After two years of painful payroll reductions, there’s enough light at the end of the recessionary tunnel for some employers to begin considering pay raises. But in a volatile economy, implementing performance incentives and bonus plans that motivate employees and avoid windfall payments is easier said than done. Experts say two tactics can help HR pros create variable pay plans that strike a balance between risk, reward and fiscal stability.

Q. Our company pays out bonuses in the year after the work is completed, sometimes late into the first quarter. If an employee resigns before the bonus payout date (say, in February), do we have to pay a bonus to that employee?

Q. May we include a provision in our bonus plan for North Carolina employees that they will forfeit any bonus that has not been paid at the time of termination?

By focusing sales compensation on what matters most, successful companies are offering up lessons on variable pay from which every compensation pro can learn. Struggling to make variable pay work for your organization? Pay attention to these sales compensation trends that just might apply in your organization:

The Texas Payday Act allows employees to sue for commissions earned but unpaid after termination. But that doesn’t mean that employees are always owed such commissions. If they violated their fiduciary duty to their employers by disclosing confidential information to a competitor, it’s legitimate to withhold pay.

The tax-exempt North Carolina High School Athletic Association apparently violated University of North Carolina policy when it paid bonuses to its managers. The association administers high school sports throughout the state. From 1999 to 2008, the association paid out $239,133 in bonuses to managers and $7,820 to nonmanagement staff. The employees won’t have to return the money.

The Supreme Court of California has ruled that employers are free to develop incentive payment plans that reward loyalty by requiring employees to stay for a period of time before earning the full benefit.

Business and vacation travel may be down, but American Airlines says customer satisfaction is up—and is rewarding about 71,000 employees for making it happen. The Fort Worth, Texas-based airline awarded $10.6 million—about $150 per employee—to staffers who helped the organization achieve its fourth-quarter 2009 customer satisfaction goals.

If you pay commissions under a written compensation plan that covers commissions earned only while the employee works for your company, be careful how you handle terminations—and discussion concerning payment of further commissions. In some circumstances, you could inadvertently create additional liability for unpaid commissions ...

An Orange County attorney has agreed to plead guilty to two felony charges after frittering away millions of dollars of his clients’ settlement awards—by placing losing bets on the stock market. Sandeep Baweja, sole proprietor of Baweja Law Group, was representing 800 real estate agents who sued their employer for denying commissions and other payments.

It’s that time of year again—time to spread a little holiday cheer … and think about the potential legal consequences of doing so. Even as employers cut back during these difficult economic times, most still want to find special ways to thank their employees and celebrate the hard work they have put in over the past year. As you do so, here are some tips on how to make sure that your holiday season stays merry and bright.

Q. Our bonus plan states that employees eligible to receive bonus pay will receive bonus advances with each paycheck based on year-to-date performance results. Last year, we were on track to meet the maximum bonus throughout most of the year, but the last few months of the year were slow and we didn’t meet our target goal. As a result, we deducted certain amounts from the last few paychecks of salaried employees. Do these deductions threaten the exempt status of the salaried employees?

Q. We give employees who opt out of our health plan a bonus. Do we withhold federal taxes on that bonus?

It sometimes takes extra money to entice an applicant to jump ship. That’s all part of the hiring dance. But there's a hidden peril that could land you in court—and cost you thousands. Learn the best practices that will help you defend yourself.

As hard as this recession has been on everyone, it has forced organizations to look at how to spend compensation budgets more efficiently and more effectively. What has shaken out is a new system of pay raises and bonuses that rewards employees for doing top-notch work rather than for simply showing up for work. Here are five lessons compensation pros have learned during these hard times: