Bonuses, Pay Increases and FMLA Reinstatement
An employee returning from FMLA leave is generally entitled to reinstatement to the same position they held prior to the leave or to a virtually identical position.
A common area of confusion is how handle pay increases or other bonuses when an employee returns from FMLA leave.
An employee returning from FMLA leave is entitled to any unconditional pay increases that may have occurred during the FMLA leave period, such as cost of living increases. Pay increases conditioned upon seniority, length of service, work performed or the achievement of a specified goal must be granted in accordance with the employer’s policy or practice with respect to non-FMLA leaves.
Section 825.215(c)(2) of the FMLA regulations specifically states:
[I]f 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 it is 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.
If an employer has a practice of pro-rating a bonus for employees who are on a non-FMLA unpaid leave to account for the time the employee worked, the bonus should be similarly pro-rated for employees who take FMLA leave and, as a result, don’t meet the bonus requirement.
To manage employee expectations and help ensure consistency, it is recommended that bonus plans and related documents address the treatment of bonuses in leave circumstances.
An increasing number of states and municipalities are passing paid sick leave laws. Employers in a jurisdiction with a paid sick leave law should examine the law to see if it addresses payment of bonuses during a paid sick leave period that may run concurrently with the FMLA.