California Supreme Court Approves Bonus Plan Using Net Profit Calculation
On August 23, 2007, in the case of Prachasaisoradej v. Ralphs Grocery Company, Inc., the California Supreme Court reversed earlier appellate decisions by holding that a company may lawfully offer its employees bonus compensation (over and above their regular wages) based on a profit calculation that takes into account ordinary operating losses, workers' compensation costs, tort claims by non-employees, and other business expenses beyond the employees' control.