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Handbook statement on FMLA eligibility creates potential employer liability

February 5th, 2015  |  Kathy Kapusta

A recent opinion from the Sixth Circuit should send employers, especially those in Kentucky, Michigan, Ohio, and Tennessee, scurrying to dust off their employment policies and handbooks and take a peek at the language therein regarding FMLA eligibility. In this case, the appeals court ruled that a county road commission’s statement in its personnel manual—that full-time employees who had “accumulated 1,250 work hours in the previous 12 months” were eligible for FMLA leave—without qualifying that they would only be covered if they worked “at, or within 75 miles of” a site employing 50 or more employees, subjected it to potential liability for an employee’s FMLA claim.

Both the federal appeals court and the lower court agreed that the employee was not an “eligible employee” under the FMLA because his employer did not employ at least 50 employees at or within 75 miles of his workplace at the time he sought leave. Despite this, the appeals court found that it was up to a jury to decide if the road commission was “equitably estopped” from denying the employee’s eligibility.

Deteriorating relationship. In this case, two years after the long-term employee started reporting to the general superintendent, their relationship began deteriorating. He was ultimately terminated after he failed to submit a required assignment.   

Heart attack? According to the employee, he missed the deadline for turning in the report because he was experiencing what he believed to be symptoms of a heart attack and instead of completing the “brief finishing touches” on the assignment, he went to the hospital and was admitted for observation. A few days later, an employer representative sent FMLA paperwork to him, telling him he was eligible for FMLA leave. Three days after that, he was terminated.

He then sued, alleging among other things, that his employer interfered with his right to FMLA leave and retaliated against him for taking leave. Finding that he was not an eligible employee under the FMLA, the district court dismissed his claim on summary judgment.

While the appeals court agreed that he wasn’t an eligible employee, it pointed out that in certain circumstances, an employer’s statements regarding an employee’s FMLA eligibility can bar the employer from raising non-eligibility as a defense. In order to prevail on such “equitable estoppel” an argument, the employee had to show a misrepresentation of material fact, his reasonable reliance on it, and that such reliance resulted in a detriment to him.

Misrepresentation. The employer’s personnel manual contained such a misrepresentation. It stated that covered employees were those who were “full-time employees who have worked for the Road Commission and accumulated 1,250 work hours in the previous 12 months.” That language was “unambiguous and unqualified,” the court explained, stating that employees like the employee here who had logged the requisite hours in the year “are covered by the FMLA and are eligible to apply for FMLA benefits.” While the employer could have qualified that language, it did not.

Reasonable reliance. The employee also presented evidence that he reasonably relied on the manual’s language. He submitted a sworn affidavit stating that if he had known he was not entitled to FMLA leave, he would have made those “brief finishing touches” to the assignment in spite of his illness. He also attested that he relied on the policy in the manual in taking leave and that he believed he was eligible for leave. To the court, this was “sufficient to create a material factual dispute on the reliance element.”

While the employer argued the employee’s statement that he sought treatment because he believed he was covered was not credible, and the court agreed that such an attack was “certainly a fair one,” the credibility of his statement was ultimately a question for the jury. The court was unwilling to find that the employee had behaved unreasonably in relying on the eligibility statement in the manual. “Simply put,” the court explained, “a reasonable person in” the employee’s “position could fairly have believed that he was protected by the FMLA.” And, in fact, the employer itself had concluded that the employee was eligible and had “twice communicated that conclusion to” the employee.

Detriment.  Finally, there was evidence that the employee “suffered a detriment” based on that reliance. He was fired, in part, because he missed that deadline and he attested that he would have satisfied it had he not relied on the statement in the manual regarding eligibility.

Employer takeaway. This case should serve as a reminder of the importance of conducting regular legal reviews of your employee handbooks and policies, and especially your FMLA policy. As the Sixth Circuit stated, the road commission could have qualified its statement concerning employee eligibility by adding that its full-time employees would only be covered by the FMLA if they worked at or within 75 miles of a site at which it employed at least 50 employees. Courts have recognized that such qualifying language may effectively communicate to employees that they are assured of eligibility only if the FMLA 50/75 employee threshold is met. The road commission’s failure to do so may prove to be quite costly.