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Compliance September 15, 2006
Appellate Judges OK FMLA Leave Bonus Reduction
September 15, 2006 (PLANSPONSOR.com) - In what it
said was the first time a federal appellate court has
considered the issue, the 3rd US Circuit Court of Appeals has
ruled that companies can cut a worker's bonus if that person
has been off the job on a medical leave.
Reported by Fred Schneyer
However, Circuit Judge Ruggero Aldisert wrote for the court in a case involving a former employee of The Vanguard Group, such reductions have to be made according to specific criteria set out in the plan, reports Human Resource Executive Online. The plans have to be pegged to production or working a certain number of hours.
The appellate court rejected arguments by former Vanguard Financial Administrator Robert Sommer that the suburban Philadelphia financial services firm acted improperly in cutting his 2001 bonus by $1,788 after he took two months medical leave. Sommer’s leave, for treatment of “major depression and generalized anxiety,” was taken under the Family and Medical Leave Act (FMLA).
Upholding a lower court ruling, Aldisert wrote that the FMLA holds ” that, while on FMLA leave, an employee is not entitled to the actual accrual of any right of employment but is entitled to those rights of employment ‘to which the employee would have been entitled had the employee not taken the leave.'”
Qualification for the Vanguard bonus, Aldisert noted, was based on employment on the last day of the calendar year, on the date of the plan’s distribution and all days in between. The amount of the bonus was based on the Vanguard employee’s job level, length of service to the company and hours worked. The Vanguard bonus policy set a target of 1,950 hours worked as a threshold for the full bonus, Aldisert said.
The ruling in Sommer versus The Vanguard Group is here .
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