Employers can, knowingly or unknowingly, adopt family and medical leave (FML) policies that are more generous than the minimum required by the FMLA. Violation of those more generous policies may subject the employer to civil suit for monetary damages for breach of contract or promissory estoppel based on the employee's detrimental reliance on the employer's policy. Such a claim is not based on the FMLA. Nor will the employer be able to successfully defend these type of actions by arguing that the FMLA does not apply.
The issue was recently addressed by the Seventh Circuit in in Peters v. Gilead Sciences, Inc.,No. 06-4290, 2008 U.S. App. LEXIS 14894 (7th Cir. July 14, 2008). In that case, Gilead policy permitted employees to take FML leave if they met two requirements: (1) at least 12 months of employment with the company; and (2) at least 1250 work hours in the 12 month period preceding leave commencement. Those requirements are the same as the eligibility requirements of the FMLA. What Gilead's policy did not include, however, was the FMLA requirement that Peters be employed at a worksite that employs at least 50 employees within 75 miles- the so-called 50/75 rule. By not including the 50/75 rule, Gilead's FML policy was more generous than the FMLA. Peters was not entitled to FMLA leave because he did not work at a worksite where there were at least 50 Gilead employees within 75 miles.
Peters applied for and was approved FML leave for a work-related shoulder injury. Gilead provided him with a letter confirming his right to take up to 12 weeks of FMLA leave. The letter repeated the 12 months and 1250 hours eligibility requirements that was also set forth in the employee handbook. Consistent with the policy, the letter did not address the 50/75 rule. Like the handbook, the letter also guaranteed his right to reinstatement for such leave if he returned to work by a specified date. Unfortunately for the employer, it miscalculated the when 12 weeks of FMLA expired. The miscalculation shorted Peters a month of FML leave. Gilead replaced Peters before the true expiration of his FML leave. Peters was medically cleared to return to work before his 12 weeks of FMLA leave expired.
Peters sued alleging that his termination violated the FMLA. He also added a state law promissory estoppel claim. Promissory estoppel is a cause of action independent of the FMLA that permits the enforcement of a promise that otherwise lacks the elements of a contract. Gilead defended the suit by arguing that Peters was not eligible for FMLA leave because he did not meet the 50/75 requirement. The trial court agreed. After equating his promissory estoppel claim with equitable estoppel, the trial court also found that Peters failed to establish that he should be deemed eligible based on the misrepresentations of Gilead.
On appeal, the Seventh Circuit reversed the decision of the trial court. The Seventh Circuit found that, even if Peters was not eligible for FMLA leave, he may have an FMLA-like claim for breach of contract or promissory estoppel based on his detrimental reliance on Gilead's handbook policy and the letters he received approving his FMLleave. The trial court erred when it equated equitable estoppel, a defensive doctrine, with promissory estoppel, a cause of action. Both are based on detrimental reliance. The Court remanded the matter back to the trial court to address those claims.
Comment: Employer FML policies frequently provide greater rights than the minimum required by the FMLA. In addition to dropping the 50/75 eligibility requirement, employers may allow employees to take FML leave for siblings or other family relatives beyond those identified in the FMLA (spouse, daughter, son). Employer policies may also granted more than the minimum 12 weeks of FMLA leave. Violation of those more generous policies may/may not create a cause of action for violation of the FMLA. They may, however, create a contract or promissory estoppel cause of action for violation of the employer's FMLA-like leave policies. The fact that you did not intend to create more generous FML rights may not relieve you from suit.
To avoid inadvertently creating greater FML rights (which can be the basis of civil suit) than the minimum required by the FMLA, employers need to exercise great care when drafting and executing their family leave policies. Consistent with the mandates of state law, handbooks and manuals should include prominently displayed disclaimers that the handbook does not create any express or implied contract rights. Employers should also consider having their FML policies independently audited to identify areas where the policy exceeds or fails to meet FMLA requirements. With that information, the employers can make informed decisions on whether it wishes to continue to provide more generous FML policies or not. Bosland Consulting Group can help you with such audits.
The Seventh Circuit covers Wisconsin, Illinois, and Indiana.
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