Employer Allowed to Deny Employee Pay Differential Due to FMLA-Related Absences

The United States District Court for the Eastern District of Arkansas, in Flowers v. McCartney, has determined that an employer did not violate the Family and Medical Leave Act ("FMLA") when it discontinued an employee's weekend pay differential due to FMLA-related absences.

Background. The employer offered a 30 percent pay differential to its employees who worked weekend shifts and did not miss more than six weekend shifts during a six-month period. Moreover, employees who missed more than six weekend shifts would not be eligible to participate in the employer's enhanced weekend pay option for one year.

The plaintiff missed more than six weekend shifts as a result of taking FMLA leave to care for a serious health condition. When the plaintiff returned to work, the employer stopped paying her the 30 percent pay differential. Despite being told by the employer that she was no longer eligible for the pay differential, the plaintiff continued to use the pay differential code with her time entries, and she was subsequently terminated for falsifying records. In response, the plaintiff sued the employer alleging that its actions violated FMLA.

District Court. The court highlighted that the applicable FMLA regulations explicitly allow employers to withhold a bonus or other payment that is based on the achievement of a goal related to hours worked or perfect attendance. Accordingly, even where an employee does not meet the goal due to FMLA leave, the employer may withhold the payment as long as the employer would do the same for non-FMLA absences. The court noted that the Ninth and Tenth Circuits have interpreted the FMLA regulations to hold that "absences caused by FMLA leave may count as absences with respect to bonuses," provided the employer acts similarly in response to non-FMLA absences.

While the court further acknowledged that FMLA regulations do provide that: "[a]n employee is entitled to be restored to a position with the same or equivalent pay premiums, such as shift differential,"  it clarified that this provision applied only where the employer's payment of the shift differential was not conditioned upon hours worked or an attendance record. Therefore, the court held that the employer's actions were acceptable under FMLA because: (i) its payment of shift differential was contingent upon an employee's attendance record; and (ii) it treated all employee absences the same, regardless of whether the absence was covered by FMLA.