Employment Bonus Might Not Be Enforceable

Florida is a “right to work” state” that means employment contracts are at-will. An at-will employment contract can be terminated at any time by either party for any reason, as long as the termination does not violate rights protected by anti-discrimination laws.

As one moves up the pecking order of employment positions, employment contracts tend to become written rather than oral. Employment contracts are nothing more than contracts. Employment contracts must be definite on all essential terms. Some employment contracts included a provision addressing performance or other bonus. Florida judges have often reached conflicting decisions on whether or not payment of the bonus is mandated as part of the contract or avoidable by the employer.

In one such case, Joseph Antonell sued his employer for breach of contract. Antonell was hired to work as an architectural draftsman with an hourly rate wage and time and one-half for overtime. In the fall of 1980, the president of the employer promised a bonus to any employee still working at Christmas if the drawings were complete by that time. The amount of the bonus was apparently to be determined by the recommendation of a vice president. The employee’s supervisor promised a one-week paid vacation as another bonus if the drawings were completed on time.

On December 24, 1980, while Antonell was still employed, the drawings were collected, and blueprints made. For much of the following year, changes were made to the drawings. Some of the changes were required by a new customer contract which required the employer to coordinate drawings of various subcontractors. The drawings were accepted for construction in early 1982.

The employer argued there was no agreement as to exactly how much each employee would receive under the bonus offer. The court agreed, explaining that the bonus would be divided only among those who qualify and after the vice president recommended an amount. However, the court explained the uncertainty did not invalidate the bonus because the vice president had the duty to act in good faith which included an obligation to recommend a bonus. The vice president’s failure to do so and the employer’s subsequent failure to pay was a breach of contract.

The employer also argued Antonell did not substantially perform. But the court disagreed. This was a fact question decided by the jury. Antonell won, and since the court agreed the bonus was part of his wages, Antonell also won attorney’s fees under a statute providing for award of attorney’s fees in a suit for wages. 

On February 7, 2024, another Florida appeals court issued its decision in the Feeny case. Feeny worked for Presidio from March 2015 to October 2019. Feeny was Senior Director of Data Analytics. Presidio had a Company Performance Plan which governed Feeny’s compensation. The plan was determined from a budget set by Presidio’s Board of Directors each year then passed on to each business unit responsible for setting the unit’s objectives. As he had done previously, Feeny signed the 2018 plan. The plan signed by Feeny included the following:

This document summarizes the Performance Plan for the Sr. Director of Data Analytics objectives starting FY18. It is provided to clarify both the Individual's objectives as well as the incentive plan associated with meeting these objectives. All objectives are provided on a yearly basis unless otherwise specified. All Performance end Bonus plans are discretionary and subject to change based on individual or corporate performance. 

In 2018, Feeny was paid a $30,000 bonus and since his department met its objectives, expected an additional bonus of $68,250. Presidio did not pay an additional bonus explaining that the company’s overall performance had been poor.  Feeny sued. The trial court ruled Feeny had an enforceable contract and granted judgment for Feeny. Presidio appealed.

Presidio argued that the Plan’s discretionary language allowed it to withhold additional bonus because the company as a whole under performed. Feeny argued the plan was enforceable and he was due his bonus because he satisfied the plan’s metrics.

The appeals court started with a recitation of contract law explaining to establish a contract there must be (1) an offer (2) acceptance (3) consideration and (4) sufficient specification of the essential terms. The court explained an incentive that is vague, indefinite, or otherwise incalculable suggests a discretionary bonus. Feeny’s performance plan contained a number and methodology to calculate his bonus amount. The court explained that meant the bonus was not vague and incalculable. Good for Feeny, so far.

But, the plan included discretionary language conditioning the bonus on individual and company performance. Because Presidio retained the right to change the bonus at its discretion and, importantly, based on corporate performance, Feeny’s bonus was discretionary and the trial court was wrong. Presidio won on appeal.

Employment contracts are like other contracts. There must be clear agreement on all essential terms. One Florida court applied the obligation of good faith to enforce what might seem to be a discretionary bonus plan. Another court decided any discretion at all and the employer could refuse bonus payment.

These cases show the issue of that clear agreement on all essential terms may be decided with hindsight. That means good legal advice before a contract is signed is important (and cheaper than the fees for trial).