What Do You Think?
Employers who take negative action against an employee after the employee exercises FMLA rights may face a retaliation claim. But how negative does the action have to be? A case involving a marine corps veteran who took leave from his Pennsylvania employer asks whether getting a lower bonus or raise compared to prior years can constitute an adverse action.
The vet worked as a casualty claims processor and struggled with depression, anxiety, and PTSD. He took a few months of approved FMLA leave. While the employee was on leave, his boss approved a 2.5% salary increase and a $3,000 bonus. This was more than 40 percent lower than his many past increases and bonuses.
He sued the company for retaliation. The District Court ruled against him, reasoning that he did not establish that he suffered an adverse employment action – one of the requirements for establishing retaliation. The employee appealed.
An employee claiming FMLA retaliation, the 3d U.S. Circuit Court of Appeals stated in a case of first impression, must establish that a reasonable employee would have found the employer’s action materially adverse in that “it well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.”
Did the vet establish an adverse action?
A. No. Reducing his increase and bonus was not an action that was severe enough to deprive him of employment opportunities or adversely affect his status as an employee.
B. Yes. Under the circumstances, a reasonable person in his position might have been discouraged by the increase and bonus reductions from pursuing his FMLA claims.
If you selected B, you agreed with the court in Steidle v. United States Liability Insurance Company, No. 24-2999 (3d Cir. 06/24/26), which reversed the lower court’s decision.
First, the court found that the District Court applied an overly stringent standard when it required the employee to demonstrate that the employer’s actions deprived him of employment opportunities or adversely affected his status as an employee. The proper standard to apply to both FMLA and ADA claims is the Title VII standard: whether a reasonable person in the employee’s situation would have been dissuaded from pursuing a discrimination claim.
The court rejected the employer’s argument that reducing a discretionary bonus cannot be an adverse action. Because the retaliation inquiry does not focus on strict contractual compensation terms but on whether the action discourages an employee from pursuing his rights, lower-than-anticipated discretionary raises or bonuses can be materially adverse.
The court pointed out that in 2020, after the employee sought FMLA leave, he received a bonus and salary increase that were over 40 percent lower than those he typically received. This was a sufficiently adverse action.
The court also rejected the employer’s argument that the employee could not establish he suffered an adverse employment action because the lower bonus and increase did not in fact dissuade him from exercising his FMLA rights. “The inquiry must focus on the likely impact an employer’s action would have on ‘a reasonable person in the plaintiff’s position,’ not on how the most intrepid and financially secure employee would react to it,” the court said.
The court remanded the case to the District Court for further proceedings.
