{"id":87,"date":"2015-11-02T21:41:22","date_gmt":"2015-11-02T21:41:22","guid":{"rendered":"http:\/\/marcusboxerman.com\/blog\/?p=87"},"modified":"2016-03-22T19:29:55","modified_gmt":"2016-03-22T19:29:55","slug":"discretionary-bonuses","status":"publish","type":"post","link":"https:\/\/marcusboxerman.com\/blog\/discretionary-bonuses\/","title":{"rendered":"Withholding or Reducing Discretionary Bonuses May Lead to Discrimination Claims"},"content":{"rendered":"

In October 2015, the Second Circuit Court of Appeals ruled that an employer\u2019s reduction of an employee\u2019s discretionary bonus constitutes an adverse employment action and may support an employee\u2019s discrimination claim. Davis v. New York City Dep’t of Educ.<\/em>, 2015 U.S. App. LEXIS 18115 (2d Cir. 2015).<\/p>\n

\"employeeIn Davis<\/em>, a teacher, took an extended leave of absence after injuries suffered in a car accident. As a result of her leave of absence, Davis\u2019 employer reduced her bonus from $3,000 to $1,000. The Second Circuit held that the reduction of Davis\u2019 bonus constituted a materially adverse action even though Davis\u2019 discrimination claim ultimately failed.<\/p>\n

The Second Circuit found that the \u201cfact that the employer has discretion whether to grant bonuses or raises does not support the conclusion that an employer may freely allocate them on the basis of racial or religious bias, or disability discrimination.\u201d It noted that most business decisions are discretionary. Employers have discretion in deciding who to hire, fire, and promote, but the fact that those decisions are discretionary does not protect them from discrimination statutes. The Second Circuit sees no reason to analyze bonuses differently.<\/p>\n

The Second Circuit\u2019s Davis expressly refused to follow the law of the Seventh Circuit, which treats employers\u2019 decisions about discretionary bonuses as \u201cbeyond the reach of discrimination statutes\u201d because bonuses tend to be \u201csporadic, irregular, unpredictable, and wholly discretionary,\u201d as opposed to raises, which are the normal, expected reward for satisfactory work. Hunt v. City of Markham<\/em>, 219 F.3d 649 (7th Cir. 2000).<\/p>\n

After this ruling, the state of the law governing reductions in discretionary bonuses and raises is unclear. Both the Second Circuit and D.C. Circuit hold that the denial or reduction of a discretionary bonus is materially adverse. On the other hand, the Seventh Circuit treats decisions about bonuses as \u201cwholly discretionary.\u201d To be on the safe side, employers should ensure that they have documented reasons explaining all decisions regarding bonuses to avoid legal problems while the law on this issue continues to develop.<\/p>\n","protected":false},"excerpt":{"rendered":"

In October 2015, the Second Circuit Court of Appeals ruled that an employer\u2019s reduction of an employee\u2019s discretionary bonus constitutes an adverse employment action and may support an employee\u2019s discrimination claim. Davis v. New York City Dep’t of Educ., 2015 … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,3,25],"tags":[36,37,77,38],"class_list":["post-87","post","type-post","status-publish","format-standard","hentry","category-employment","category-franchisee","category-franchisor","tag-adverse-employment-actions","tag-circuit-split","tag-discretionary-bonuses","tag-employee-discrimination"],"yoast_head":"\nWithholding or Reducing Discretionary Bonuses May Lead to Discrimination Claims -<\/title>\n<meta name=\"description\" content=\"The state of the law governing reductions in discretionary bonuses and raises is unclear. Both the Second Circuit and D.C. 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Circuit hold that the denial or reduction of a discretionary bonus is materially adverse.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/marcusboxerman.com\/blog\/discretionary-bonuses\/\" \/>\n<meta property=\"article:published_time\" content=\"2015-11-02T21:41:22+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2016-03-22T19:29:55+00:00\" \/>\n<meta property=\"og:image\" content=\"http:\/\/marcusboxerman.com\/blog\/wp-content\/uploads\/2016\/02\/piggy-bank-970340_1920-300x196.jpg\" \/>\n<meta name=\"author\" content=\"mboxerman\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"mboxerman\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/marcusboxerman.com\/blog\/discretionary-bonuses\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/marcusboxerman.com\/blog\/discretionary-bonuses\/\"},\"author\":{\"name\":\"mboxerman\",\"@id\":\"https:\/\/marcusboxerman.com\/blog\/#\/schema\/person\/ae2b8d0203c0ecb5d54bf0e4e0e564a4\"},\"headline\":\"Withholding or Reducing Discretionary Bonuses May Lead to Discrimination Claims\",\"datePublished\":\"2015-11-02T21:41:22+00:00\",\"dateModified\":\"2016-03-22T19:29:55+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/marcusboxerman.com\/blog\/discretionary-bonuses\/\"},\"wordCount\":343,\"image\":{\"@id\":\"https:\/\/marcusboxerman.com\/blog\/discretionary-bonuses\/#primaryimage\"},\"thumbnailUrl\":\"http:\/\/marcusboxerman.com\/blog\/wp-content\/uploads\/2016\/02\/piggy-bank-970340_1920-300x196.jpg\",\"keywords\":[\"adverse employment actions\",\"circuit split\",\"discretionary bonuses\",\"employee discrimination\"],\"articleSection\":[\"Employment\",\"Franchisee\",\"Franchisor\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/marcusboxerman.com\/blog\/discretionary-bonuses\/\",\"url\":\"https:\/\/marcusboxerman.com\/blog\/discretionary-bonuses\/\",\"name\":\"Withholding or Reducing Discretionary Bonuses May Lead to Discrimination Claims -\",\"isPartOf\":{\"@id\":\"https:\/\/marcusboxerman.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/marcusboxerman.com\/blog\/discretionary-bonuses\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/marcusboxerman.com\/blog\/discretionary-bonuses\/#primaryimage\"},\"thumbnailUrl\":\"http:\/\/marcusboxerman.com\/blog\/wp-content\/uploads\/2016\/02\/piggy-bank-970340_1920-300x196.jpg\",\"datePublished\":\"2015-11-02T21:41:22+00:00\",\"dateModified\":\"2016-03-22T19:29:55+00:00\",\"author\":{\"@id\":\"https:\/\/marcusboxerman.com\/blog\/#\/schema\/person\/ae2b8d0203c0ecb5d54bf0e4e0e564a4\"},\"description\":\"The state of the law governing reductions in discretionary bonuses and raises is unclear. 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