Definition
A bonus is a sum paid over and above ordinary or base compensation, consideration, or value. The term carries several distinct legal meanings depending on context:
1. Employment and compensation law: A payment made to an employee in addition to regular wages or salary, typically tied to performance, tenure, or company profits. Whether a bonus is discretionary or contractually obligated is legally significant and affects enforceability.
2. Corporate and franchise law: A premium exacted by a state from a corporation as a condition for granting a charter or other franchise. In this context it is a payment for a privilege, not a tax, and the distinction has constitutional consequences.
3. Contract and lending law: A definite sum paid at one time in connection with a loan, distinct from and in addition to stated interest. Also used to describe an extra consideration paid to a grantor or vendor beyond the agreed price.
4. Corporate dividends: An extraordinary or extra dividend distributed to shareholders from accumulated profits, beyond the ordinary dividend rate.
Common Language
Modern common usage (Wiktionary): To pay a bonus, premium.
Historical common usage (Webster's 1913): A premium given for a loan, or for a charter or other privilege granted to a company; an extra dividend to shareholders; money paid in addition to a stated compensation.
The common understanding of "bonus" as a simple extra payment tracks reasonably close to legal usage, but the legal distinctions matter: courts and employment lawyers draw hard lines between a discretionary bonus (a gratuity the employer may or may not pay) and an earned bonus (a contractual obligation triggered by conditions the employee has already met). The colloquial sense blurs this distinction entirely, which is a frequent source of litigation.
Common Confusion
Bonus vs. gratuity: Anderson's Dictionary of Law explicitly rejects the characterization of a bonus as a gift or gratuity, noting it is paid "for services, or upon a consideration." Black's, by contrast, includes "gratuity" in its opening line. This is not merely a semantic dispute — whether a bonus constitutes enforceable consideration or a revocable gratuity determines whether an employer can rescind it after conditions are met but before payment is made. Modern employment law generally treats a bonus as a gratuity only when the employer retains full, unilateral discretion over the decision to pay.
Bonus vs. tax: In franchise and corporate law, a bonus exacted by the state for a charter grant is not a tax. The distinction was settled in nineteenth-century case law and matters for analyzing constitutional limitations on state power and for understanding how historical corporate charters were structured.
Why It Matters in Research
Researchers working in employment law must identify at the outset whether historical sources treat a bonus as contractual or discretionary, because the default assumption has shifted over time. Early sources lean toward gratuity; modern doctrine leans toward enforceability when conditions for earning the bonus have been satisfied.
In corporate history research, "bonus" frequently appears in nineteenth-century state franchise and incorporation documents as the premium paid to the state for a charter. Researchers consulting Bouvier or Black's 2nd for this usage will find it well-documented; researchers expecting the modern employment-compensation sense may misread these passages.
The lending-law usage — a lump sum paid for a loan, separate from interest — has largely disappeared from modern practice but appears frequently in equity cases involving unconscionable lending. Burrill's Latin entries (bonus as "good") are historically relevant to Latin maxims but are unrelated to the English commercial term; researchers should not conflate them.
The tax law context introduces a separate modern meaning: bonus depreciation, a federal tax provision allowing accelerated deduction of the cost of qualifying property. This usage is entirely statutory and does not appear in any of the historical dictionaries. Researchers moving between historical sources and modern tax materials should treat "bonus depreciation" as a term of art with no pre-twentieth-century counterpart.
Historical Dictionary Support
Bouvier, Black's 2nd, and Webster's 1913 converge on the core commercial meanings: a premium to a grantor or vendor, a state-exacted franchise payment, and an extra dividend to shareholders. Black's 2nd adds the lending-law definition most explicitly, quoting directly from Connecticut case law to pin down the distinction from interest.
Anderson's is the most analytically precise of the historical sources, insisting on the consideration-based nature of the payment and noting that a state may exact a bonus for a franchise payable in advance or over time. This is useful for researchers analyzing whether historical franchise bonuses were treated as one-time transactions or ongoing obligations.
Burrill's entry is primarily a Latin glossary treatment and is of limited utility for the commercial term, though its maxim — bonus judex secundum æquum et bonum judicat — is a recognized principle of equity jurisprudence worth noting in that separate context.
None of the historical sources address the employment compensation sense in depth, which reflects the relatively undeveloped state of employment contract law in the period when these dictionaries were compiled. Researchers should not read historical silence as evidence that employment bonuses were legally unenforceable; it reflects the era's limited treatment of employment as a subject of private law doctrine.
Jurisdictional Note
Employment bonus law varies significantly by state, particularly regarding whether a bonus earned but not yet paid survives termination of employment. Some states treat unpaid earned bonuses as wages subject to wage payment statutes; others apply general contract principles. Franchise bonus requirements are matters of individual state incorporation law and vary considerably in historical period and industry.
Encyclopedia Cross-Reference
Bonus Depreciation (The Law Mind Tax Encyclopedia)