benefits or wage supplements.”

Four questions sort most of these cases.

Here, the Hauppauge rep’s number came from a formula applied to her own sales, the year had closed, and nothing was left to decide but whether to pay. That is the Ryan and Weiner side; the payment-date line is the Truelove side.

Fired to beat the payout date

A firing is not a claim just because of when it happened. In Wakefield v Northern Telecom, 769 F2d 109 (2d Cir 1985), the federal court of appeals accepted that, under the Court of Appeals’ decision in Murphy v American Home Products, a salesman could not “recover for his termination per se.”

It then drew a line for commissions. The plan the employer relied on required the salesman to be employed on the payment date, and a clause like that “cannot be read to enable the defendant to terminate an employee for the purpose of avoiding the payment of commissions which are otherwise owed.” Otherwise, the court said, “the better the performance by the employee, the greater the temptation to terminate.” The limits matter as much: employees terminated “for reasons other than a desire to avoid payment of earned commissions, including reasons which are mistaken or arbitrary, have no right to further commissions,” and a legitimate reduction in force lets the clause operate. Wakefield is a federal decision that treated New York and New Jersey contract law as the same on these points, not a Court of Appeals holding. The reason for the firing, not its timing, is the case.

The timing means more when the firing follows a complaint about pay. Labor Law § 215 bars discharging an employee for complaining to the employer about conduct the employee “reasonably and in good faith, believes violates any provision of this chapter,” and the complaint “need not make explicit reference to any section or provision.” Labor Law § 740 protects a disclosure to a supervisor of a practice the employee “reasonably believes is in violation of law, rule or regulation.”

And an employer that isn’t happy with an employee who exercises their rights can end up on the wrong end of a lawsuit for retaliation. That’s always the big play: there’s a retaliation hook. So if you complained about the bonus that was earned but not paid and you were let go before the payout, your complaint is protected under Labor Law section 215, and a complaint to a supervisor about a violation of law is protected under section 740. And you have two years to bring an action in court.

Section 215 does not cover state or municipal employees, and the wage-payment article does not count a governmental agency as an “employer”; a public employee’s retaliation claim can run through Civil Service Law § 75-b, and for many union employees through grievance arbitration. Our wage theft retaliation guide covers how those cases are built.

Commission salespeople: the plan has to say what happens when you leave

If your principal activity is selling and your earnings are based at least partly on commissions, you are a commission salesperson under the Labor Law, unless your principal activity is supervisory, managerial, executive or administrative. For you, Labor Law § 191(1)(c) requires the agreed terms to be “reduced to writing, signed by both the employer and the commission salesperson,” and the writing “shall also provide details pertinent to payment of wages, salary, drawing account, commissions and all other monies earned and payable in the case of termination of employment by either party.”

If the employer cannot produce those written terms when the Labor Commissioner asks, the law presumes the terms are the ones the salesperson presents. And on written request the employer must give you “a statement of earnings paid or due and unpaid.” Ask for that statement in writing the week you leave.

Two doors, and what each one pays

You have to know which laws are administrative and which laws can be brought in court for damages. A complaint to the Labor Department is the administrative door, and it will stop the six-year clock while it is pending. The lawsuit under Labor Law section 198 is where you also recover attorney fees. So what are your damages? It’s a bonus that was earned, plus liquidated damages of 100 percent unless the employer can prove a good faith basis, plus attorney fees and interest.

Whether the bonus is wages also decides the fee. Pachter explained that under Gottlieb v Kenneth D. Laub & Co., attorney’s fees under § 198(1-a) “are available only to plaintiffs who prove a violation of article 6.” A bonus that is only a contract promise is still recoverable, without the fee.

The wage-payment remedies “may be enforced simultaneously or consecutively so far as not inconsistent with each other.” Consequently, the wage claim and the contract claim can be pleaded together, with retaliation added when a complaint came before the firing.

On the way out: the separation agreement

Look again at the day Ryan was fired. He was handed a separation agreement that offered him $20,000 and released the firm from any and all claims, and he refused to sign it. A jury later found the firm had breached an oral agreement to pay him a guaranteed $175,000 bonus; with interest, fees and costs the judgment came to $379,956.65, and the Court of Appeals affirmed.

So take the separation agreement home, don’t sign it there, read it, see what the release is giving up before you sign anything. And then if that bonus you made, that you earned, isn’t in the number they’re paying you, ask them why. You got to watch what you say and you gotta document better. So write down what you were told about the bonus, when, who it was that told you, put it in an email, save that email, don’t just rely on your memory of it.

Our severance agreement lawyer page explains what to look for in the release before you sign it.

Bring these to the first call:

• The bonus plan, every version you received, and any page you signed.
• Your offer letter and any email or statement that computed your number.
• Last year’s pay stub with the bonus line, and your W-2.
• The termination or resignation letter, and the separation agreement if one was offered.
• Any email in which you asked about the bonus, and the reply.

Back to the rep in Hauppauge

Her bonus came from her own sales, the year closed in December, and March 15 was a date on a calendar, not a decision anyone still had to make. If the company paid some departing reps and not others, Weiner treats “the inconsistent manner in which the forfeiture policy was applied” as a reason a jury decides. She should ask for her earnings statement in writing, keep every statement that computed her number, and sign no release until someone has read it. Had she complained in writing before February that her pay was cut below the formula, the termination would raise a second question.

The broader rules on unpaid bonuses are in our unpaid bonus guide, and our Long Island wage and hour practice handles the claims.

Sources

• Labor Law § 190, definitions: https://www.nysenate.gov/legislation/laws/LAB/190
• Labor Law § 191, frequency of payments: https://www.nysenate.gov/legislation/laws/LAB/191
• Labor Law § 193, deductions from wages: https://www.nysenate.gov/legislation/laws/LAB/193
• Labor Law § 198, costs and remedies: https://www.nysenate.gov/legislation/laws/LAB/198
• Labor Law § 215, prohibited retaliation: https://www.nysenate.gov/legislation/laws/LAB/215
• Labor Law § 740, retaliatory action by employers: https://www.nysenate.gov/legislation/laws/LAB/740
• Civil Service Law § 75-b: https://www.nysenate.gov/legislation/laws/CVS/75-B
• CPLR 213: https://www.nysenate.gov/legislation/laws/CVP/213
• Pachter v Bernard Hodes Group, Inc., 10 NY3d 609 (2008): https://www.nycourts.gov/reporter/3dseries/2008/2008_05300.htm
• Ryan v Kellogg Partners Inst. Servs., 19 NY3d 1 (2012): https://www.nycourts.gov/reporter/3dseries/2012/2012_02248.htm
• Truelove v Northeast Capital & Advisory, 95 NY2d 220 (2000): https://static.case.law/ny-2d/95/cases/0220-01.json
• Weiner v Diebold Group, 173 AD2d 166 (1st Dept 1991): https://static.case.law/ad2d/173/cases/0166-01.json
• Wakefield v Northern Telecom, Inc., 769 F2d 109 (2d Cir 1985): https://static.case.law/f2d/769/cases/0109-01.json

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If you were fired, laid off or quit before a bonus you had already earned was paid, call (516) 750-0595 with the bonus plan in hand, or request a free case review.