As the end of the year approaches, the subject of employee bonuses may be on the minds of employees and employers alike, which raises an interesting question: What obligation does an employer have to an employee to pay a “bonus?”  As with most employment law issues, the answer is “it depends,” but wrongly decided that there is no obligation may have serious financial implications for an employer.

First of all, under the Idaho Code, it is important to have a general understanding of what constitutes wages. Wages are broadly defined as “compensation for labor or services rendered by an employee, whether the amount is determined on a time, task, piece or commission basis.”  See Idaho Code § 45-601(7).  While a bonus might not be traditionally thought of as a wage, Idaho courts have previously said that a bonus or a commission can be a “wage.”  See Goff v. H.J.H. Co., 95 Idaho 837 (1974); Neal v. Idaho Forest Indus., Inc., 107 Idaho 681 (Ct. App. 1984). 

In determining whether a bonus constituted wages, the Court examined whether the “bonus” was part of the compensation bargained for in the agreement of employment (i.e., if there was consideration on the part of the employee such as extraordinary work, efficient and faithful service, or continuous service for a specific length of time, then the bonus takes on the character of payments made in consideration of services rendered to the employer, and the employer may become bound contractually to pay the bonus as a “wage”).  On the other hand, a bonus may be a gift if it is a mere gratuity given without consideration by the employee and the bonus may not constitute “wages.” Mundell v. Stellmon, 121 Idaho 413 (Ct. App. 1992). 

Importantly, under the Idaho Code, an employer has fairly stringent obligations to pay an employee “wages” which is important if your bonus is viewed as wages.  Pursuant to Idaho Code, employers are required to pay all wages due to their employees at least once during each calendar month or on regular paydays designated in advance by the employer.  See Idaho Code § 45-608.  If an employee has separated from his or her employer, the employer has a slightly expedited time period for paying “wages” to the employee (i.e., by the earlier of the next regularly scheduled payday or within ten days of termination by either the employer or employee). See Idaho Code § 45-606 and 608.

Significantly, these time frames are not limited to just wages earned during a calendar month or to wages that are normally paid every calendar month – wages earned over a longer period of time, such as an annual bonus based upon net profits, will come due during a specific calendar month and are covered by the “wages” statute.  Paolini v. Albertson’s, Inc., 143 Idaho 547(2006). 

Furthermore, if “wages” are not paid within the provided time frame, an employer may face serious penalties for such delay.  See Idaho Code § 45-607 and 615.  Penalties could include fines of several hundred dollars, attorney’s fees reasonably incurred by the employee, and/or damages in the amount of three (3) times the unpaid wages.  See Idaho Code § 45- 615.


  • Think carefully about your company’s bonuses and the structure of the bonuses.
  • For example, what does the employee handbook provide with regard to bonuses (i.e., does it say bonuses are discretionary, does it provide an explanation for when an employee receives a bonus (i.e., breaking a certain sales point, etc.) and what type of oral statements are made by management with regard to bonuses (i.e., you had a great year so we will give you a bonus).
  • Are your company’s bonuses more likely to be viewed as something extra earned by the employee or as a gratuitous gift?
  • Remember, especially for employees who are no longer employed with the company, the company may still need to pay a bonus to the employee and the payment of the bonus may be subjected to the timing requirements for doing so under the Idaho Code.