If you like statistical analysis (and I do) then 538 is a really good blog. The linked story has nothing to do with statistics but it explains something that I didn't understand about the AIG bonus fury.
http://www.fivethirtyeight.com/...
Pundits call it a bonus but the contract says the payment is not performance based, like you expect a bonus to be. The cash payment is AIG's guarantee to some employees who received a big bonus in the good times that they would receive equal compensation in the bad times if they stick around. This really sounds more like a salary with an employment agreement. Is this a distinction without a difference? I don't think so because not paying the compensation could fundamentally change the doctrine of employment at will.
Employment at will means that an employer can fire you, and you can quit a job, at any time with no notice and no reason. Whether this is fair or not depends on your point of view, and my point here is not to debate the merits of employment at will. I think the doctrine has both good and bad consequences but I don't think that it should be changed merely because of AIG.
Employment at will has existed at common law for a long time in every state of the US except Montana. (Common law is judge created law, which is a centuries-old way of making the law. Even most statutes have their origins in the common law. Statutes always win over common law. Montana has a statute that modifies employment at will.) Thus employment at will is generally the law. States vary on how an employer and employee can change the terms of employment at will. Generally a collective bargaining agreement or a personal agreement of the kind courts in the jurisdiction approve are the safest ways to ensure the agreement will be upheld if the parties go to court. An express contract, with those key points that lawyers in the jurisdiction will know they need to add, is the most certain way to overcome the presumption of employment at will.
Today, employers and employees have some general notion of how they may negotiate something other than employment at will. That knowledge allows them to structure their business relationships with some feeling of confidence. The AIG bonus issue could disrupt that confidence.
With AIG it appears that the employer said, "hey you credit default swappers, if you agree to keep working with us when your division is not making money, we'll keep you on at the same pay you received in the good times. But you must agree to stay with us for the medium-long term." The workers agreed to that, and they received their compensation of a salary and payment equal to what they had previously earned as a performance bonus. (The linked article makes the argument that anybody could have made money on CDSs in the crazy times thus the bonus was not really a performance bonus. I address that in the conclusion). Thus, if the employee kept his promise and stayed with the company, the company is obligated to keep its promise and pay the employee his non-performance based compensation that looks like a bonus. Assuming of course that the employment agreement is valid in the jurisdiction.
If the employees don't receive the promised compensation from AIG, and then go to court and are denied their compensation, the court is greatly modifying the employment at will doctrine. If the employees gave something up (possibly other employment) and kept working in reliance on AIG's promise to pay them and then they AIG didn't pay them, the court would likely find that the employment agreement requires AIG to pay and order the employees payed. That's the current law. However, a court with jurisdiction can exercise equity power (that is, ability to make a party whole) to modify agreements in the interest of fairness. A court in equity could find that the compensation is not fair to taxpayers and deny the compensation, holding the employment agreements void against public policy. That's not the current law.
A court that found the compensation should not be paid would be substituting its policy choice, that employees of bailed out companies should not receive compensation that looks like a bonus, for the law. If the court could do that, then the same court could also substitute its policy choice when a fired employee shows up and says, "I wasn't given a one month notice before I was fired so I want severance" and find the employee was not treated fairly so is owed back pay. A court should not make decisions based on popular opinion or its on its personal policy preferences, and I don't see much difference between the AIG situation and my hypo. Modifying employment at will may or may not be a good idea, but again, that is not my point. If the AIG employees do not get their compensation that looks like a bonus, then employees in the future are less likely to enter into agreements. And those who do may break them and say, the agreement is unenforceable, see AIG. Employers could do the same. Thus, if the AIG employees are not paid, chaos results. And Republicans then turn to union contracts as the next set of employment contracts that need to be renegotiated for the sake of the economy.
After writing this I've changed my mind. Now I think the employees should be paid their money, and not be subject to any extra tax. (By the way, that tax that was bounced around in congress last week is almost certainly constitutional.) I remain open to further developments though.
The AIG bonus is a distraction from the real issue. The real issue in my view, and the one the pundits ignore, is why these guys at AIG were making so much money trading "credit default options", maybe better called "pieces of paper with phony value", to each other. Lack of any regulation or oversight of that CDS market is the root of the problem. We could be asking, how much should we reward really smart people who developed a market for a financial instrument designed solely to enrich themselves without providing something to the country's economy? Should society reward greed for greed's sake? The CDS market was pure greed, not capitalism. Pundits railing against the bonuses is cathartic but unproductive unless turned toward creating an economy that values manufacturing, distributing, selling, and fixing real goods. That would solve the problem.