Home » Commentary » How Does Taking an FMLA Leave Affect an Annual Quota or an End-of-Year Bonus?

Amanda DeMatteis: Hi, Josh.

Josh Goodbaum: Hi, Amanda. What are we talking about today?

DeMatteis: I thought we would talk about the FMLA today. We help a lot of folks that need to go out on FMLA leave for their own serious health condition or that of a family member, and they’re really interested in how that impacts work for the rest of the year in which they took FMLA leave.

So, I have two questions for you. The first is, if you have a quota at your job and you take FMLA during a particular fiscal year or calendar year, are you entitled to a reduced quota because you were out on medical leave? And second, if you are expecting a bonus at the end of your work year, are you entitled to the same bonus that you typically would be if you hadn’t taken FMLA leave, or is your employer entitled to take some type of reduction based on time that you were not actually working because of that medical leave?

Goodbaum: Great questions, Amanda. Remember that for most employees around the country, FMLA leave is going to be unpaid. It is job-protected leave, but not compensation protection. It’s not wage protection. You are entitled to be reinstated to your same position when you come back from that FMLA leave, but you’re not entitled to compensation while you’re gone.

So, how does that translate to the issue of an employee’s quota? If you go out on FMLA leave, you are entitled to a reduced quota that accounts for that leave. Otherwise, the leave would basically be illusory. It wouldn’t exist. You’d be charged for doing work on that leave, except you weren’t doing the work.

So, let’s say you go out for an FMLA leave of three months, which is a quarter of the year, and you have a million-dollar sales quota that you need to generate. Well, what your employer is required to do is to reduce your quota by that same proportion, by 25%, by one quarter. So now, you should be expected to generate sales of $750,000 per year, and that is your right as a person who’s gone out on FMLA to enforce that reduced quota vis-à-vis your employer.

But your employer also has some rights here with respect to a bonus. Now, let’s imagine that you don’t have a discretionary bonus. Let’s imagine you have a commission-based bonus, or you have a production-based bonus. In other words, you have a bonus that is purely mathematical – basically, a commission. If you go out on FMLA leave, your employer is allowed to prorate your bonus, so that it pays you proportionally less to account for the time that you were out on the FMLA leave. Otherwise, it would be as if the FMLA leave were required to be compensated, and it’s not under the federal FMLA. You are entitled to a prorated bonus only, so long as that is what the employer is doing for people who also take similar leaves but do not do so under the FMLA.

Here’s what one circuit court said back in 2006: “An employer may prorate any production bonuses to be paid to an FMLA leave-taker by the amount of any lost production, be it hours or another quantifiable measure of productivity, caused by the FMLA leave.” In other words, you’re not entitled to go out for three months and still expect that you’re gonna get your bonus as if you’ve been working those 3 months and producing what was expected of you.

So, those are the basics about how an FMLA leave can affect your quota and your production-based bonus. You have rights, and your employer has rights.

This can be complicated. There can be some play in the joints. So it’s something you might want to talk with an employment lawyer about.

DeMatteis: It’s so interesting cause we always talk about FMLA with retaliation, you know, “My employer terminated me after I took leave,” or, “They didn’t give me all of the leave I was entitled to.” This is a great example of how there are other entitlements within the FMLA that are important and that you should know about if you need to utilize FMLA leave for yourself or your family members.

Josh, thank you so much for that information, and thank you for watching. Take care.

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