- Blog post
FMLA regulations allow you to deny bonuses
FMLA law says you can prorate production-based bonus for missed time
If you’ve wondered how Family Medical Leave Act absences may affect employee bonuses, listen up: A federal appeals court has clarified FMLA regulations in one key respect.
In a nutshell, the court said that when an employee takes FMLA leave, you can reduce a workers’ bonus as you based the bonus on performance and production measures. If you base a bonus on straight attendance, then no, you can’t reduce FMLA hours taken from the bonus.
Here’s what happened: A Pennsylvania-based mutual-fund management firm knocked an employee’s annual bonus down by $1,800 because he’d taken eight weeks of leave under FMLA regulations.
He sued, claiming the firm interfered with his FMLA rights.
No dice, the court said. The firm’s bonus plan was production-based, the court held – although one way production was measured was by hours worked. The bonus was pro-rated by hours worked for everyone, so the worker wasn’t singled out.
What an employer can’t do, the court went on, is reduce a bonus payout due to FMLA leave when the bonus is based on employees’ avoiding a negative event – such as a missed day or a work accident.
What’s this mean for you? Simply that from the standpoint of FMLA regulations, any attendance bonus program should focus on rewarding production and performance.
Note: This was the first time a federal appeals court had addressed this issue in FMLA law, so it was as close to a Supreme Court decision as we’re going to get for now.
Cite: Sommer v. The Vanguard Group, No. 05-4034, 3rd Cir., 8/24/06.