Suits In The WorkPlace

Policy Language Creates FMLA Rights for Ineligible Employee

The Seventh Circuit just handed down a doozie. In Peters v. Gilead Sciences, 2008 U.S. App. LEXIS 14894, the court ruled that an employee who was statutorily ineligible for benefits under the FMLA may nevertheless be entitled to a leave of absence and a guaranteed return to work because of inartful language in the employer’s FMLA policy and correspondence to the employee. In other words, the employer’s own policy actually created an entitlement to leave, even though the FMLA did not apply.

Mr. Peters suffered an injury and took leaves of absence to recover. His employer, Gilead Sciences, sent him letters at the beginning of each leave period which outlined their FMLA policy. The letters and the policy discussed the eligibility requirements for taking a leave of absence, including the fact that employees must have worked at least one year for the employer, and at least 1250 hours in the past year. The letters were silent, however, on the eligibility question associated with the employee’s work location. (Under the FMLA, employees are only eligible if they work at a location with at least 50 employees within a 75 mile radius. ) By now, you can probably see where this is going. In addition to the letters, Gilead’s 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.” I suspect many of you have the similar language in your own handbooks. Before you scurry off to check, read on.

Before Peters returned from leave, Gilead filled his job with another employee. When he did return, the company offered him a demotion, he declined, and was terminated. He sued under both the FMLA and under the Indiana state law theory of promissory estoppel. The court upheld dismissal of the FMLA claim itself, because it was undisputed that Peters did not work in an office with at least 50 employees within 75 miles. Thus, he was statutorily ineligible for FMLA leave. However, and this is a big however, the court allowed the promissory estoppel claim to go forward, on the theory that Peters had relied on the letters and handbook when he took the leave, and he was therefore equitably entitled to leave: “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. It is not clear whether this is sufficient to establish a binding contract under Indiana law. . . . In the absence of a binding contract, however, Indiana permits enforcement of Gilead’s promises to the extent of Peters’ reliance damages.”

A couple of takeaways from this case: First, Gilead really didn’t behave all that badly under the FMLA. This isn’t like some prior decisions in which the employers actively misled the employee about his FMLA eligibility. The company here simply drafted a policy and sent correspondence (as it is required to do under FMLA). There was no evidence of any intent to mislead the employee. This means the language in your policies and correspondence to employees must be crystal clear, and should spell out all conditions of eligibility. Second, don’t make your policy and other language absolute. Saying “all employees will receive 12 weeks of leave” is very different from saying “employees who qualify under applicable law may be eligible to receive 12 weeks of leave” or some other less “promissory” language. Finally, even though this was decided under specific state law, Indiana is not the only state that recognizes the concept of promissory estoppel.

It’s of course unclear how far-reaching this case will be, but given that it came out of a federal appeals court, it at least justifies looking at policies, handbooks and correspondence templates to make sure the eligibility language is sufficiently specific.