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QUESTION: Here’s something that has come up in our office recently: Is it legal for a practice to withhold or revoke an earned benefit as a “punishment"? An example of that is that we lose a bonus if a chart is not written up. Thank you for your consideration of our question.
ANSWER FROM REBECCA BOARTFIELD, HR specialist with Bent Ericksen & Associates:
Employers generally have the right to modify or rescind any discretionary benefit that they provide. Discretionary means that it is not required by any federal, state, or city/county law.
While they have the right to do this, it cannot be a retroactive action, nor can they take away something that employees have already earned. For example, employers cannot provide a "punishment" today of taking away vacation and applying it back to January 1, 2021, or they cannot take away vacation if an employee already earned the vacation as of the day of the punishment. The punishment would only apply going forward. In this case, the employee would stop earning vacation going forward, but could still use what they had earned.
You mention a bonus in your question. These programs should be set up, right from the get-go, with the criteria for how something is achieved and under what circumstances it can be reduced or taken away. For example, employers could build in the criteria around charting, as you state in your question. This should be in writing so that employees know and understand how it works.
If the bonus program does not have the criteria built in, or the criteria does not involve things like charting, then any bonus earned must be provided without punishment because it was never part of the original criteria. However, the employer could, as part of a punishment, remove an employee from future bonus earnings.
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