What are the laws regarding the payment of bonuses?

In California, the Division of Labor Standards Enforcement establishes the rules and regulations regarding bonus payments. Generally, all employers must pay an overtime rate for hours worked in excess of 8 in one day or 40 in one week. However, employers may choose to provide a bonus instead of overtime pay as long as they follow specific requirements. Bonuses must be agreed upon in writing prior to the performance of the services or employment. Any agreement to pay a bonus must clearly state the amount of the bonus and when it will be paid out. A bonus may be paid in one lump sum or in installments but must be paid out within 24 hours of the employee’s termination of employment. Bonuses must also be prorated for part-time employees or those who are exempt from overtime requirements. The bonus must be paid out according to the agreement specified in writing. If a bonus is unpaid or only partially paid, the employer may be required to pay the employee the full amount of the bonus, plus any interest due. Employers must also provide employees with accurate pay stubs that include the amount of the bonus payment and when it was paid out. It is important for employers to follow the requirements for bonus payments to avoid any potential labor law violations.

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What are the laws regarding the payment of bonuses?

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