Appeals court OKs prorated bonus for worker on FMLA leave

Dive Brief:

Moody's Analytics Inc. did not interfere with an employee's Family and Medical Leave Act (FMLA) rights when it prorated his bonus based on his leave, the 2nd U.S. Circuit Court of Appeals has ruled (Clemens v. Moody's Analytics, No. 18-1283-cv (2nd Cir., May 3, 2019)).
In addition to his regular salary, Gregory Clemens was eligible for incentive payments based on both his individual performance and the team's, according to court documents. Following leave for cancer, Moody's prorated his bonus based on his absences. He sued, alleging interference, but a district court granted summary judgment for the employer, finding that it did not violate the FMLA by prorating incentive compensation to account for lost production.
On appeal, the 2nd Circuit agreed with the lower court, observing that an FMLA interference claim requires a plaintiff to show, among other things, that he or she was denied FMLA benefits to which he or she was entitled. The appeals court also said Clemens failed to show any evidence that his manager had acted with "retaliatory animus" rather than "legitimate skepticism of the [contributions] claimed by Clemens in light of his reduced working hours and [the manager's] own personal knowledge of Clemens' work activities during the time period."

Dive Insight:

FMLA regulations entitle workers to "unconditional pay increases" that occur during leave such as cost of living increases and some bonuses.

They generally are not, however, due bonuses dependent on specified goals such as "hours worked, products sold or perfect attendance" if the goal was missed because of FMLA leave — unless otherwise paid to employees on an equivalent leave status for a reason that does not qualify as FMLA leave, the rules note. "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."

The U.S. Department of Labor again made this clear in 2000 opinion letter, stating that the FMLA does not require that an employee accrue seniority or benefits during unpaid leave, but it does require that benefits accrued before the start of FMLA leave be available to employees when they return from leave. As for determining the amount of a bonus, DOL said that because bonuses may be prorated based upon hours worked, that it would not be an FMLA violation to determine the bonus based only upon the actual hours of work.