Viewpoint: FMLA Leave Can Affect Year-End Bonuses

Employers should understand how incentive pay and the Family and Medical Leave Act interact

By Jeff Nowak © Franczek Radelet P.C December 11, 2018
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It's the end of the year, which means bonus time.

Or perhaps instead you want to offer a pay incentive to employees to improve attendance or production? Take, for instance, a point-based attendance bonus policy in which employees are assessed points for every tardiness or absence, which, in turn, disqualifies an employee from receiving the incentive pay.

In these situations, can an employer disqualify an employee from the bonus or incentive for leave time taken under the Family and Medical Leave Act (FMLA) or Americans with Disabilities Act (ADA)?

In short, yes.

FMLA regulations 29 C.F.R. § 825.215(c)(2) provide that:

. . . 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. For example, if an employee who used paid vacation leave for a non-FMLA purpose would receive the payment, then the employee who used paid vacation leave for an FMLA-protected purpose also must receive the payment. (emphasis added).

When calculating bonus payments or incentives, employers must treat employees who take FMLA leave the same as those who are on "an equivalent leave status for a reason that does not qualify as FMLA leave."

So, bottom line, if you deny bonuses and incentives to those on other, similar forms of leave—such as absences related to jury duty leave, military leave to ADA leave—you can deny the same bonus to the employee who took FMLA leave.

But what about unconditional pay increases automatically given to employees? That's a different story. When increases such as a cost-of-living increase are provided to all employees without any condition attached, an employee who has taken FMLA leave is entitled to the same increase.

Other Holiday Pay Issues

What about other FMLA issues you face around the holidays, such as holiday pay during FMLA leave, calculating FMLA during the holidays, and dealing with an employee who plays hooky during the holidays?

  • As to whether to pay an employee holiday pay when they missed the day before or the day after the holiday because of FMLA leave, the answer is fairly straightforward: treat them the same way you would treat another employee on non-FMLA leave. That is, to pay or not to pay for the holidays rests largely on the language in your personnel policies.
  • To calculate FMLA leave time when the employee is absent on the holiday or during a business shutdown for the holiday, you must adhere to very specific FMLA regulations. For instance, if prior to a Friday holiday the employee takes the entire work week off, the employer should count the entire workweek as one full week of FMLA leave used. However, if the employee works any portion of the workweek and then observes the employer holiday on Friday, the employer cannot count the holiday as FMLA leave.

From an earlier post, here are 10 suggestions for combating FMLA leave abuse around the holidays.

Jeff Nowak is a Chicago-based partner and co-chair of the labor and employment practice at Franczek Radelet P.C. and author of the FMLA Insights blog, where this article originally appeared. © 2018 Franczek Radelet P.C. All rights reserved. Republished with permission.

Related SHRM Articles:

Remember 3 Points About FMLA During the Holidays, SHRM Online, December 2018

Watch Out for Wage and Hour Requirements During Holidays, SHRM Online, December 2018

Visit SHRM's resource center for the Family and Medical Leave Act.


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