Is An Employer Required to Pay a Prorated Amount of Annual Bonus after Employee Takes FMLA Leave?
December 23, 2014
It’s the end of the year. And with the end of the year comes questions from my clients about whether they need to account for an employee’s FMLA leave when doling out year-end bonuses. In other words, is an employer obligated to pay a bonus based on a “goal” when the employee missed the goal because he took FMLA leave during the year?
The answer typically is NO. The FMLA regulations put it this way:
if a bonus or other payment is based on the achievement of a specified goal such as hours worked, products sold or perfect attendance, and the employee has not met the goal due to FMLA leave, then the payment may be denied, unless otherwise paid to employees on an equivalent leave status for a reason that does not qualify as FMLA leave. 29 C.F.R. § 825.215(c). (My emphasis)
Simply put, the regulations require employers to treat FMLA absences in the same manner they account for non-FMLA absences. Employees cannot be treated worse for taking FMLA leave than they would have been had the absences not qualified under the FMLA.
Interestingly, the regulations talk of an employer’s ability to deny “goal-based” bonuses. The regulations define “goal-based” quite broadly, and only bonuses awarded to all employees – such as holiday bonuses – are not considered goal-based. Therefore, attendance bonuses, safety bonuses, production bonuses, and sales bonuses would be considered goal-based bonuses.
The regulations do not address whether an employer must pay a prorated portion of bonuses when an employee’s FMLA leave impacts receipt of the bonus. But the same logic above would apply. Here, you must careful: from time to time, I find that employers give employees a credit to account for time missed due to an absence. Such a practice is acceptable (although a slippery slope), but for this purpose, you must then treat employees who have taken FMLA leave the same as employees who have taken other types of non-FMLA leave.
Other Holiday Pay Issues
- For those with questions about whether you pay an employee holiday pay when they missed the day before or the day after the holiday because of FMLA leave, see my previous post here for the answer.
- If you’re wondering how you calculate FMLA leave time when the employee is absent on the holiday or during a plant shutdown for the holiday, you must adhere to very specific FMLA regulations on point. I answer that question here.
- For tips on fighting FMLA abuse around the holidays, either dial (800) HELP-ME-JEFF or see my post here.