A Pennsylvania financial administrator requested time off under the Family and Medical Leave Act (FMLA) for an illness and ultimately took 2 months' leave without pay. As a result, his employer prorated his performance bonus for the year, reducing it by nearly $1,800. He filed a class action lawsuit, asserting the proration tended to discourage him and his colleagues from using FMLA.

What happened. Robert Sommer worked for Vanguard Group, an investment management firm. The company had instituted its "partnership program" in 1984, with goals to "recognize crew members' contributions to Vanguard's growth and success in a tangible way" and to allow employees "to share in Vanguard's growth and financial success." 

To be eligible for a given year's bonus, an employee was required to have put in 1,950 hours and stay until bonuses were awarded. No specific performance targets were included, but the plan does specify what does and does not count as hours worked. Paid vacation and sick leave, for example, do qualify, leading Sommer to charge that workers using FMLA were treated unfairly by comparison. 

A judge in federal district court heard his arguments and those of Vanguard, and ruled that the bonus plan was acceptable and did not discriminate. Sommer appealed to the 3rd Circuit, which covers Delaware, New Jersey, and Pennsylvania.

What the court said. Appellate judges first noted that they were the first to consider the question of FMLA and prorated benefits. Then they turned to the law itself, finding that workers using FMLA leave cannot be deprived of "any right, benefit or position to which the employee would have been entitled had the employee not taken the leave." At the same time, the statute says that employees are not entitled to accrue benefits during such leave. 

Finally, judges reviewed the relevant opinions of the Department of Labor, which described two types of bonus--one for perfect attendance or a clean safety record, which judges termed an "absence of occurrence" bonus, and the other a "production bonus" based on hours worked, items produced, or the like. They concluded that prorating an "occurrence" bonus for FMLA leave might be illegal, but doing so for one based on production was permissible. So Sommer's case was dismissed again. Sommer et al. v. Vanguard Group, U.S. Court of Appeals for the 3rd Circuit, No. 05-4034 (8/24/06).

Point to remember: Vanguard got points for naming short- and long-term disability leave as nonqualifying hours, like FMLA time. If you have a bonus plan, make sure it clearly defines the goal, what employees must do to qualify and, if hours worked are a criterion, how they will be calculated.