Tricky FMLA Question: Must We Pay Commissions to Salespeople on Leave?

Picture this: A salesperson establishes a long-term relationship with a customer who places a recurring order every month. And the salesperson is paid commissions on each of those orders. Then the salesperson goes out on FMLA leave – and the customer still places its regular order.

The question is, does the salesperson still get a commission while out on unpaid FMLA?

Salesperson Takes FMLA for Breast Cancer

In October 1997, Angela Estes started working at Meridian One Corp. During her time there, she worked in several positions, including as a sales agent. 

About five months into her employment, she was diagnosed with breast cancer. As her illness progressed, her doctor determined that she needed surgery. 

In early 1999, Estes took unpaid leave under the FMLA to handle pre- and post-surgery medical testing and to recover from surgery. She was on leave from January 14 to February 11.

Then, Estes filed an FMLA lawsuit against Meridian. Among other things, she claimed the company retaliated against her for taking FMLA leave by failing to pay her commission on sales that she had set up before going on leave.

No Commission – Was It Retaliation?

The case went to trial. In September 1999, a jury found in favor of Estes, awarding $1,297.58 in damages. The award was based on the commission she earned but did not receive while on FMLA leave.

Estes then sought attorneys’ fees and costs arising from the lengthy litigation – approximately $95,000 in total.

Meridian filed a motion for a judgment as a matter of law, arguing that such damages weren’t allowable under the FMLA – because, by design, it’s leave without pay. It also argued that the amount of money Estes sought for attorneys’ fees and costs was excessive.

The court explained that Meridian had to clear a very high hurdle: To succeed in getting a motion for judgment as a matter of law, the company had to show that the evidence was insufficient to uphold the jury’s verdict.

Closer Look at the FMLA

Before the Family and Medical Leave Act (FMLA) was put into place, Congress recognized that workers with serious health issues often lacked job security, the court explained. To fix this problem, the FMLA was designed to let employees take reasonable time off for medical reasons.

In light of congressional intent, the court said Meridian failed to meet its burden – it didn’t show the evidence was insufficient to uphold the jury’s verdict. 

The court pointed out two key reasons: 

First, under Section 2617(a) of the FMLA, if an employer violates the law, it must pay any eligible employee the wages, benefits, or other compensation they lost as a result.

Even though the unpaid commissions were not included in Este’s $25,000 base salary, it was reasonable for a jury to consider them a part of her total earnings.

So classifying the commissions as “other compensation” under the law was appropriate, the court held.

And second, 29 C.F.R. § 825.215(c) explains that if an employee is on FMLA leave during the period a monthly bonus is calculated, the individual should receive the bonus just like other employees, whether they are on paid or unpaid leave.

At trial, Estes testified that Meridian calculates and pays commissions every month for sales of machines, services, and other items.

As such, it was reasonable for a jury to find that monthly bonuses and commissions were similar, the court noted. This regulation and the evidence presented at trial strongly supported the jury’s decision to award commissions, the court held.

Icing on the Cake: Workers Taking Other Types of Leave Were Paid Commission

Moreover, Meridian was supposed to afford Estes the same consideration for monthly bonuses and/or commissions as other “similarly situated” employees. But Meridian didn’t.

At trial, Estes provided evidence showing that two similarly situated employees — Donna Hicken and Wilmer Putz — received commissions as part of their overall pay, even while they were on paid or unpaid leave.

Meridian argued that they weren’t “similarly situated” because they weren’t on FMLA leave. But the court was not swayed, pointing out that this was “precisely the distinction drawn by 29 C.F.R. § 825.215(c),” which clearly states that employees on FMLA leave should receive the same bonus consideration as those on other types of paid or unpaid leave.

The court denied Meridian’s motion for judgment as a matter of law. It ran through the calculations and granted Estes $76,092.83 for attorneys’ fees and costs.

Estes v. Meridian One Corp., 77 F. Supp. 2d 722 (E.D. Va. 11/30/99).