Should You Accept a Retention Bonus?

If your employer is offering you a retention bonus, not only should you confer with an experienced attorney, but also consider the following:

● What is your employer’s motivation for offering you the bonus? Is the business facing a major change or other organizational disruption? Do you foresee the company being prosperous or facing hardship? Answering questions like these can help you understand how, or if, you will fit into the “new” company.

● You should also do a “gut check” on whether you are happy with your employment. If you love your job, you had planned to remain with your employer for the duration of the retention term, and you like the stability a retention agreement provides, then accepting the bonus is likely an easy decision. However, if you are unhappy with certain aspects of your employment, you need to decide if you want to negotiate the terms (including non-financial terms) of your retention, or if there are better opportunities for a new job you should explore.

● Another important consideration with retention bonuses is understanding how they will be taxed. A retention bonus will be treated as supplemental wages, so you should confer with a tax professional to understand how much of your bonus will actually go into your pocket.

● Have your attorney review the retention agreement. It is common for employers to draft these contracts and to favor the employer as much as possible. Your attorney can help you alter vague or confusing language to become more reasonable and to have more objective terms, allowing you more control over your qualification for payment of the retention bonus.

A retention agreement should benefit both the employer and the employee. Working with an attorney experienced in drafting and reviewing this type of contract is essential to prevent an employer from taking advantage of you.

Negotiating and drafting retention agreements is Mailly Law’s primary area of practice. We have years of experience and understand the complexities involved. Let us fight for your rights and help obtain a contract that is the most beneficial to you. Contact our office today.