Employee Handbooks Are Part of the Terms, Conditions and Privileges of Employment
A federal appellate court1 recently ruled that an employee who was deemed ineligible for leave under the Family and Medical Leave Act (FMLA) is nonetheless entitled to take the leave because the employee satisfied all conditions for FMLA leave set forth in the employee handbook.
To be eligible for FMLA leave, an employee must work for a employer covered by the federal statute and: (1) have worked for that employer for at least 12 months; (2) have worked at least 1,250 hours during the 12 months prior to the start of the FMLA leave; and (3) work at a location where at least 50 employees are employed at that location or within 75 miles of the location. (“50/75 rule”)
In this case the company’s employee handbook provisions recited that employees are provided all the entitlements mentioned in the federal law, but went on to state under the heading “FAMILY AND MEDICAL LEAVE” and the subheading, ”ELIGIBILITY”: “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.” As apparent, the provision made no mention of the 50/75 rule.
After suffering work-related injury the employee took what he believed to be protected leave under the FMLA. When he returned to work under medical restrictions he took a second leave of absence and his employer sent him a letter outlining the terms and conditions of the leave stating that he would need to return to work by a certain date to be guaranteed reinstatement to his position.
When he did not return, the company decided to replace him with another employee but offered him another position which he declined, whereupon the company terminated his employment.
In the lawsuit the employer argued that the employee was ineligible for FMLA leave because he did not satisfy the 50/75 rule. The employee pointed out that he satisfied all conditions for leave specified in the employee handbook. The U.S. Court of Appeals agreed that the employee may be entitled to leave as a matter of contract law based on the employee handbook.
The court reasoned that the employee has the right to sue under state law for either breach of contract or promissory estoppel. Promissory estoppel is applicable to a situation where the promise may lack some of the elements of a binding contract, but it would be inequitable to deny relief because the other party detrimentally relied on the representations. The court pointed out that the employee filed a state-law claim based upon his own reliance on the employer’s representations in the handbook.
Many employers incorrectly believe that the employee handbooks are not binding legal contracts but companies may rely on them to enforce policy. Under basic principles of contract law and equity the employees are entitled to rely on company representations in those handbooks without fear that doing so may cost them their jobs.
If a handbook term gives employees specific rights, it is probably an enforceable employment contract. The lesson is that employers should make sure that their handbooks only make promises that the company is willing to keep.
1 Peters v. Gilead Sciences, Inc. (2008)
Tags: eligibility, employee handbook, Family Medical Leave Act, FMLA leave