Employers may prorate bonuses due to FMLA leave
Court weighs in
Gregory had been with the company for a couple years and was doing well. In addition to receiving an annual salary, he was eligible to receive bonuses based on his individual performance and the overall performance of the team he was in. His individual performance was measured based on completing certain activities. These activities allowed him to claim contribution unit credits that varied based on the activity and his expected and actual time commitment. He could receive 100% of his bonus if he recorded at least 160 contribution units and his team met its sales target.
One year, Gregory was diagnosed with cancer, and he took FMLA leave at first for about five weeks, then intermittently. Months later, he took another leave related to his condition. In total, he took leave for 63 days that year.
The next year, the company prorated Gregory’s year-end bonus based on the number of days he was on leave. A look into his claims of unit credits indicated something hinky; that he had claimed unearned credits. After a closer investigation, his claims were seen to have violated the company’s code of conduct and was terminated.
Gregory sued under the FMLA, arguing that the company retaliated against him for taking the leave. The retaliation, he claimed, occurred when his bonus was reduced, and when he was terminated. The employer, on the other hand, that the actions were not in retaliation for the FMLA leave.
The court indicated that Gregory did not present any evidence of retaliation. He was provided all the leave he requested. The timing of the adverse actions was not so close together that would support an argument that they were retaliation, since nearly four months passed between the end of Gregory’s latest leave and the reduction of his bonus, and over seven months before his termination.
The employer, however, was able to show that it had a legitimate, clear, specific, and nondiscriminatory reason for its action. It reduced Gregory’s’ bonus and terminated him because he falsely claimed credit to inflate his bonus.
Aside from the retaliation, Gregory tried to claim independently that the employer violated the FMLA by prorating his bonus. But the FMLA allows employers to prorate such incentive bonuses because they are tied to production, and if leave reduces production, it can reduce a bonus. If, however, such a bonus is not prorated for employees on an equivalent leave status for a reason that does not qualify for FMLA leave, then it may not be prorated. Other types of pay increases, such as cost of living, are also not to be prorated.
The employer in this case succeeded in stopping the FMLA part of the case from proceeding to trial.
Clemens v. Moody’s Analytics, Second Circuit Court of Appeals, No. 18-1283, May 3, 2019
This article was written by Darlene M. Clabault, SHRM-CP, PHR, CLMS, of J. J. Keller & Associates, Inc. The content of these news items, in whole or in part, MAY NOT be copied into any other uses without consulting the originator of the content.
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