South-Western Legal Studies in Business

Bonus Payment Reduction for Time Lost During FMLA Leave Is Appropriate
Description

Appeals court held that an employer did not violate the FMLA by reducing an employee's annual bonus to take into account the eight weeks he missed during leave covered by FMLA.

Topic Employment Law
Key Words

FMLA; Disability Leave; Annual Bonus

C A S E   S U M M A R Y
Facts

Vanguard pays an annual bonus to certain classes of employees based on profits; the payment is based on length of time worked and productivity. When Sommer worked at Vanguard, he took eight weeks Family and Medical Leave Act due to a temporary disability. His bonus was reduced to take into account the eight weeks he missed. He sued Vanguard for violating the FMLA, contending that not granting him a full bonus violated his FLMA rights. The trial court held for the employer; Sommer appealed.

Decision

Affirmed. The employer's plan was a "production bonus" under Department of Labor regulations. It was calculated based on the number of hours worked per year and could be prorated for absences. Hence, it was legitimate for the employer to reduce Sommer's bonus based on his FMLA absence. The fact that the employer does not reduce bonuses based on vacation and sick leave time taken does not impact its treatment of FMLA leave. Other, non-FMLA leaves, such as due to workers compensation or unpaid personal leave, also resulted in a reduction in bonus time credit. Sommer was not denied his FMLA leave, and suffered no other employment impact, so he has no claim.

Citation

Sommer v. The Vanguard Group, 461 F.3d 397 (3rd Cir., 2006)

Back to Employment Law Listings

©1997-2006  SW Legal Studies in Business. All Rights Reserved.