Human Resource Blog

Arizona - Getting/Calculation Bonus during FMLA

I’m an employee who works and lives in Arizona. I recently used FMLA for about 6 weeks. My employer allowed me to use my accrued vacation and sick time for 3 weeks of the time that I was out.

I receive a bonus annually. The bonus is based upon 50% of my personal performance, and 50% Company EBIDA. (Earnings Before Interest, Depreciation, and Amortization.) In order to calculate the bonus, the company looks at my prior year’s compensation to calculate. Example: I get paid the bonus in March 2009, they look back to March 2008 for the compensation period.

Per the bonus policy particular wages are considered eligible wages for the bonus. Eligible wages are Regular Earnings, Vacation, Sick, and Holiday pay.

Here’s the question. My employer permitted me to use sick, and vacation time during my 6 weeks of leave, but they are telling me that the sick and vacation time I used for the leave will not be considered for the bonus calculation. This is where I’m confused. The bonus plan states vacation and sick time is eligible wages, but because I took FMLA and used vacation and sick time, 6 weeks of wages are not included in the calculation. Does this violate FMLA as it pertains to bonus?

The 2nd part of the question is that the company changed the bonus policy effective January 2008, but just informed employees of the change in May 2008. My issue is the old bonus plan did not reduced your eligible wages for FMLA leave if you used Sick and Vacation. If I would have known this earlier I may have not taken the 6 weeks of leave, I may have come back earlier.

Please help me?

Regards

Let’s take the easy question first. Does this violate FMLA regulations as they pertain to bonus? As long as the FMLA paperwork you filled out shows that you were on FMLA for the entire 6 weeks, the answer is “No, it doesn’t.” Because according to the US DOL compliance guide, time on FMLA leave is specifically excluded from calculating bonuses.

 

 

It sounds like you assumed that any sick or vacation time you used while on FMLA would count towards your annual bonus. But from the company’s point of view, you were on FMLA and that does not count towards bonus. Basically, to them, “on vacation” is different from “on vacation while on FMLA.”

 

If someone in HR told you before you went on leave that the sick and vacation time would be eligible income towards your bonus – especially if it’s in writing – then you should be entitled to it. Otherwise, you can plead your case with HR, but you will probably lose.

 

If the lost bonus amount is less than 3 week’s salary, you still come out ahead financially. Even if it cost you money, it’s probably a small price to pay to spend time with your baby.

 

You understandably feel that the company changed rules on you after January 1. In reality, the US Department of Labor changed the FMLA rules that companies must follow on February 11, 2008. Before that time, companies could use their discretion whether or not to allow workers to use their vacation time while on FMLA. Many companies did not permit employees to do so.

 

Under the new rules, the employer must allow the worker to take any paid time off, such as vacation or sick time, while on FMLA. This has caused many companies to change their policies, with consequences to the employees.

 

Companies have the right to establish new bonus plans every year, and many do. The previous year’s bonus plan is really irrelevant. While it would be nice if every company finalized the bonus plan for 2008 prior to the start of the year, there is no legal requirement that they do so.