In 2021, as everyone begins to hope that the world will shift back to normal after the chaos of COVID-19, many employers are finding that they have no workers to fill open positions as they ramp up production and expand business hours, Historically, it can be difficult to fill certain positions and currently both employers and politicians are searching for ways to incentivize workers. As discussed in a previous post, Governor Reynolds announced on May 11, 2021, that Iowa will end participation in the federal supplements to unemployment compensation beginning June 12, 2021. This is coupled with the fact that beginning on June 13, 2021, “Iowa will no longer waive employer charges for COVID-related unemployment insurance claims.”

Employer risks in unique recruitment and retention solutions

Recruitment and retention problems didn’t start with COVID in Iowa. The state has experienced low unemployment for several years and many employers have difficulty filling positions. In response, employers have adopted a wide array of programs to both keep and maintain employees. For certain hard-to-fill shifts or roles, employers may offer bonus payments directly linked to the shift and regular ongoing attendance at that shift.

One example of this is the “weekend package” for nursing and other healthcare staff. In this model, an employee commits to work a certain number of weekends per year (e.g. between 46 and 50) and the employee receives a higher rate of pay for completing those weekend shifts. If an employee is absent from a weekend shift, they may lose the weekend shift benefits either simply for the following weekend or the weekend shift package as a whole.

One consistent problem with this payroll process comes from the Americans with Disabilities Act and FMLA leave. For example, if an employee has extended family leave and only meets a third of the weekend package commitments, does the employer still have to pay the premium weekend package rate or can the employee be removed from the weekend package? This can be a complicated question and not all courts or regional DOL have weighed in consistently on this matter.

Arkansas case may clarify hours worked component

A 2019 case from Arkansas, Flowers v. McCartney, focuses on the hours worked component in the FMLA. Generally, employees on FMLA receive certain accrued benefits unless those benefits are based on hours worked.

The most common example is an employee who receives PTO accrual on an annualized basis every January 1, who misses 12 weeks for family leave. The employee still receives the PTO accrual the next January 1. Employees who accrue PTO based on hours worked only receive the PTO accrual for actual hours worked and FMLA leave or other leave does not count towards that calculation.

In the case, Flowers, a nurse worked the weekend package at a local hospital where she received a 30% premium for weekend work. As part of the weekend package agreement, nurses agreed not to miss more than six weekend shifts in a year. Those who missed more than six were removed from the weekend package pay differential. Ms. Flowers missed some time for personal issues and then due to a health condition, took FMLA through July and August, and missed a total of eight weekend shifts.

Siding with the employer, the court cited the FMLA regulations regarding equivalent pay “… 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…”

The court goes on to state that the FMLA regulations explicitly allow employers to withhold payment that is based “on the achievement of a goal related to hours or attendance.” This is only true if the employer would make the same decision for any other form of leave taken by an employee, citing 9th and 10th Circuit cases with similar findings.

In this instance, the clear language of the weekend package agreement signed by the employee and the very specific requirements for attendance cut in favor of the employer’s interpretation of the rule.

In addressing the ADA issues, the court states that while “Flowers can clearly draw a connection between the loss of her shift differential and her taking leave … she cannot, however, draw the necessary connection into loss of the differential and her disability.” The Court cites again the contract and the requirements of attendance set forth in the weekend shift agreement and the fact that an employer treated all leave the same regardless of the need for the leave.

The big picture

When considering shift differentials, bonus options, or various ways to fill hard-to-fill shifts, employers need to be very clear about their expectations, set clear guidelines, and most importantly enforce those guidelines consistently in all cases to avoid potential liability.