Effective August 1, 2024, Louisiana’s law regarding wage payments (HB 352) at termination has been updated to clarify that commissions, incentive pay, and bonuses are payable to terminated employees only if at the time of separation, they are earned and have not been altered by a written policy.
The updates also clarify that employers are permitted to:
- Implement a policy that adjusts the amount of an employee’s commission if the order generating the commission is modified.
- Establish a policy stating that commissions, incentive pay, or bonuses are not considered earned until the employer receives the payment that generates these amounts.
- Determine bonuses based on periodic financial performance (e.g., annually or quarterly) within up to 120 calendar days after the end of the performance period to assess if a bonus is due and calculate its amount.
Next Steps
Employers should ensure their commission and bonus policies are reviewed and updated by:
- Clarifying Earning Requirements: Define clearly in your written policies when commissions, incentive pay, and bonuses are considered “earned” by employees, in alignment with the new law’s focus on earned wages at termination.
- Outlining Adjustment Policies: Specify in writing if your policies adjust commissions based on changes to orders. This transparency helps employees understand how their earnings might be impacted.
- Specifying Payment Timing: Clearly state in your policy if the commission and bonus payouts are contingent upon the employer receiving payment from clients.
- Updating Bonus Determination Window: Revise your policy to reflect the new 120-day period for determining and paying out bonuses based on performance evaluations (e.g., annual or quarterly).
Apply these updated commission and bonus policies consistently to all employees to avoid potential discrimination claims. Maintain detailed and accurate records of employee performance, commission calculations, and bonus determinations for verification purposes in case of disputes.
Inform employees about the changes brought by HB 352 and how these changes affect their commission and bonus structures. This can be communicated through company-wide announcements, updated policies distributed electronically, or informational sessions.
