“The employee handbook, and the leave approval letters, could be viewed as an enforceable contract given to the employee.”
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FMLA UPDATE
Handbook Language May Create
FMLA Obligations
For Ineligible Employees
By Christopher W. Olmsted
What does your employee handbook say about leaves of absence? If it erroneously promises FMLA rights, the company may be bound to extend those rights to employees, even if the company is not covered or the employee is not eligible.
A federal Seventh Circuit court in Indiana recently came to this conclusion in a case titled Peters v. Gilead Sciences, Inc.
Mr. Peters suffered injury to his shoulder and neck at work. After filing a workers’ compensation claim, he requested time off for corrective surgery.
Gilead employed less than 50 employees within 75 miles of Peters’ worksite, making him statutorily ineligible for FMLA leave.
But Gilead’s employee handbook stated that it offered FMLA leave. The handbook stated: “A request for family and medical care leave will be granted for all employees employed by the Company for at least twelve months and who have worked 1,250 hours during the twelve months preceding the commencement of leave.” The policy did not include the FMLA’s 50 employees within a 75 mile radius restriction.
The handbook further stated: “You will retain your employee status during the
period of your FMLA Leave. This includes accrual of tenure and vacation, in addition to continued health benefits coverage. You will be guaranteed reinstatement in your position, or equivalent position, if you return to work by the time your FMLA leave expires.”
The day after Mr. Peters began his leave, Gilead sent him a letter, which restated the handbook leave policy. The letter included specific leave dates and guaranteed reinstatement.
However, Gilead did not reinstate Mr. Peters. Instead, it decided to hire someone to take his job. It offered Peters a different job, which he declined. Gilead then terminated him.
Peters sued. Gilead asserted the defense that Mr. Peters was not eligible for FMLA leave, and the trial court ruled in the company’s favor.
On appeal, the Seventh Circuit court of appeal reversed the trial court ruling. The court sidestepped the issue of FMLA coverage. Instead it considered whether the employee handbook and the letter to Peters created a contract obligation to provide FMLA leave.
The court determined that the company’s promises were enforceable. The employee handbook, and the leave approval letters, could be viewed as an enforceable contract given to the employee. (Note to lawyers: the court recognized two theories: breach of contract and promissory estoppel.)
The court observed: “Gilead’s employee handbook promised 12 weeks of medical leave—the equivalent of the leave guaranteed by the FMLA—and Gilead repeated these promises in its letters to Peters.” These were enforceable promises, even though the FMLA did not technically apply to the workplace.
Because the company’s policy made no reference to the 50/75 rule, it could not assert that FMLA defense. “There is no reason employers cannot offer FMLA-like leave benefits using eligibility requirements less restrictive than those in the FMLA, … and that is what Gilead did. Peters’ statutory ineligibility is irrelevant to the contract-based theories of liability.”
Thus, the company “volunteered” FMLA coverage that it was technically not required to provide—and in fact offered more generous rights than FMLA by not including the 50/75 rule, AND it breached its own policy by refusing to reinstate Mr. Peters as promised.
Practical Tips
Determine Coverage. Know whether the company, and individual employees, are eligible for FMLA leave. Request our free Leaves of Absence Chart if you need guidance (email cwo@barkerolmsted.com).
Clarify Your Handbook. If the company is not covered by FMLA, say so in the handbook. Carefully craft a company leave policy. Do not adopt FMLA standards unless you intend to be held to FMLA rules.
Avoid Big Promises. If the company is covered by the FMLA, but certain employees may not be, ensure that FMLA rights are not promised to ineligible employees. Add qualifying language to the handbook.
Limit Leave Terms. Do not offer FMLA (or CFRA) leave rights to ineligible employees. Offer company leave. If you offer leave to such employees, be sure to clearly and accurately state your company leave policy.
Looking for more information on FMLA leaves?
Request our free Leaves of Absence Chart. Email cwo@barkerolmsted.com
Attend our seminar:Employee Leaves of Absence In California.
More Legal Update articles.
Download entire August Legal Update in PDF format.
This article is intended as a brief overview of the law and are not intended to substitute as legal advice. Any questions or concerns regarding any statute or case law should be addressed to a licensed attorney. Copyright © 2008 by Barker Olmsted & Barnier, APLC. San Diego, California. All rights reserved.
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