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Handbook language can lead to unintended FMLA liability

Based on employee handbook language granting leave under the Family and Medical Leave Act (FMLA), the 7th U.S. Circuit Court of Appeals held that an employee can proceed with state law claims for breach of contract or promissory estoppel even though the employer had fewer than 50 employees. While employers can certainly offer more generous FMLA-type leave benefits if they so choose, inadvertent exclusion of FMLA eligibility requirements from an employee handbook might subject employers to unintended liability based on implied contract theories.

In Peters v. Gilead Sciences, Inc., an employee who suffered a shoulder injury and underwent corrective surgery, took what he thought was FMLA leave, as outlined in the employer's handbook and as further explained to him in letters from the employer outlining his rights under the FMLA. The handbook and letters recited the 12-month, 1,250-hour prerequisites for FMLA eligibility, however, made no mention of the other key statutory eligibility requirement that the employee be working at a worksite with at least 50 employees within a 75-mile radius. In fact, the employer did not have 50 employees within a 75-mile radius.

During a second leave, the employer replaced Peters with another employee and sent a letter designating him as a “key” employee. Peters sued in federal court alleging violations of the FMLA and state-law claims. Although the FMLA claims were dismissed on summary judgment, the court found that, based on the employee handbook and letters to the employee, the employee could bring a state-law claim for promissory estoppel because of the employee's detrimental reliance on the letters and handbook. The court concluded that the employer offered "FMLA-like" leave benefits, using eligibility requirements less restrictive than those in the FMLA (and had offered FMLA-like leave to employees who worked at a worksite that did not have at least 50 employees within a 75-mile radius).

To avoid unintended liability, employers should ensure that their FMLA policies and related documents reflect exactly the leave they intend to grant.