Maternity leave pay with commissions or variable comp

[jenny1223]

I will be taking maternity leave later this year and am clarifying my company's maternity leave policy (which is pretty generous). However, I'm wondering if I should push back on one piece. The policy did not previously address employees who get commission or variable compensation as part of their pay. I'm the first women to take maternity leave who has variable comp as part of my salary. They are now rewriting the policy to state that it only covers your base salary. I get variable comp each month related to how well the company as a whole performs to our sales goals (this usually ends up to be about 25% of my total pay, not insignificant), but not directly tied to my personal performance (i.e. I'm not a sales rep who has to sell x widgets to make my personal quota).

I found a court case (Estes v. Meridian One Corporation, et al.) that says:

The court inferred that commissions are seen as bonuses. Therefore, the employee would need to have missed a specified goal because of FMLA leave in order to be denied the pay. She did not; her commission was part of her pay. (summary pulled from this site: www.jjkeller.com/learn/news/082016/Do-employees-receive-commission-during-FMLA-leave)

Does anyone have any experience with a similar situation? I know maternity leave pay is not regulated or required, of course, but that extra 25% will make a huge difference to my budget and/or reduce the amount of leave I can take for financial reasons.

[notoriousmeg]

I’m in sales so 40% of my package is tied to revenue. I was paid out at 100% of my package the year I took maternity leave, but no overage for the quarters I exceeded my targets.

[marie]

I administer compensation plan a for associates who are paid primarily on commissions. We make it as fair as possible for all paid leaves. Given that their compensation can vary greatly each month, we take the total incentives from the prior year (bonuses included) and use that as their annual "salary" amount for their leave pay. We then take it another step further and reconcile when they return. If they would have made more as an active employee we will pay them the difference. If they made more receiving their leave pay, we leave it as is.

I personally think that you should argue this. Our legal team would never ever allow us to have a policy like this.

[lemoncupcake]

I was in a similar situation during my first ML - about 2/5 of my pay was variable incentive based on our business line's performance. It was paid out the exact same as it would have if I were an active employee during that time.

[kath16]

Especially since it's not tied to your personal performance, it should be at least factored in. I can see it possibly being reduced if your other pay is reduced (ex: you'll be making 60% of your base for 12 weeks or something, then maybe they pay you 60% of the variable also)

I would absolutely push back. Work with HR/Legal since you are a "guinea pig"

[jenny1223]

Thanks for all the feedback. This is super helpful. I am going push back. I get 12 weeks paid out 100% (of my base salary). The first 6 weeks is 60% paid via STD insurance and my company compensates for the remaining 40%. Then the next 6 weeks is paid all via company mat leave coverage.

[Susie]

When I took my first maternity leave, my comp had two pieces, a base salary and quarterly bonuses that are tied to my productivity.  I was paid my base salary during my 8 week leave, and when I came back I had to earn my way back to my threshold before earning bonuses again.  So, I was paid, but from the bonus perspective it was as if I had just had a (really) bad quarter.  My bonuses made up 25-30% of my comp at the time, and I essentially missed one quarterly bonus, and the next one was small because of my leave.

Now I am a partner, and am TTC #2.  I expect I will be paid my base draw during leave like last time, and I will continue to be paid my percentage of the profits of the firm (as a shareholder) without regard to leave.  My quarterly productivity bonuses will sag like last time, so my take home pay will probably sag by about 20% for a similar length of time.

I think it is reasonable to ask for compensation that's tied to the performance of the organization rather than yourself, but I would "push back" somewhat carefully.  They're offering to pay you at roughly 75% of your normal comp, right?  (For how many weeks?)  That's pretty good for US companies, sadly.  I would expect negotiations to go more fruitfully if you go in with a counter offer, maybe come up with something that's 100% of your comp for fewer weeks, or 100% for the first 8 (or 12) weeks, and then 75% for weeks 12-16, or something like that.  If you're pushing for 100% during your whole leave, then provide justifications, for example, the profits of the company are calculated/distributed after your leave is factored in, so you shouldn't be penalized/the company would be enriched. 

I definitely would not bust out legal decisions and point to those as precedent for why they need to give you something.  First, because there may (or may not) be significant distinctions between the facts of that case and your own, and second, because waving court opinions around will probably be viewed as a threat, and shut down negotiations pretty quickly.  

[lemoncupcake]

Apr 26, 2018 10:26:19 GMT -5 Susie said:

 That's pretty good for US companies, sadly.  

But her company has already decided that they want to be supportive of new moms by offering 12 weeks paid at 100%. They have made a conscious decision to be “generous” and offering something that isn’t required of them (for altruistic reasons, to retain employees, whatever the reason ). I think it’s fair that she ask to be actually paid at 100% for the 12 weeks, particularly since the variable comp isn’t tied directly to her performance (or lack thereof when she’s on leave).

[jenny1223]

Apr 26, 2018 10:26:19 GMT -5 Susie said:

When I took my first maternity leave, my comp had two pieces, a base salary and quarterly bonuses that are tied to my productivity.  I was paid my base salary during my 8 week leave, and when I came back I had to earn my way back to my threshold before earning bonuses again.  So, I was paid, but from the bonus perspective it was as if I had just had a (really) bad quarter.  My bonuses made up 25-30% of my comp at the time, and I essentially missed one quarterly bonus, and the next one was small because of my leave.

Now I am a partner, and am TTC #2.  I expect I will be paid my base draw during leave like last time, and I will continue to be paid my percentage of the profits of the firm (as a shareholder) without regard to leave.  My quarterly productivity bonuses will sag like last time, so my take home pay will probably sag by about 20% for a similar length of time.

I think it is reasonable to ask for compensation that's tied to the performance of the organization rather than yourself, but I would "push back" somewhat carefully.  They're offering to pay you at roughly 75% of your normal comp, right?  (For how many weeks?)  That's pretty good for US companies, sadly.  I would expect negotiations to go more fruitfully if you go in with a counter offer, maybe come up with something that's 100% of your comp for fewer weeks, or 100% for the first 8 (or 12) weeks, and then 75% for weeks 12-16, or something like that.  If you're pushing for 100% during your whole leave, then provide justifications, for example, the profits of the company are calculated/distributed after your leave is factored in, so you shouldn't be penalized/the company would be enriched. 

I definitely would not bust out legal decisions and point to those as precedent for why they need to give you something.  First, because there may (or may not) be significant distinctions between the facts of that case and your own, and second, because waving court opinions around will probably be viewed as a threat, and shut down negotiations pretty quickly.  

It's definitely a really good mat leave policy compared to what most get. And better than I got when I had DS1. I'm super grateful for that. The policy already exists to pay 100% (via STD and company contributions combined) for 12 weeks. I don't think that is negotiable. But until now the policy did not specify how it would treat variable compensation. They are adding the stipulation that it only covers base salary now because I brought it up.

I'm not a lawyer and have no intentions of bringing up the legal decision I found. Just including it here as part of my internal justification.

My company is very generous WRT to employee benefits and it is a primary company initiative to be one of the best places to work from an employee's point of view.

Also my boss recently took paternity leave (2 weeks off and then an add'l 2 weeks when baby was a few months old) and I know his variable comp was not affected.

[y4m]

I’m in tech Sales and comped on a global number. My company just paid me the commissions as though I’d been working (in reality our deal cycles are longer than a few months anyway, so the deals closing were ones I had worked on before leave). They wouldn’t have done that for an extended leave, but for 12 weeks they did.

[SallyJ]

What does the sick policy state for employees with a variable component of pay? STD leave should be treated the same.

Have any men been allowed to take paternity leave? Any of them with variable pay? How was it handled?

I recommend asking them questions to help them think about all employees and consistency in policy, rather than you being the first woman with variable pay.

[jenny1223]

Apr 29, 2018 1:30:50 GMT -5 SallyJ said:

What does the sick policy state for employees with a variable component of pay? STD leave should be treated the same.

Have any men been allowed to take paternity leave? Any of them with variable pay? How was it handled?

I recommend asking them questions to help them think about all employees and consistency in policy, rather than you being the first woman with variable pay.

Thanks for the response. We have an "unlimited" PTO/sick leave policy and variable is paid out in full while out. (However most employees (not me) with variable comp have direct influence- sales reps who need to make $x in sales each month for individual quotas. They are generally affected since they're not working as much to make sales when out on PTO, but not otherwise penalized.)

Men have taken paternity leave (albeit a shorter duration than mat leave) and received their variable pay.

I brought it up with my boss who is going to bring it to the VP of our dept. Our department is the only one affected by variable pay. My boss is very much on my side. Right now I'm waiting to see what that response will be.