Professional Service Agreement

Employers Can Prorate Bonus Payments for Employees on FMLA Leave

May 20, 2019

Employers frequently wonder when to pay bonuses to employees on leave under the Family and Medical Leave Act (FMLA). Do employees who do not meet certain goals due to leave qualify for such bonuses? The FMLA regulations provide: "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." The key, as the Second Circuit Court of Appeals recently confirmed, is treating FMLA absences and non-FMLA absences the same for goal-based bonus purposes. The FMLA requires employers to treat FMLA absences the same way they treat non-FMLA absences. However, this means employers can prorate certain bonus payments to employees on FMLA leave, so long as they limit such payments to employees on similar non-FMLA leaves types of leaves. If an employee uses paid time off for non-FMLA leave and qualifies for a bonus, then those who use paid time off for FMLA leave must also qualify for the bonus. Employers should remember that goal-oriented bonuses do not include bonuses awarded to all employees, such as company-wide bonuses. We recommend all employers have SESCO review their Employee Handbook annually to ensure compliance with all federal and state laws.