Compliance Considerations for the End of the Year
With many employers finalizing year-end bonuses and preparing for 2026 recruiting, questions continue to arise regarding pay transparency requirements and the proper classification of bonuses under the Fair Labor Standards Act (FSLA). As employment law attorneys, we have seen how even a modest, well-intended holiday “thank-you” bonus can generate unexpected wage-and-hour exposure and complicate broader employment claims. The experience is still relevant today: informal or repeated bonuses can become nondiscretionary, and the evolving patchwork of salary-posting laws adds additional compliance considerations for multi-state employers.
The following update highlights the key considerations in both areas.
Pay Transparency Laws: No Requirements in the Southeast
While states such as Colorado, California, Washington, and New York require salary ranges in job postings, there is no federal pay transparency law.
Among the states where many of Galloway’s clients operate — Alabama, Florida, Georgia, Louisiana, Mississippi, Missouri, and Texas — none require pay ranges in job advertisements. Georgia and Missouri have considered but not passed such legislation. Employers in these states remain governed by federal law and any internal policies they choose to adopt.
Even so, multi-state employers and those hiring remote workers should take care. Job postings tend to circulate nationally, and roles that can be performed anywhere may trigger pay transparency obligations in jurisdictions where applicants reside or where the posting is accessible.
Understanding Bonus Classification Under the FLSA
Under the Fair Labor Standards Act, not all bonuses are treated alike:
- Nondiscretionary Bonuses (Treated as Wages)
- Promised in advance or tied to objective criteria (attendance, production, sales, performance metrics).
- Employees reasonably expect payment if conditions are met.
- Must be included in the regular rate of pay, requiring recalculation of overtime for non-exempt employees.
- Discretionary Bonuses (Not Treated as Wages)
- Employer retains full discretion over whether to pay and in what amount until near the end of the bonus period.
- Not tied to predefined criteria or promises.
- Excluded from overtime calculations.
Even small or irregular bonuses can be found to be nondiscretionary if employees come to expect them, or if they are tied—formally or informally—to performance.
Bonus Payment at Separation Depends on State Law and Policy Language
Whether an employee is entitled to a bonus upon resignation or termination depends on:
- State wage statutes,
- Whether the bonus is discretionary or nondiscretionary, and
- The employer’s written bonus policy or plan language.
For example, Texas, Georgia, and Louisiana treat nondiscretionary bonuses as wages and generally require payment once earned while Florida and Mississippi rely primarily on contract principles for private-sector bonus disputes.
Many states allow employers to condition bonuses on being employed on the payout date if clearly stated in the policy.
Key Takeaways for Employers
- Review bonus practices to confirm whether they are truly discretionary.
- Ensure written policies match actual practice and clearly define eligibility.
- Audit multistate operations for varying wage-payment rules.
- Monitor state activity related to changes in pay transparency laws.
Disclaimer: This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between Galloway and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions.
