Home » Commentary » The Super Bowl and Employment Law: Incentive Compensation on the Field and in the Office

Josh Goodbaum: Hi, Amanda.

Amanda DeMatteis: Hi, Josh. What are we gonna talk about today?

Goodbaum: Well, I wanna talk about football because it is Super Bowl week. We’re gearing up for the 49ers and the Chiefs, and you know, we can’t help ourselves: we like to relate everything in our lives back to what we do, which is employment law.

Okay, these players on the 49ers and the Chiefs are probably getting a lot of money for what their teams have been able to accomplish. They get money for getting to the conference championship, they get money for winning the conference championship, they get money to get to the Super Bowl, and if they win the Super Bowl, it’s more money, plus a trip to the White House, probably.

So, obviously, not everybody is a professional athlete. But lots of employees in Connecticut and around the country do have incentive structures in their compensation. They might have certain benchmarks they need to hit to get more money; they might be working on commissions; and so I thought I would ask: What do employees need to know if they’ve got these different compensation structures that might look a little bit like professional football players, even if they’re only professional football players in their own minds?

DeMatteis: Yeah, it is a fun week, no matter whether you’re rooting for the teams, no matter if you’re just trying to see Taylor Swift on TV for a couple minutes. But this is an important question because folks in Connecticut, maybe on a little bit of a different scale, are also being paid incentive compensation, and there’s a few different ways that you can get paid that compensation.

The first is your own individual performance. Think about: “Amanda, you need to make 20 widgets. After you make 20 widgets, I’m going to pay you X.” So, as long as you hold up your end of the bargain and you make those 20 widgets, then your employer has to pay you whatever compensation that the two of you have agreed upon. Think about the Chiefs beating the Ravens last week, right, and becoming the AFC champions. They have met that requirement under their employment contract. They have been paid that amount of money for meeting that requirement. Done. Really nothing else to talk about.

But some incentive compensation, especially for employees in Connecticut, doesn’t only have to do with your own individual performance; it also has to do with the performance of the team, right? So maybe part of this compensation is: “Well, you need to reach X quota, Amanda, but so does the team. The team needs to sell X number of dollars in whatever it is the company is selling.” Well, then that pay is not only conditioned upon your individual performance, but it’s also conditioned maybe upon the performance of the company as a whole. This gets a little bit more tricky. There are a lot of different policies that employers have that say that, in order to receive that type of compensation, you need to be employed at the company at the time that bonus or that compensation is paid, and if you’re not, you’re no longer entitled to it.

So, think about how this plays out in practice. Maybe your fiscal or commission year is January 1st to December 31st. You’ve completed that year of work; you’ve done everything you needed to do to hold up your individual end of the bargain; and maybe the benchmarks in place for the employer have also been met. But that payment isn’t gonna be made until March 15th of the following year. Well, if you decide to quit on February 1st, you might be precluding yourself from being eligible for that payment that is supposed to be made on March 15th.

So, you have to be really, really careful when you’re gonna decide, “You know what? I’m gonna leave my current job to go to a different one.” The last thing you wanna do is leave any money on the table. So, before you make a quick decision, maybe chat with an employment lawyer and find out if there’s something you need to know before leaving one employer to go to the next so that you can get all of that money that the Chiefs and the 49ers are getting this week.

What do you think about that, Josh? Good advice?

Goodbaum: Well, I think you did well to bring it back to football, Amanda. It’s always fun talking to you. I never know if this is actually useful to anybody, but I hope it is, and I hope all of you enjoy watching the game this weekend. Take it easy.

DeMatteis: We’ll see you.

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