New York Bonus Disputes
Bonus disputes in New York always arise soon after the new year. Most New York banks and financial firms start announcing bonuses this quarter. At our firm we always prepare for the calls from New York financial and wall street executives. This season we expect it to be worse than normal because the banks are predicting a cut back of 30% or more in bonus pay outs.
As I have written before, the first question to ask in a bonus dispute is whether the executive has a right to the bonus in the first place. In order to have a right to the bonus, the bonus must make up a substantial part of the compensation. For example, if a banker has a salary of 300K, but has received a bonus of 800K for the past four years, then that bonus is a substantial part of the bankers compensation. That is the first test - is the bonus a big part of the compensation package. If it is, then you might have a right to the bonus - otherwise you generally don't have a right to the bonus.
Next, if the bonus is a substantial part of the compensation package, then the inquiry moves to the payment history. Has this kind of bonus been paid in the past such that it is a reasonable expectation? In our example above, the 800K bonus was paid for the past four years - in that case the executive has a stronger claim than someone who only received such a bonus for one year.
Assuming that the bonus is a substantial part of the compensation and there is a history of such payments, then the case begins to look stronger. Then you move to the facts to see why the bonus was not paid this time - is there a reasonable and fair explanation for companies decision to withhold the bonus? Most companies have a fair amount of discretion but that discretion cannot be abused - fairness is required.
If the company abused its discretion, then an aggrieved executive may have the right to the bonus.
Bonus dispute cases in the financial industry are resolved via arbitration before FINRA. These matters can move along quickly and FINRA has a good reputation for treating parties fairly and there is a solid history of financial executives obtaining large recoveries in bonus dispute cases. We have handled many of these and if you have a question about your bonus, please give us a call for a free consultation.
