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Non-Discretionary vs. Discretionary Bonuses

What You Will Learn

Bonuses can be extremely useful tools for your medical practice, and they are increasingly being implemented as part of an effort to reward team members for excellent work and as a hedge against losing employees. That being said, you should be careful — there are plenty of ways to get these bonuses wrong and potentially pay extensive fines or penalties. 

In this video, Ali gives a full breakdown of discretionary vs. non-discretionary bonuses and when you would use them. 

Talk Summary

A discretionary bonus is given at the discretion, or choice, of the employer. This means that you, as an employer, can decide when and why to give out a bonus. It can be at any time and/or for any reason. 

A non-discretionary bonus is given under a set series of circumstances. Any or all of the factors surrounding this bonus - including when it is given, why it is given, and how much it will be - are pre-determined and an expectation of payment exists when the employee meets the agreed upon conditions. 

Sounds simple, right? It's more complicated than that. Non-discretionary bonuses have to be calculated into overall compensation, and this may impact overtime calculations. Failure to do this can lead to real challenges for you and your practice, including fines and other penalties. 

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