Another year in the books—hope 2025 was a big win for your team!

For some, and hopefully all of you, you are ready to pay out year-end bonuses as the final pennies are counted for the year. In the meantime, however, you’ve debated with your bean counters whether you can prorate or deny of a bonus to an employee who has taken, let’s say, 10 weeks of FMLA leave this year.

Ten weeks of FMLA leave seems like a lot. And it probably impacted the number of gold-plated widgets your employee made this year. So, can you prorate or even deny a bonus because this employee missed work due to FMLA leave?

In a word, yes.

Here’s the deal: If your bonus is tied to hitting a goal—like perfect attendance, hours worked, or sales—and someone didn’t hit that goal because of FMLA leave, then, no soup for you!

The catch? You have to treat these employees the same as anyone on similar leave that’s NOT FMLA.

Per Section 215 of the FMLA regulations, an employer can disqualify an employee from a bonus based on achievement of a specified goal, such as hours worked or perfect attendance, even where the employee has not met the goal due to FMLA leave.  The regulations provide guidance for us here:

. . . if a bonus or other payment is based on the achievement of a specified goal such as hours worked, products sold or perfect attendance, and the employee has not met the goal due to FMLA leave, then the payment may be denied, unless otherwise paid to employees on an equivalent leave status for a reason that does not qualify as FMLA leave.  For example, if an employee who used paid vacation leave for a non-FMLA purpose would receive the payment, then the employee who used paid vacation leave for an FMLA-protected purpose also must receive the payment.

29 C.F.R. § 825.215(c)(2) (my emphasis and bold). 

Let me put this another way.

When qualifying employees for and/or calculating bonus payments or incentives, employers must treat employees who take FMLA leave the same as those who are on “an equivalent leave status for a reason that does not qualify as FMLA leave.” 

But Jeff, give me some case law support for this concept!

I got your back! In situations like these, I find helpful the Clemens case, which often is cited on FMLA bonus issues. 

Clemens v. Moody’s Analytics, Inc. (2nd Cir. 2019). Clemens argued that his former employer unlawfully prorated bonus payments owed to him under an incentive program offered by Moody’s. Under this incentive program, Clemens was eligible to receive incentive payments for completing certain work throughout the year. Moody’s prorated payments based on the length of an employee’s leave, regardless of the employee’s reason for leave. In other words, if you missed time — regardless of the reason — you lost bonus money. Since the evidence showed that the employer’s proration was neutrally applied based on the length of the employee’s leave (regardless of the reason for leave), there was no interference with his FMLA rights, and the claims were dismissed.  The Second Circuit affirmed the decision. 

What About State/Local Leave Laws?

We’ve covered the federal FMLA rules—but what about state or local paid sick leave laws? Could they cause problems for your bonus policy?

The answer: maybe. Most state leave laws don’t specifically address whether you can deny a bonus to someone who uses state or local paid sick leave. In those cases, you could probably apply the same standard you use for FMLA.

But be careful! Many of these laws include anti-retaliation provisions that might come into play. For example, my hometown Chicago’s sick leave ordinance says employers can’t take adverse action against employees for using protected paid sick leave. That’s pretty broad and generic, so it’s unlikely to affect how you handle bonuses.

Minneapolis, on the other hand, takes a much harder line. Their sick and safe time ordinance explicitly says employers cannot consider legitimate sick and safe time use when rating attendance for purposes of awarding benefits—like bonuses. Doing so would be considered unlawful retaliation.

Bottom line: Before you prorate or deny a bonus, check your local paid leave laws. And when in doubt, pick up the phone and call your favorite employment attorney.

Other Holiday Pay Issues

What about other FMLA issues you face around the holidays, such as holiday pay during FMLA leave, calculating FMLA during the holidays, and dealing with an employee who plays hooky during the holidays?  Take a look at my other posts on these issues below:

We’ll cover prorating bonuses for FMLA leave at some length at my 2026 FMLA & ADA Master Class – check out the details HERE!

Merry Christmas and Happy Holidays!