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Jun13

Can you discriminate when paying a bonus between exempt ad non-exempt staff?

We want to provide a bonus not severance (since we don’t pay severance) to staff that is being temporarily laid off due to lack of work to assist in their health insurance premiums. Is this discriminatory?

Severance pay is defined as pay and benefits an employee receives when he or she ceases employment at a company. Bonus pay is defined as additional pay to employees for exceptional performance. By simply referring to the definitions, the idea of paying laid off employees a bonus solely to aid in expenses doesn’t quite make sense. It seems like you may be making an exception to your no severance policy rule, which could be deemed discrimination if you don’t make this exception for any other employees.

An idea would be to create a severance pay policy with clear eligibility distinctions. The U.S. Department of Labor considers severance pay as a matter between the employer and employee; thus, there is no legislation requiring an employer to pay severance to all employees. The policy should explain the following: the purpose of the plan ie to provide assistance to employees, circumstances under which severance will be paid ie lay off, circumstances under which severance will not be paid ie involuntary termination, clearly listing the specific groups eligible for severance ie exempt staff, how the severance will be calculated, how the severance will be paid, and what the severance will include. It’s important to include that the policy is subject to change or be terminated at the company’s discretion. Adopting clear policies which are consistently practiced are in a company’s best interest.

This entry was posted on Thursday, June 13th, 2013 at 8:00 pm and is filed under
Human Resources Management.
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