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Sommer v. Vanguard Group

August 24, 2006


On Appeal from the United States District Court for the Eastern District of Pennsylvania. (D.C. No. 04-cv-02682). District Judge: The Honorable Jan E. DuBois.

The opinion of the court was delivered by: Aldisert, Circuit Judge


Argued July 10, 2006

Before: SMITH, ALDISERT and ROTH, Circuit Judges.


This appeal by Robert Sommer, a former employee of The Vanguard Group, Inc., presents a question of first impression regarding the construction of the Family and Medical Leave Act ("FMLA"), 29 U.S.C. §§ 2601-2654, and the corresponding Department of Labor ("DOL") regulations. We must decide whether Vanguard illegally interfered with Sommer's FMLA rights when, upon his return from approximately eight weeks of short-term disability FMLA leave, it did not award him a full annual bonus payment under its Partnership Plan, but instead awarded him a payment prorated on the basis of the time he was absent. Central to this question is a determination of what the bonus program rewards: employee production or the absence of an occurrence. If it rewards employee production, then proration for FMLA absences is generally allowed; if it rewards the absence of an occurrence (like a safety or perfect attendance bonus), then proration is not allowed.

In a summary judgment dated August 10, 2005, the District Court for the Eastern District of Pennsylvania determined that the Vanguard Partnership Plan is a production bonus and that the company had not unlawfully interfered with Sommer's FMLA rights by prorating his bonus. We agree and will affirm.*fn1


Congress enacted the FMLA in 1993 to accommodate "the important societal interest in assisting families, by establishing a minimum labor standard for leave." Churchill v. Star Enters., 183 F.3d 184, 192 (3d Cir. 1999) (quoting S. Rep. No. 103-3 at 4, 1993 U.S.S.C.A.N. at 6-7). Congress' stated purposes for the act are "(1) to balance the demands of the workplace with the needs of families, to promote the stability and economic security of families, and to promote national interests in preserving family integrity; [and] (2) to entitle employees to take reasonable leave for medical reasons, for the birth or adoption of a child, and for the care of a child, spouse or parent who has a serious health condition; . . ." 29 U.S.C. § 2601(b)(1), (2). To accomplish these goals, the FMLA grants an "eligible employee" the right to 12 work-weeks of leave over any 12-month period because of, among other things, "a serious health condition that makes the employee unable to perform the functions" of the employee's position. § 2612(a)(1). After a period of qualified leave, an employee is entitled to reinstatement to his former position or an equivalent one with "equivalent employment benefits, pay and other terms and conditions of employment." § 2614(a)(1). Moreover, the taking of FMLA leave, "shall not result in the loss of any employment benefit accrued prior to the date on which leave commenced." § 2614(a)(2). This right is limited, however, by the proviso that the restored employee shall not be entitled to "the accrual of any seniority or employment benefits during any period of leave[,] or . . . any right, benefit, or position of employment other than any right, benefit, or position to which the employee would have been entitled had the employee not taken the leave." § 2614(a)(3)(A), (B).

To protect these rights, the FMLA declares it "unlawful for any employer to interfere with, restrain, or deny the exercise of or the attempt to exercise, any right provided" in the FMLA. § 2615(a)(1). Such a claim is typically referred to as an "interference" claim, and is acknowledged to "set floors for employer conduct." Callison v. City of Philadelphia, 430 F.3d 117, 119 (3d Cir. 2005). To deter such interference, Congress has provided that an employer may be found liable for civil damages that include: compensatory damages for any wages, salary, employment benefits or other compensation lost by reason of the violation; and liquidated damages. § 2617(a)(1)(A).

To assert an interference claim, "the employee only needs to show that he was entitled to benefits under the FMLA and that he was denied them." Callison, 430 F.3d at 119 (citing 29 U.S.C. §§ 2612(a), 2614(a)). "Under this theory, the employee need not show that he was treated differently than others[, and] the employer cannot justify its actions by establishing a legitimate business purpose for its decision." Id. at 119-120. "An interference action is not about discrimination, it is only about whether the employer provided the employee with the entitlements guaranteed by the FMLA." Id. at 120. Because the FMLA is not about discrimination, a McDonnell-Douglas burden-shifting analysis is not required. See Parker v. Hanhemann Univ. Hosp., 234 F. Supp. 2d 478, 485 (D.N.J. 2002) (citing Hodgens v. Gen'l Dynamics Corp., 144 F.3d 151, 159 (1st Cir. 1998)).


Addressing unlawful FMLA interference, the DOL has stated that it includes "not only refusing to authorize FMLA leave, but discouraging an employee from using such leave." 29 C.F.R. § 825.220(b).*fn2 As for company bonus programs-and, more specifically, the distinction between absence of occurrence bonuses (e.g., safety and perfect attendance bonuses) and production bonuses-the DOL has explained:

Many employers pay bonuses in different forms to employees for job-related performance such as for perfect attendance, safety (absence of injuries or accidents on the job) and exceeding production goals. Bonuses for perfect attendance and safety do not require performance by the employee but rather contemplate the absence of occurrences. To the extent an employee who takes FMLA leave had met all the requirements for either or both of these bonuses before FMLA leave began, the employee is entitled to continue this entitlement upon return from FMLA leave, that is, the employee may not be disqualified for the bonus(es) for the taking of FMLA leave. See § 825.220 (b) and (c). A monthly production bonus, on the other hand does require performance by the employee. If the employee is on FMLA leave during any part of the period for which the bonus is computed, the employee is entitled to the same consideration for the bonus as other employees on paid or unpaid leave(as appropriate). See paragraph (d)(2) of this section.

§ 825.215(c)(2). The referenced subsection (d)(2) provides that "[a]n employee may, but is not entitled to, accrue any additional benefits or seniority during unpaid FMLA leave." § 825.215(d)(2).

Although the regulations do not speak specifically to the proration of bonuses, the DOL has issued several opinion letters detailing how companies should compute the ...

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