Hiring Bonus Checklist

(almost)Everything you need to consider before posting a job with a hiring Bonus.

It was the beginning of 2021 and I was working at a company that was desperate for housekeepers. Our biggest issue was we just couldn’t get any applicants in the door. We looked around at other similar job openings in the area and noticed that many businesses were offering hiring bonuses, sometimes up to $2000 just for a sign-on. Well we thought, we could give a sign-on bonus a try. What’s there to lose?

So we posted the job with a generous hiring bonus. A few weeks later we hired someone, but then the questions started flowing – when would this new hire get the bonus? How will we deal with current employees in that position who feel it’s unfair? What if the new-hire just takes the bonus and runs?

These were all questions I wished we had addressed before we decided to offer a sign-on bonus. So Compiled for you is your sign-on bonus checklist:

  • Does paying out a sign-on bonus violate your state’s Equal Pay Act?
    • Read more here for Oregon and Washington employers
  • How will the bonus be paid out?
    • (Consider payroll taxes, etc)
  • When will the bonus be paid out?
    • Oftentimes employers will pay the bonus out after 90 days in the job, or half upon hire and half upon the successful completion of 90 days.
  • What other conditions need to be met for the bonus to be paid out?
    • Some employers require the bonus be paid back if the employee leaves voluntarily before a year to encourage longevity. Be careful requiring this though, if the employee is not the right fit you don’t want the wrong employee staying at your company just because they can’t afford to pay their bonus back.
  • Are the conditions of payout clearly explained and provided in writing to the candidate?
    • Any terms and conditions of a hiring bonus should be included in an offer letter, and it’s best to have the employee sign their offer before starting the position
  • What budget is the bonus coming out of?
    • Labor? Recruiting? Department?
  • How will you address a perception that the bonus is unfair to current employees in the job?
  • How many hires can you financially sustain offering a hiring bonus to?
    • Offering a hiring bonus may seem like a great financial solution – it’s a one-time expense vs raising your labor costs permanently by raising wages. However, there’s no signs of the labor market favoring employers anytime soon, meaning candidates will remain difficult to find and will continue to be picky with the jobs they choose. Is hiring 10 people over the next year at $500 bonus per person the solution? or is bumping the wage up for all employees to increase retention and hiring a better solution?

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