Perfect attendance bonuses were one of the very first topics that the DOL’s Wage and Hour Division commented on after the law was passed in 1993, so it’s something to take seriously. Since then, the DOL has commented on it four additional times but confusion still exists.
So how should you handle perfect attendance when someone misses work under FMLA?
Here’s the short answer: Absences under FMLA cannot have an adverse impact on eligibility for an attendance bonus and must be treated the same as otherwise similar absences.
Here’s a summary of what the Department of Labor’s opinion letters and non-administrator interpretations say about attendance and production bonuses.
- You cannot use FMLA leave as a factor in qualifying for an attendance bonus.
- You can prorate the amount of the bonus for absences under FMLA, but only if you would prorate it for other types of absences.
- You cannot use the failure to earn a bonus due to FMLA leave as a factor in other employment decisions, such as disciplinary action, promotional opportunities, etc.
Here are some examples.
Example 1: Your company has a monthly perfect attendance bonus that is paid if the employee does not have any unplanned absences.
- An employee has an unplanned absence due to the flu. The employee is not eligible for the bonus.
- An employee has two unplanned absences to care for a child under FMLA. The employee would be eligible for the perfect attendance bonus.
- An employee has four unplanned absences. One due to a flat tire and three under intermittent FMLA. The employee would not be eligible for the perfect attendance bonus.
Example 2: Your company has a monthly perfect attendance bonus that is paid if the employee does not have any unplanned absences and is paid at a pro-rated amount for days missed for planned absences such as vacation time or any FMLA absences.
- An employee misses one week of work for a planned vacation. The employee would receive ¾ of the perfect attendance bonus because they worked three out of the four weeks in the month.
- An employee misses one week of work under FMLA. The employee would receive ¾ of the perfect attendance bonus because they worked three out of the four weeks in the month.
- An employee produces zero widgets because they were on a continuous FMLA leave and were not at work during the entire week (i.e. the entire bonus period). The employee would not receive their bonus.
Here's our recommendation . . .
Overall, we don’t recommend variable pay programs that are tied to attendance. They often encourage employees to come to work when they are sick, which prolongs their illness, or infects other employees, or both.
If you must, we recommend a perfect attendance bonus that only factors in unplanned absences that are not covered under FMLA (like the attendance bonus in Example 1). The prorated attendance bonus policy in Example 2 is used as an example in one of the DOL opinions, but it’s more complicated to administer than it’s worth.
Have questions? We would love to help. Email us at email@example.com.
Having trouble sleeping? Here are the links to the DOL opinions used for this article:
We hope you enjoyed reading our article on Perfect Attendance Bonuses and FMLA.
Leave Solutions is based in Milwaukee, WI and helps employers with their FMLA and leave of absence processes from a Human Resources perspective.
Contact us today at firstname.lastname@example.org if you have questions on attendance bonuses or other topics.