Third Circuit: A Smaller Bonus Can Be Illegal Retaliation Under the ADA and FMLA

Third Circuit: A Smaller Bonus Can Be Illegal Retaliation Under the ADA and FMLA

The Third Circuit ruled on June 24, 2026 in Steidle v. United States Liability Insurance Co., No. 24-2999, that the employee-friendly "materially adverse" retaliation standard from Title VII also governs ADA and FMLA retaliation claims, and that a reduced bonus or raise can qualify, vacating summary judgment for the employer on one claim.

Information last verified on July 3, 2026. This is a developing story; we update it as the record changes.

Jurisdiction scope: The Third Circuit's ruling is federal law binding on courts within its territory: Pennsylvania, New Jersey, Delaware, and the U.S. Virgin Islands. Other federal circuits decide ADA and FMLA retaliation standards independently and may reach different conclusions until the Supreme Court or Congress resolves any split. Employment relationships within the Third Circuit are also shaped by state-specific at-will rules; see at-will employment laws and the state pages linked below.

What Happened

On June 24, 2026, a panel of the U.S. Court of Appeals for the Third Circuit decided Steidle v. United States Liability Insurance Co., No. 24-2999, an appeal from the U.S. District Court for the Eastern District of Pennsylvania. Plaintiff Jeffrey Steidle worked for United States Liability Insurance Co. and disclosed a mental health condition, later including major depressive disorder, post-traumatic stress disorder, and anxiety. After transferring teams and telling his supervisor about his condition, he took FMLA-protected leave in 2020. While on leave, his supervisor approved a bonus and raise significantly smaller than in prior years. In 2021, after Steidle requested further accommodations, he again received a reduced bonus and raise. He was later terminated following an extended medical leave.

The district court granted the employer summary judgment on all of Steidle's ADA and FMLA retaliation claims, holding that he had not shown the reduced pay decisions were adverse employment actions or that they were causally connected to his protected activity. Steidle appealed.

The Third Circuit vacated that judgment as to the 2020 bonus and raise, finding the "unusually suggestive" timing between Steidle's leave and the reduced pay enough to support a prima facie case, and remanded for the district court to weigh the employer's stated reasons for the reduction. The panel affirmed summary judgment on the separate 2021 reduction, tied to the accommodation request, because the gap in time was not close enough alone to support an inference of retaliation. The case returns to the Eastern District of Pennsylvania for further proceedings limited to the 2020 pay claim.

What the Law Actually Says

Title VII's anti-retaliation provision has long used a broader standard than its anti-discrimination provision. In Burlington Northern & Santa Fe Railway Co. v. White, 548 U.S. 53 (2006), the Supreme Court held that a retaliation plaintiff need not show an action affecting the terms of employment itself; it is enough to show an action that "well might have dissuaded a reasonable worker from making or supporting a charge of discrimination" (548 U.S. at 68). That "materially adverse" standard sweeps more broadly than the narrower "adverse employment action" test some courts had applied to retaliation claims under other statutes.

The ADA's anti-retaliation provision, 42 U.S.C. § 12203(a), makes it unlawful to "discriminate against any individual because such individual has opposed any act or practice made unlawful by [the ADA] or because such individual made a charge, testified, assisted, or participated in" an ADA proceeding, read by the Third Circuit to also protect requests for reasonable accommodation. The FMLA's parallel provisions, 29 U.S.C. § 2615, bar employers from interfering with an employee's FMLA rights and from discriminating against an employee for opposing an unlawful FMLA practice. Neither statute's text specifies what counts as a prohibited adverse action for retaliation purposes; that is the gap the Third Circuit filled in Steidle by importing the Burlington Northern standard.

Applied to compensation, the holding means a bonus or raise smaller than what an employee otherwise would have received, not just an outright denial of pay already earned, can be materially adverse if it might dissuade a reasonable worker from taking FMLA leave or seeking an accommodation. An employer's discretion over bonus and raise amounts does not by itself remove the decision from ADA and FMLA retaliation review. See at-will employment laws for how discretionary employer decisions interact with the at-will presumption.

Analysis: Why This Matters

The following is analysis from the Recording Law Editorial Team.

Before Steidle, litigants within the Third Circuit faced some uncertainty about whether Title VII's relatively low retaliation bar also applied to claims under the ADA or the FMLA. By adopting the Burlington Northern standard across all three statutes, the panel gives litigants in Pennsylvania, New Jersey, and Delaware a single, more predictable framework, regardless of which law is invoked.

The practical effect falls most heavily on compensation decisions involving employer discretion, bonuses and merit raises being the clearest examples, rather than on binary actions like termination that were already clearly covered. A reduced bonus is harder to defend as too minor to count once the test asks only whether it might dissuade a reasonable worker from protected activity, not whether it altered the terms of employment. The panel's split outcome, vacating the 2020 claim but affirming the 2021 claim, shows timing still does heavy lifting: a materially adverse action alone does not establish retaliation without evidence, often temporal proximity, connecting it to the protected activity.

How This Affects You

For employees in Pennsylvania, New Jersey, Delaware, or the U.S. Virgin Islands, a reduced bonus or smaller-than-expected raise following FMLA leave or a disability accommodation request is not automatically outside federal retaliation law simply because the employer calls the amount discretionary. Protected activity under these statutes generally includes taking or requesting FMLA leave, requesting a reasonable accommodation, and opposing practices reasonably believed to violate the ADA or FMLA.

For employers in the circuit, documentation for merit-based or discretionary pay decisions matters more when those decisions closely follow an employee's leave or accommodation request. A legitimate, well-documented, non-retaliatory reason remains a valid defense; what changed is that the threshold for a retaliation claim to survive summary judgment on the materially-adverse question is now aligned with the more lenient Title VII standard. This article describes the general legal framework established by the Third Circuit's opinion and does not assess any individual's situation.

This is general legal information, not legal advice. This article covers a federal appellate ruling on ADA and FMLA retaliation standards within the Third Circuit (Pennsylvania, New Jersey, Delaware, and the U.S. Virgin Islands), and reflects sources verified on July 3, 2026. Laws change and outcomes depend on individual facts; consult a lawyer licensed in your jurisdiction about your specific situation.

Sources

• Oral argument and docket, Steidle v. United States Liability Insurance Co. Inc., No. 24-2999 (3d Cir.) (CourtListener, official case record)
• Steidle v. United States Liability Insurance Co. Inc., U.S. District Court for the Eastern District of Pennsylvania, No. 2:22-cv-04972 (govinfo.gov, underlying district court order on appeal)
• 42 U.S.C. § 12203, Prohibition against retaliation and coercion (Cornell Legal Information Institute)
• 29 U.S.C. § 2615, Prohibited acts (Cornell Legal Information Institute)
• Burlington Northern & Santa Fe Railway Co. v. White, 548 U.S. 53 (2006) (Cornell Legal Information Institute)

Related articles

• At-will employment laws
• Pennsylvania at-will employment laws
• New Jersey at-will employment laws
• Delaware at-will employment laws
• United States whistleblower laws

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Last updated: 2026-07-03. This is a developing story; details verified as of 2026-07-03.