Implementation Date: August 1, 2024
Summary
Effective August 1, 2024, commissions, incentive pay, and bonuses are considered due in final wages in the state of Louisiana if they have been earned at the time of separation and have not been modified in accordance with a written policy addressing such payments.
The amended law also specifies the types of policies an employer may have regarding such payments and the manner and time within which an employer may determine whether to provide discretionary bonuses and their amount.
Breakdown
Louisiana House Bill 352 (HB 352) clarifies how employers handle certain final payments, specifically commissions, incentive pay, and bonuses, to employees after termination. Here’s a breakdown of what it means for you as an employer:
- Earned is Earned: Louisiana HB 352 emphasizes that commissions, incentive pay, and bonuses are only considered “due” if the employee has already earned them at the time of separation.
- Policy Makes the Rules: You can have written policies that address how these earned commissions, incentives, and bonuses are paid out. The law allows you to:
- Require the employee to be employed on the designated payout date (according to your policy) regardless of why their employment ended.
- Adjust the amount based on changes affecting the commission (e.g., order cancellations).
- Withhold payout until you receive any payment that generates the commission (if applicable).
- Bonuses and Time: For bonuses determined by your company’s performance (e.g., annual financials), the law allows you a reasonable amount of time, based on your standard accounting practices, to calculate and distribute them.
An employer may also use standard accounting practices to make a determination regarding whether to pay discretionary bonuses (i.e., those based on the employee’s or employer’s performance) and their amount on a reasonable periodic basis that does not exceed 120 calendar days from the end of that period.
View the H.B. Here.
