Third Circuit Decides FMLA Bonus Issue of First Impression

NewsDash from PlanSponsor.com has the skinny this morning on an interesting FMLA issue of first impression decided by the 3rd Circuit Court of Appeals concerning bonuses:

In what it described as a case of "first impression," 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.  However, Circuit Judge Ruggero Aldisert noted that those reductions have to be made according to specific criteria set out in the plan, reports Human Resource Executive Online. 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 of medical leave. Sommer's leave, for treatment of "major depression and generalized anxiety," was taken under the Family and Medical Leave Act (FMLA).

Specifically, the Court found:

[T]he 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, [Judge] 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.

Here is the opinion in Sommer v. The Vanguard Group, 05-4034 (3d Cir. Aug. 24, 2006).

PS