Paying Out a Year-End Bonus or an Incentive Payment: Can an Employer Withhold the Money from the Employee Who Took FMLA Leave?

By Jeff Nowak - Franczek Radelet P.C.

December 6, 2018

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 (even for FMLA or ADA-covered leave), which, in turn, disqualifies an employee from receiving the incentive.

In these situations, can an employer disqualify an employee from the bonus or incentive?

In short, Yes.

The FMLA regulations provide in relevant part:

    . . . 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.

29 C.F.R. § 825.215(c)(2) (my emphasis and bold).  When qualifying employees for and/or 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?  See my other posts on these issues below:

• 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 previous post giving my Top 10 suggestions for combating FMLA leave abuse.

For more FMLA Insights, please visit https://www.fmlainsights.com/