How should employers handle commission-based pay when employees are on FMLA or extended leave of absence?

In general, employers can establish internal commission pay policies as they wish. When creating a commission pay plan, employers should clearly outline the conditions under which commission pay will be awarded (i.e., goals that must be met to earn the commission) and how commissions will be handled when an employee is out on a leave of absence.

Employees out on a Family and Medical Leave Act (FMLA) leave of absence are entitled to equivalent pay. The FMLA regulations state in C.F.R. §825.215(c)2: "Equivalent pay includes any bonus or payment, whether it is discretionary or non-discretionary, made to employees consistent with the provisions of paragraph (c)(1) of this section. However, 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, unless otherwise paid to employees on an equivalent leave status for a reason that does not qualify as FMLA leave. For example, if 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 also must receive the payment."

Therefore, employers need to provide commission pay to an employee in this type of situation unless they can show that the employee did not meet the goals necessary to receive the commission or they would not otherwise pay the bonus out to other employees on a similar leave of absence. 

This is also the case in situations in which an employee is out on an extended leave of absence due to a disability. An employer may not treat employees out on leave due to disability any less favorably than those on other leaves of absence.