I am an employee who is required to fill out a W-9 to receive my yearly bonus. Is this correct?

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It does not seem correct to me if you are in fact an employee receiving a W-2 form. Are you sure you are an employee and not an independent contractor?

See the following:

https://turbotax.intuit.com/tax-tools/tax-tips/IRS-Tax-Forms/What-is-IRS-Form-W-9-/INF20088.html

ron. 

I am positive I am an employee. Have two previous W-2s from the past two years. When I started only filled out a 1040. All employees are filling out the same form to receive their bonus this year.  Previous years it was paid in cash.

You employer is doing it wrong, and may be illegally evading some taxes.

The first step is to try to get your employer to do it correctly.  If that doesn't happen, there are ways to properly report things on your tax return, BUT it will result in the IRS contacting your employer about it, and your employer may not be too happy with you about it.

Sounds like in the prior years it was not recorded as income on your W2 or your tax return.  Was it included in W2 box 1 before?

A W-9 is typically requested when an employer plans to issue a 1099-MISC for non-employee compensation.  This would be treated as self-employment income on your tax return.  However, that is incorrect.  As an employee, ALL your compensation must be reported on the W-2, both wages and bonuses.  (There are some ways that real estate agents and other kinds of commissioned jobs get around this rule.)  by reporting your bonus on a 1099-MISC, the employee is making you responsible for all 15% of the social security and medicaid tax, instead of withholding 7.5% from you and matching it themselves.

As mentioned, you can fix this on your tax return but it will cause the employer to be investigated.  (However, the employer won't know that it was YOU who reported it, especially if many employees are in the same position and all take the same reporting steps with their tax returns.)

"There are some ways that real estate agents and other kinds of commissioned jobs get around this rule."
In defense of real estate agents: most real estate agents meet the IRS definition of independent contractor because they are commission-only, and may go weeks or months with no compensation.  Realtors also typically set their own hours and choose which clients they wish to work with.  Therefore when realtors receive a 1099-MISC, it is entirely legitimate. They are not "getting around" any rule.

No defense needed; I've seen questions where an agent is paid a small salary or retainer by the firm, but most of their pay is commission, the commission gets 1099'd because I guess it really comes from the seller, not the real estate firm that is paying the retainer.  I only raise it because someone will always come back and say "But I heard about..." and argue.  In the vast majority of cases, bonuses should be included in W-2 wages.

Your employer is probably doing it wrong. But, as others have suggested, it depends on the details.
But, since that's the way he wants it done, why are you "looking a gift horse in the mouth"? Just do it. There's a way to deal with it at tax time, if you want to contest it.

You shoulda reported those cash bonuses in previous years as income, on your past year  tax returns.

Good point that the rest of us missed!