Case: Burnett v. Fin. of Am. Mortg., LLC, 2025 U.S. Dist. LEXIS 34395 (D. Colo. Feb. 24, 2025)
A recent decision from the United States District Court for the District of Colorado delivers an important warning to employers who rely on “discretionary” language to withhold bonus payments.
In Burnett v. Finance of America Mortgage, LLC, the court denied the employer’s summary judgment on an employee’s unpaid bonus claim under the Colorado Wage Claim Act (CWCA), holding that even discretionary bonuses may constitute earned wages where the evidence shows approval, reliance, and potential abuse of discretion.
This federal ruling builds on the Colorado Supreme Court’s landmark decision in Nieto v. Clark’s Market and clarifies how courts must analyze bonus disputes and wage theft claims at the summary-judgment stage.
Background: Executive Bonus Dispute During Corporate Restructuring
Plaintiff Mark Burnett was employed as a non-producing branch manager for Finance of America Mortgage, LLC (“FOAM”) overseeing multiple Colorado offices. His executive compensation agreement provided a base salary and contemplated discretionary bonuses based on performance and overall contributions to the company.
In September 2022, as FOAM explored a potential asset sale and later decided to exit the forward-mortgage business altogether, Burnett requested a discretionary bonus of $875,000—more than three times his base salary. According to Burnett, the request was approved by his direct supervisor and a company president, reflected in FOAM’s internal compensation system, and consistent with historical bonus practices.
Days later, the bonus disappeared from the ledger, and FOAM ultimately denied payment. Burnett continued working for months during the company’s wind-down, allegedly in detrimental reliance on the promised bonus.
Burnett subsequently filed a lawsuit asserting claims under the CWCA, along with breach of contract and unjust enrichment theories. FOAM moved for summary judgment, arguing that its bonus program was wholly discretionary and therefore did not impose an enforceable obligation on FOAM to pay bonuses.
Recovering Unpaid Bonuses Under the Colorado Wage Claim Act (CWCA)
How the CWCA Protects Bonuses as “Earned Wages”
The CWCA defines “wages” to include “bonuses or commissions earned for labor or services performed in accordance with the terms of any agreement between an employer and employee.” C.R.S. § 8-4-101(14)(a)(II). The statute does not create a right to any particular form of compensation, but it requires timely payment once compensation is earned.
Relying on the Colorado Supreme Court’s decision in Nieto v. Clark’s Market, Inc., the court explained that an employee asserting a claim for unpaid bonuses need only show the bonus was “earned”—not necessarily “vested.” This means the bonus was owed as a return for labor or services performed. Any contractual provision purporting to divest employees of earned wages is void and unenforceable under the CWCA’s anti-waiver provision.
Why Labeling a Bonus “Discretionary” May Not Protect Employers
The Implied Duty of Good Faith and Fair Dealing
FOAM argued that because the bonus plan used discretionary language, Burnett could never have an enforceable right to payment. The court rejected that position.
The court noted that, under Colorado law, every contract includes an implied duty of good faith and fair dealing, which limits how discretion may be exercised. Where discretion exists, the question becomes whether the employer acted consistently with the employee’s justified expectations.
Evidence of Bad Faith and Wage Theft
Here, the court identified multiple factual disputes that precluded summary judgment, suggesting that the employer may have abused its discretion to avoid paying earned wages.
Key evidence included:
- Authorized Approval: Whether Burnett’s bonus request had, in fact, been approved by authorized decision-makers.
- Past Practice: Evidence that no similarly approved bonus had previously been denied by the company.
- System Records: Burnett’s testimony that the bonus appeared in FOAM’s internal compensation system before being abruptly rescinded.
- Retroactive Changes: Disputes over whether FOAM retroactively altered reserve calculations to justify the denial.
- Reasonable Expectation: Evidence that Burnett continued working during the company’s shutdown with a reasonable expectation of receiving the bonus.
Because a jury could find that FOAM approved the bonus and later withdrew it in bad faith, the court held that the discretionary label was not dispositive.
Court Rejects “Absolute Discretion” Defense: The Shift from Vesting to Earning
FOAM relied on earlier lower-court authority suggesting that discretionary bonuses are never vested. The court found those cases unpersuasive after Nieto, explaining that they rested on a now-outdated focus on vesting rather than earning. The court also emphasized that CWCA claims must be liberally construed to protect employees from wage deprivation.
The Court’s Ruling: Summary Judgment Denied on Wage Claims:
In a significant victory for the employee, the court issued several key holdings:
- CWCA Claims Proceed to Trial: The court denied summary judgment to FOAM on Burnett’s CWCA claim, ruling that a jury must decide the issue.
- “Earned” vs. “Discretionary”: The judge held that a reasonable jury could find the bonus constituted earned wages that were improperly withheld, regardless of the “discretionary” label in the contract.
- Common Law Claims survive: The court allowed additional claims for breach of contract and unjust enrichment to proceed against the corporate entity (although it dismissed personal liability claims against the individual executive).
- Anti-Evasion Ruling: The decision reaffirmed that employers cannot rely on ambiguous discretionary language to evade CWCA obligations or avoid paying earned compensation once labor has been performed.
A Clear Warning on Bonus Practices & Wage Theft
Burnett v. Finance of America Mortgage reinforces a growing trend in Colorado wage law: employers cannot defeat unpaid bonus claims simply by relying on discretionary language alone in an employment contract or policy.
Where the facts suggest approval, reliance, and post-hoc reversal, discretionary bonuses may be treated as earned wages under the CWCA—exposing employers to liability, including statutory penalties, attorney fees, and the risk of a jury trial.
Contact a Denver Unpaid Wages Lawyer
Baird Quinn’s employment attorneys have substantial experience litigating complex sales commission disputes, executive bonus claims, and other wage theft issues.
If you believe you have been denied earned compensation—or if you are an employer seeking to draft compliant bonus agreements—contact Baird Quinn LLC today for a consultation.