Error in Employer’s Personnel Manual Prevents Defense of Employee Ineligibility Under the FMLA
Paula Lopez, February 20, 2015.
It is important for employers to always implement proper policies as a tool for staving off litigation. While doing so employers should understand that the statements contained in their policies are binding on them in the same manner that they would be on their employees. Therefore, they should take the proper steps to ensure that their policies accurately reflect the state of the law so as to not expose themselves to legal liability that otherwise could be avoided.
A Michigan employer learned this the hard way in the recently decided Sixth Circuit case Tilley v. Kalamazoo County Road Commission. In Tilley, the Sixth Circuit reversed the district court’s order dismissing Terry Tilley’s claims against his former employer under the Family Medical Leave Act (“FMLA”). The court ordered a trial on the issue of whether Mr. Tilley’s employer is equitably estopped from denying that he is an “eligible employee” under the FMLA based on statements contained in the employer’s personnel manual even though Mr. Tilley does not meet the statutory definition of “eligible employee” under the FMLA.
In his lawsuit against the Kalamazoo County Road Commission (“Commission”), Mr. Tilley claimed, among other things, that his employer interfered with his right to FMLA leave and retaliated against him for taking FMLA leave when it terminated him for failing to complete certain job assignments within a specified deadline. Mr. Tilley stated that he failed to complete the tasks within the deadlines because he needed to take time off work for medical reasons which he believed were protected under the FMLA because of statements contained in the Commission’s personnel manual, and which he claims to have relied on in taking the leave. Mr. Tilley suffered symptoms of a heart attack and was taken to the hospital before he completed the tasks. While on leave, he received paperwork from the Commission confirming his eligibility for FMLA leave. When he returned to work a few days later he was terminated.
An employee is eligible to take job-protected leave under the FMLA if he or she meets the following three requirements at the time of seeking the leave: (1) the employee has been employed by a covered employer for at least 12 months; (2) the employee has worked at least 1,250 hours in the prior 12 month period; and (3) the employee works at a location that employees at least 50 employees within a 75-mile radius (50/75 Threshold).
In Tilley, the section of the personnel manual discussing FMLA leave stated that employees were eligible to take leave if they “accumulated 1,250 work hours in the previous 12 months” and made no mention of the 50/75 Threshold required under the statute for eligibility. There was no dispute that Mr. Tilley met the first two eligibility requirements for FMLA leave. However, at the time Mr. Tilley sought leave there was no evidence that he worked at a location employing 50 employees within a 75 mile radius and therefore did not satisfy the third eligibility requirement under the FMLA. Consequently, the district court dismissed Mr. Tilley’s FMLA claim finding that he is not an “eligible employee” under the Act.
On appeal, the Sixth Circuit agreed that as a matter of law Mr. Tilley is not an “eligible employee” under the FMLA. However, it found that he had made a sufficient showing to create a question of fact as to whether the Commission is prevented from asserting his ineligibility as a defense to the FMLA claims under the doctrine of equitable estoppel. The doctrine of equitable estoppel prevents a party from alleging a certain fact based on its own prior conduct. In this instance, for the court to apply the doctrine of equitable estoppel based on the statements contained in the Commission’s personnel manual, Mr. Tilley had to show the existence of (1) a definite misrepresentation as to a material fact; (2) that he reasonably relied on the misrepresentation; and (3) that his reliance on the misrepresentation resulted in a detriment to him.
As to the first requirement, the Sixth Circuit found that the statements contained in the personnel manual constitute unambiguous and unqualified statements that Commission employees, like Mr. Tilley, who accumulated 1,250 work hours in the prior year, are covered under the FMLA and eligible to apply for benefits. The Court noted that the Commission could have qualified the statement by adding the 50/75 Threshold requirement and avoided liability. However, because they failed to add that language Mr. Tilley is able to satisfy the misrepresentation element of his equitable estoppel claim.
In support of the second requirement, Mr. Tilley submitted a sworn affidavit stating that he reviewed the personnel manual before taking leave and believed he was eligible to take leave for his illness under the FMLA. He further stated that had he known he was not eligible for FMLA leave he would have returned to work after being released from the hospital and completed his job tasks, the incompletion of which were the basis for his termination. Both the Commission and the court were skeptical of Mr. Tilley’s claim that he only sought treatment for symptoms of a heart attack based on his belief that he was eligible for FMLA leave. However, the Court held that his sworn affidavit is sufficient to meet the reliance element and that it is up to a jury to determine Mr. Tilley’s credibility. Further, the Court refused to hold as a matter of law that Mr. Tilley’s reliance on the eligibility statements contained in the personnel manual was unreasonable, especially in light of the fact that the Commission itself had concluded that he was eligible for FMLA leave and sent him paperwork advising him of his eligibility.
The Court also found that Mr. Tilley met the third equitable estoppel requirement of showing that he suffered a detriment as a result of relying on the misrepresentation in the personnel manual. The detriment suffered is that Mr. Tilley was terminated, in part, because he missed the deadline to complete his job tasks because he sought medical treatment, which he claims to have only sought based on the statements in the personnel manual.
As a result of the Sixth Circuit’s decision, the Commission must continue to litigate Mr. Tilley’s claims in district court, whether through further motion practice attacking the merits of his FMLA claim or at trial and risk a finding of liability. The continued litigation and risks associated with litigation and the resultant drain on the Commission’s resources could have been avoided if only the Commission had reviewed its personnel manual to ensure that its FMLA leave policy was properly written. Tilley should be seen as a warning to employers that dedicating some time and financial resources to the creation and maintenance of proper policies can have long lasting benefits in avoiding time-consuming and costly litigation down the road.