What is one of the key ways to promote good attendance? For many employers, it is by implementing a perfect attendance award bonus for employees who work for a month or a quarter without missing any scheduled work days. However, while perfect attendance bonuses may seem like the perfect answer for promoting good attendance, various employment law protections make the implementation of these awards risky and can create potential liability for employers.
For instance, suppose an employer provides a perfect attendance bonus to an employee even though they miss work due to a scheduled vacation. Or maybe the employer awards the bonus to an employee even though they missed work for jury duty. However, under the same bonus policy, an employee who takes an unscheduled “sick” day or otherwise has to miss work because of a military or personal leave is disqualified from receiving the bonus. Is the employer at risk of a lawsuit?
In recent cases, for example, courts have held that employees taking military leave must be afforded the same “rights and benefits” as employees taking comparable non-military leaves. Thus, as to perfect attendance awards, an employer must pay a perfect attendance bonus to an employee taking military leave if the employer pays the bonus to employees who miss work for jury duty or bereavement leave. Some recent court cases have gone so far as to conclude that military employees were even entitled to regular pay during a military leave of absence when employees on “comparable” jury duty or sick leaves were paid, reinforcing the notion that other types of leave may be considered comparable to military leaves.
There are also requirements under the Family and Medical Leave Act (FMLA) that require employers to treat employees on FMLA leave similarly to those on non-FMLA leave. The FMLA regulations provide that a perfect attendance bonus may be denied to an employee who fails to qualify due to the use of FMLA leave, unless the bonus is paid to employees “on an equivalent leave status for a reason that does not qualify as FMLA leave.”
However, the example that the Department of Labor provides in the regulations is less than clear:
[I]f 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 must also receive the payment.
This example suggests that an employer should consider whether to award perfect attendance bonuses to employees taking FMLA if the employer does not otherwise disqualify employees from earning the bonus for taking other types of unpaid leave, such as unpaid personal days or bereavement leave.
In light of the risks, we encourage you to review your perfect attendance bonus programs and consider the impact of these issues to minimize the potential for litigation and avoidable lawsuits.