Some Bonuses Not Subject to Connecticut Wage Payment Laws

In a case of first impression, the Connecticut Supreme Court held that some bonuses are not subject to the Connecticut Wage Payment laws, Conn. Gen. Stat. § 31-71a et seq. Weems v. Citigroup, 289 Conn. 769 (2008). Under Connecticut law an employee may bring a civil action for the non-payment of wages or benefits. If they can prove the employer acted in bad faith they may collect double damages, costs, and attorneys fees. Employers who violate the law are also subject to fines and imprisonment.

Prior to the recent decision, the Superior Court was split on whether the failure to pay a bonus violated the wage payment laws. The Supreme Court held that for a bonus to be considered “wages” it must be non-discretionary in nature, and must be linked solely to the ascertainable efforts of the particular employee. Conversely, when a payment is discretionary or based on factors other than the particular employee’s efforts, such as a general profit sharing plan, it falls outside the law’s “wage” definition.

While employers may escape wage payment law coverage when the bonus is discretionary, or payable based on factors other than the employee’s solely controllable efforts, they may still be liable for bonus payment claims under a breach of contract theory. In such cases, employees may be awarded the unpaid bonus, but will not be entitled to the broader wage payment law relief.