Can an Employer in New Jersey Claw Back a Bonus If You Leave a Job Early?

Were you paid a bonus by an employer? Any contract related to the bonus matter. In New Jersey, employers include “claw back” provisions in bonus contracts. Investopedia defines a clawback as “a contractual provision that requires an employee to return money already paid by an employer.”In New Jersey, an employer may try to get you to pay a bonus back if you fail to fulfill the contract. Within this article, our New Jersey employment law attorney explains the most important things to know about your employer’s ability to claw back a bonus if you leave a job early.

Claw Back Provisions Can Be Enforceable in New Jersey 

First and foremost, it is important to clarify that a claw back provision in an employment contract can be legally enforceable in New Jersey. It is not uncommon for companies in New Jersey to offer contracts that “pre-pay” bonuses to highly desirable employees. These bonuses are designed to  keep that person working for the company for a certain amount of time. If you leave before that time is up, an employer may try to get some money back. To be enforceable in New Jersey, a claw back provision in an employment contract must be clear, fair, and properly drafted. If the terms are vague, misleading, or unconscionable, the claw back might not be legally valid.

 The Specific Terms of the Contract Always Matter 

Could you be required to pay back your bonus if you leave a company early? The terms of a contract always matter. Remember, there is no New Jersey law that directly requires the return of bonus payments. To the extent that these payments can be “clawed back” by employers, it is based entirely on contract rights. Every job with an employment contract is different. The most important thing is what your specific contract says. Some contracts might allow the employer to take back the whole bonus, while others might only take a part of it. If the contract says the bonus must be returned if you leave early, the employer will often have the right to enforce a claw back. However, if the terms are confusing or seem unfair, you might have some room to argue against it.

 Employees May Be Able to Negotiate Early Release from Claw Back Provision 

Negotiation may be an option for employees concerned about a potential claw back. If you have a good reason for leaving early, they might let you keep some or all of the bonus. Alternatively, the removal of the claw back provision could potentially be worked into a severance agreement. No matter your circumstances, an experienced New Jersey employment lawyer can help.

 Speak to an Employment Law Attorney in New Jersey Today

At Poulos LoPiccolo PC, our employment lawyer in New Jersey has the professional experience and legal expertise that you can trust. If you have questions about an employer trying to claw back a bonus payment, we are here to help. Contact us right away for a strictly private initial appointment. We provide employment law representation in Monmouth County and all across New Jersey.

Source:

investopedia.com/terms/c/clawback.asp#:~:text=Key%20Takeaways,or%20for%20poor%20employee%20performance