Rights Provided by Employee Handbook, Quirky Question # 54
Quirky Question # 54:
We have an employee who has missed a fair amount of work due to various surgeries. As set forth in our handbook, we offer FMLA leave for employees who have worked 1250 hours in the preceding 12 months. When we were informed that our employee would need to miss additional time due to some follow-up surgeries, we belatedly explored the issue with our attorneys.
Our lawyers advised us that although our employee had worked the requisite number of hours under the FMLA, he was not FMLA eligible because we don’t have enough employees in the office where he works or within 75 miles of his worksite. Based on those facts, we informed our employee that he was not eligible for FMLA leave and told him that he could not take time off. When he went forward with his surgery and took leave anyway, we terminated his employment. He now has sued us under the FMLA and other legal theories, including “promissory estoppel.” Given that he was not FMLA eligible, do we have anything to worry about?
Roy’s Analysis:
As you may have perceived, QQ # 54 was derived from a 7th Circuit case, decided just last month, Peters v. Gilead Sciences, Inc., No. 06-4290 (July 14, 2008). In Peters, a case based on Indiana law, the employer had provided its employees with an employee handbook which paraphrased the language of the Family and Medical Leave Act (FMLA). The handbook described the FMLA eligibility requirements of 1250 hours of work in the preceding 12 months, combined with one year’s employment. The employer’s handbook, however, did not address the other nuances of the FMLA or its other applicability criteria. For example, the handbook did not address the FMLA requirement that there must be 50 employees at the worksite of the employee seeking FMLA leave, or within 75 miles of that worksite (sometimes referenced as the 50/75 rule).
Peters experienced a work-related neck and shoulder injury in late 2001. He re-injured his shoulder about one year later, leading to corrective surgery that required a brief (11-day) leave. Compounding the imprecision of its handbook, Gilead Sciences then sent Peters a letter explaining the FMLA and restating, in part, the FMLA’s eligibility requirements. Again, however, the letter omitted any reference to the 50/75 rule. The letter specified when Peters would need to return to work, and promised him reinstatement in the same or an equivalent position.
As noted above, Peters quickly returned to work and was reinstated into his job. Several months later, however, he took a second leave, caused by an adverse reaction to a prescription medication he had been using. The company sent Peters another letter, largely mirroring its first FMLA communication and specifying the date by which he needed to return to work. Somewhat carelessly, the company miscalculated the mandatory return date, miscounting the amount of leave Peters actually had taken and consequently, underestimating the amount of leave he had left.
When the incorrectly calculated leave “expired,” the company hired a new employee to fill Peters’ job. The company explained its decision to Peters by referencing another FMLA provision, the company’s right to replace an employee occupying a “key” position. Gilead Sciences offered Peters another position but he rejected it, at which point he was terminated. Peters then sued the company on a number of different legal theories, including FMLA violations, breach of contract and promissory estoppel.
Once it examined the FMLA more closely, the company discovered that Peters was not FMLA-eligible because he did not work at a site that had at least 50 employees and the company did not have 50 employees in the aggregate working within 75 miles of Peters’ work location. Peters, however, argued that his employer was “equitably estopped” from denying him coverage under the FMLA due to the company’s representations in its employee handbook and the two letters the company sent to him. Despite Peters’ equitable estoppel argument (the notion that given its representations to him in the handbook and the letters, the company was prevented, or “estopped,” from making an argument based on the eligibility requirements) the District Court granted summary judgment, dismissing Peters’ case.
The 7th Circuit reversed, though on slightly different grounds. The appellate found that it did not have to decide the “equitable estoppel” issue, since there were two other potential bases on which Peters could prevail. First, the 7th Circuit found that Peters might be able to prevail on his claim for “promissory estoppel.” Promissory estoppel is a quasi-contract theory in which the court finds that certain promises may rise to the level of a binding agreement if the person to whom the promises were made takes action in reliance and is injured as a result. For example, if a company made a job offer to an individual (the promise) and encouraged him to move across the country to accept the position, and the employee moved across the country to take the job (the reliance), and was damaged thereby (e.g., quitting his other job, selling his house, etc.) (the injury), the employer is prevented (or estopped) from denying the employee the benefits of the promises previously made.
In the Peters case, the court found that the employer’s handbook and the statements set forth in the letter could constitute promises under Indiana law upon which Peters had relied to his detriment.
Second, the court observed that the statements made in the employee handbook could simply be a unilateral contract offer, which Peters accepted by working for Gilead Sciences. The 7th Circuit noted, however, that the Indiana Supreme Court had not decided the issue of whether employee handbooks could rise to the level of binding contracts. Even if a handbook in Indiana did not constitute a contract, the appellate court concluded that Peters had set forth enough facts to pursue a claim under the legal theory of promissory estoppel.
As the 7th Circuit noted, “There is no reason employers cannot offer FMLA-like benefits using eligibility requirements less restrictive than those in the FMLA, and that is what Gilead did. Peters statutory ineligibility is irrelevant to the contract-based theories of liability.”
The Peters lawsuit is illustrative of several critical points. First, as I have observed in this Blog before, much of employment law is state law dependent. In Indiana, the courts apparently have yet to resolve the issue of whether the promises in an employee handbook can rise to the level of contract. Other states, however, have resolved that issue. In Minnesota, for example, our state Supreme Court decided about 25 years ago that handbooks could constitute unilateral contracts. Of course, that led to the use of disclaimers, boldly set forth in handbooks, to disabuse employees of the notion that it would be reasonable to view handbooks as contractually binding.
Second, there are times when state law provisions do interact with federal law. Here, the handbook analysis had direct bearing on the FMLA, a federal statute. Indeed, in some ways the federal statute complicated the situation because the FMLA requires that information about employee FMLA leave rights be included in employee handbooks (if the employer uses such a document). Moreover, the appellate court considered, but did not decide, whether Peters’ “equitable estoppel” argument would have required the employer to provide the otherwise ineligible Peters with rights provided by the FMLA. In the absence of Peters’ state law contract and quasi-contract claims, presumably the court would have reached this issue.
Third, the case illustrates the importance of crafting your employee handbook carefully. If you reference eligibility for statutory benefits, you’d better get it right. If you omit key statutory provisions, you may be obligating your company to provide benefits that exceed those of the statute or that apply to individuals who otherwise would not be eligible for the statutory benefits. There are at least two ways to address this potential problem. You could analyze each statute carefully and ensure that your summary descriptions are correct. Or, you could include a provision in your handbooks, specifying that the handbook only provides a short synopsis of the statute and, to the extent that the statute contains provisions governing eligibility or benefits not summarized in the handbook, the statute (not the handbook) will govern. This may not completely exculpate an employer that mischaracterizes a statute but it is better than the alternatives — either omitting key statutory provisions or attempting to incorporate the entire statute into the handbook.
Fourth, the Peters case also illustrates the importance of conveying information clearly, and accurately, in other employee communications. Don’t send out letters that paraphrase statutory provisions inaccurately. Don’t advise employees that they are entitled to benefits for which they would not be eligible. Do your homework before sending out the letters. Get legal advice to ensure that you are not making promises you do not intend to make. Otherwise, you may find yourself in the position of Gilead Sciences, having promised benefits that are quite likely to be enforced, regardless of the limitatons of the statute.
Finally, purely from an advocacy perspective, limit your arguments to those which are credible. As referenced above, one of the explanations that Gilead Sciences offered to Peters for why he had been replaced was that he was a “key” employee under the statute. The FMLA definition of a “key” employee is very circumscribed and there is no way Peters would have fit that definition. By including an argument that has virtually no chance of success, the company merely diminished its own credibility with the court.
Faking Illness to Avoid Shift, Quirky Question # 47
Quirky Question # 47:
Our company uses rotating shifts, one of which starts at 11:00 p.m. and continues through 7:00 a.m. Every employee is asked to work that shift, one day, every other week. Every time a particular employee is asked to work that shift, she takes a day of FMLA leave, claiming that she has migraine headaches. She jokes with her co-workers that she is going to get a migraine each time she is assigned to that shift, and no show up for work. How should be respond?
Roy’s Analysis:
Your question raises an issue similar to the inquiry addressed in our Quirky Question # 41. As you may have read, that QQ involved the unusual situation of an employee routinely stopping at a hotel near his place of employment to help himself to the “free” breakfast and “free” newspaper the hotel provided to its guests. In short, the prior question involved the issue of how an employer should deal with a dishonest employee.
The same basic question is presented here, though in a very different context – how should the employer respond to a dishonest employee who is availing herself of the FMLA leave options by periodically claiming, falsely, that she is ill and needs leave. Compounding the problem, she is boasting to her fellow employees that she is going to continue gaming the system on a regular basis in the future.
Before addressing the specific response warranted by this scenario, let’s review some of the basics. The Family and Medical Leave Act (FMLA) provides for up to 12 weeks of unpaid leave for qualifying employees. A qualifying employee is one who has worked for the employer for at least 12 months and who has worked at least 1250 hours in the preceding 12-month period. (In previous questions, I have addressed the unusual circumstances associated with the fact that the eligible employee did not have to work for 12 consecutive months to be FMLA eligible; see QQ # 7.)
One of the more difficult aspects of administering the FMLA for employers is that the leave taken by employees does not have to be taken continuously. Rather, the leave can be utilized “intermittently.” Given that employees are eligible for 60 days of leave (12 weeks times 5 business days per week) annually, the employee described in the question above would be able to skip the shift she wants to avoid during each of the 26 weeks that she otherwise would be obligated to work that shift (once every other week), and still have 34 days of potential FMLA leave remaining.
Two other fundamental points are worth addressing. First, the employer does not simply have to accept the employee’s request for FMLA leave without obtaining medical corroboration of the underlying need for the leave request. Under the statutory scheme of the FMLA, the employer may insist that the employee provide a certification from a health care provider that she has a qualifying medical condition. Moreover, if the employer is not satisfied with the explanation provided by the employee, the employer may insist that the employee visit another medical provider (at the employer’s expense) for a second opinion. If the two medical assessments are in conflict, the employer may insist upon a third opinion (again at its expense) to be provided by a medical provider agreed upon by the first two medical practitioners who provided opinions.
Second, in general, “migraine headaches” may (or may not) qualify as a “serious health condition” under the statute, sufficient to provide employees a right to take FMLA leave. Again, this determination will likely depend on various medical considerations – e.g., how frequently does the employee get the headaches, how severe are the headaches, how incapacitated is the employee because of the headaches, how long has the employee experienced the headaches, is the employee utilizing prescription or non-prescription medications that adequately address the physical problems associated with the headaches. Presumably, these and similar inquiries are the types of questions that will be explored in the medical examinations.
Turning then to the specific factual scenario described above, you have several options. One option is to simply allow the employee to take the leave she requests once every other week. In my view, however, this is a bad idea. First, presumably, you will need to get some other employee to work the shift that the employee is skipping. If that employee already has worked 40 hours that week, you will have to pay the replacement employee overtime compensation for the skipped shift. Simply put, even though you don’t have to pay the employee taking the leave for the shift she misses, her decision to skip one shift every other week could cost your firm money.
Second, the other employees (many of whom also may be unenthused about working this late-night shift) may resent the fact that their co-worker is skipping the shift and that the company is tolerating her regular absences. Other employees may perceive this situation as unfair and they would be correct.
Third, given that the employee is boasting to her co-workers that she is going to miss the shift every other week, for what she concedes is a pretextual reason, accepting this conduct by her has two adverse consequences. It could exacerbate the resentment other employees feel toward the employee and the company. And, it sends the wrong message to the workforce. Allowing the employee to take the leave basically communicates to this employee and the rest of the workforce that she can abuse the company’s leave rules (as well as misuse the legitimate benefits of the FMLA), without consequence. If this approach were utilized by the company, you should not be surprised if other employees also decide that they would like to take some time off, either intermittently or on a more protracted, consecutive-day or consecutive-week basis.
Another option then would be to confront the employee about her request for leave and her statements that she is going to get a well-timed migraine headache every time she is asked to work the late shift. Assuming you corroborate the fact that the statement was made (either by speaking with a sufficient number of other employees or by obtaining an admission from the employee that she made this statement), you simply could deny her request for FMLA leave. The corollary question you should assess is whether you also want to discipline the employee for making a fraudulent request for leave. If you conclude that the employee is dishonest, and you have a legitimate aversion to employing dishonest employees, discharge her. If you conclude that this penalty is unduly harsh, you could consider utilizing a “last chance” warning or explaining to the employee that any further acts of dishonesty will result in her termination.
A third option you may wish to consider would be to rely on the mechanisms provided in the FMLA to address this situation. For example, if other employees did not provide clear corroboration of the employee’s statements and the employee herself denied making them, you could sit tight until she requested leave. Once the request was made, you could avail yourself of your right to seek a medical opinion regarding the employee’s condition. Taking advantage of the FMLA procedures could have a couple of benefits. First, you will get some independent insights into whether a health care practitioner will rubber-stamp the employee’s leave request. Second, if the employee’s health care professional validates the employee’s “need” for the leave, you will have gained an insight into that individual’s objectivity and veracity. Third, I would expect that your own physician will point out that migraine headaches do not arrive on schedule at 6:00 p.m. (an hour before a 7:00 p.m. shift, every other week). Presumably, this health care professional will support the company’s rejection of the leave request. As described above, if there is a conflict in the opinions of the two health care practitioners, you could demand a third opinion. Of course, the biggest downside to this approach is the attendant cost.
The bottom line is that your company should not honor your employee’s request for intermittent leave every other week for “migraine headaches.” If your employee makes the imprudent decision to litigate this issue, you should prevail.
Supplement to Analysis of QQ # 47
On July 14, I posted QQ # 47, a situation presented to us by one of our clients involving an employee who advised her co-workers that she “planned” to get migraine headaches every time she was asked to work a particular late-night shift. On July 21, I posted my analysis of that question.
On July 23, 2008, I saw a report of a decision from the Seventh Circuit, Vail v. Raybestos Prods. Co., No. 07-3621 (7th Cir. July 21, 2008), involving an employee who was terminated by her employer for abusing the intermittent leave provisions of the Family and Medical Leave Act (FMLA). Coincidentally, the employee had been fired for periodically claiming that she needed leave because of her unexpected “migraine headaches.”
Although the employer previously had agreed to allow the employee to take FMLA leave as a result of her migraine headaches, it became suspicious of the employee because of the timing of the requests for leave. The employer retained a private investigator to learn what activities she engaged in during the time she was too ill to work and discovered that during these periods of ‘incapacity,’ she was cutting lawns for her husband’s lawn service business. Based on this information, the employer terminated her employment.
The employee sued her employer for interfering with her rights under the FMLA. The District Court granted summary judgment to the employer and the 7th Circuit affirmed. The appellate court pointed out that the employee must demonstrate that she took the leave “for the intended purpose of the leave,” 29 U.S.C. § 2614(a)(1), and that the employer can defeat a FMLA claim by showing that the employee did not take leave for the “intended purpose.”
The Court noted that an employer is under no obligation to reinstate an employee returning from FMLA leave if the refusal is based on the “honest suspicion” that the employee was abusing the leave. Persuaded that the employer had an “honest suspicion” that the employee was abusing the leave (as reflected by the timing of the leave requests and the lawn cutting work in which she then engaged), the Court found that the Raybestos had not violated its employee’s FMLA rights by ending her employment.
Employer Notice of Mental Disability, Quirky Question # 10
Quirky Question # 10:
Not long ago, a stray dog wandered into our warehouse. It did not hurt anyone but it apparently frightened one of our employees. In the days and weeks after the incident, our employee began behaving more and more bizarrely. She yelled at her supervisors and co-employees. In a conversation with our company’s President, she began yelling at him about the “f***ing dog.” During this time, she also missed a fair amount of work. Sometimes she would show up and then leave soon thereafter. On other days, she simply did not show up. One day, she called the police to complain of harassment because her supervisor had moved her belongings into a nearby office. After she had used up her paid leave, we notified her how to apply for FMLA leave. She never did so and not long thereafter, we discharged her. She now has sued our firm for violating the FMLA. Did we do something wrong? How can she sue us for an FMLA violation if she never notified us that she needed to take FMLA leave?
Roy’s Analysis:
Okay, I admit it. As some of you undoubtedly realized, I did not receive this question from a client or a reader. The fact pattern is derived from a case that was decided very recently, Stevenson vs. Hyre Electric Co., No. 06-3401 (7th Cir. October 16, 2007).
[Occasionally, I will address a very recent decision in my questions. To make it easy for you to access this material, I will organize it under the topic addressed (here, FMLA), as well as a new category we've initiated with this question called "Recent Decisions."]
Turning then to the question presented, the facts described above are drawn from the Stevenson case. As the Seventh Circuit described, the employee had “no documented history of misconduct or health problems” at her employer, but “[a]ll that changed . . . when a stray dog climbed through the window the warehouse where [she] worked and approached her.” Stevenson had an immediate adverse reaction to this situation which combined spraying air freshener around her work area and “yelling, cursing and screaming” at her co-workers for several minutes. She left work later that day because she was feeling ill and did not attend work the following day.
Two days after the incident, Stevenson had a very agitated 10-minute interaction with the Company’s President, again yelling profanities about the dog. The President was unable to calm her down. The same day, Stevenson filed an OSHA complaint about the dog. She later left work to visit the Emergency Room. Over the next week or so, Stevenson continued to miss work and continued to behave oddly. The Company sent Stevenson a letter describing her rights under the FMLA but Stevenson failed to notify her employer that she desired FMLA leave.
Anxious about Stevenson’s continuing aberrant behavior, the Company changed the locks on the warehouse. On March 9, approximately one month after the dog incident, the employer terminated Stevenson’s employment.
In granting the employer’s motion for summary judgment, the Illinois district court concluded that the employee had failed to satisfy the requirements of the FMLA that she provide her employer notice of her need for FMLA leave. The federal appellate court reversed this decision.
As the Seventh Circuit pointed out, under the statutory scheme of the FMLA and the accompanying federal regulations, an employee is obligated to notify her employer that she will need FMLA leave “30 days in advance.” When the need for leave is not known in advance, however, the employee should give notice “as soon as practicable under the facts and circumstances of the particular case.” The regulations anticipate that notice will be provided within one or two days of the date the employee learns of the need for the leave, except in “extraordinary circumstances where such notice is not feasible.” In this case, the appellate court found that Stevenson was obligated to provide notice to her employer of her need for FMLA leave after her visit to the ER and the diagnosis by the ER physicians. She failed to do so.
The appellate court went on, however, to point out that notice is not always necessary. In particular, the court stated, notice is not necessary where the employer has “constructive notice” of the employee’s need for the leave. Relying on an earlier 7th Circuit decision, the appellate court observed that constructive notice may occur when the employee is unable to communicate her illness or when “clear abnormalities” in the employee’s behavior provide the employer constructive notice of the serious health condition. In the Stevenson case, the circuit court concluded that Stevenson’s clear behavioral abnormalities could have put the employer on notice of her need for FMLA leave. Further, the court found that her condition could have constituted a “serious health condition” under the FMLA that would have qualified her for leave. The court therefore reversed, sending the case back to the trial court to reach factual determinations on both the constructive notice and serious health condition issues.
The Stevenson case is intriguing on multiple levels. My concern is that it imposes on employers and their management employees, very few of whom have any psychological or medical expertise, an unrealistic obligation to discern when employees are suffering from a serious mental health problem warranting FMLA leave. If the employer fails to pick up on the cues that should provide it “constructive notice,” a discharged employee may later be able to assert an FMLA claim that she was deprived of a leave opportunity that would have enabled her to remedy the problem.
For example, when an employee begins engaging in severe sexual harassment of another employee, is this a reflection of a mental health problem that would be improved by an FMLA leave? If an employee is not performing his job duties adequately, does this reflect depression or some other mental illness? If an employee is belligerent and bellicose toward his co-workers, does this mirror a mental health issue that warrants leave? In these and hundreds of other contexts, behaviors by employees may reflect mental health problems, or they may not.
Yet the standard for determining whether an employee has provided the employer “constructive notice” of a “serious health condition” will be difficult to determine and, in my view, somewhat malleable. Employers may discover, long after the fact, that the problem they thought they had solved by terminating the problem employee actually should have been addressed through leave and corresponding medical treatment. That possibility will inject a level of uncertainty into discharge decisions that employers previously thought were unassailable.
FMLA Leave, Quirky Question # 7
Quirky Question # 7:
Several years ago we employed an individual at our auto dealership. He resigned voluntarily. About eight months ago, we rehired him. During the course of the last eight months, he has worked more than 1250 hours. He recently injured his back at home and has missed 13 days of work. Because we cannot afford to have an employee miss that much time, we fired him.
He’s now claiming that we violated the Family and Medical Leave Act (FMLA) and is threatening a lawsuit. We realize that he has met the 1250 hours requirement under the FMLA but he did not work for us for 12 months, another FMLA requirement. Should we tell him to pound sand, and then lawyer-up in case he sues? Will our lawyers be able to obtain sanctions if he pursues this bogus claim?
Roy’s Analysis:
Not so fast!
Believe it or don’t, your discharged employee’s prior employment with your company, even though it was several years ago, enables him to meet the requirements of the federal Family Medical Leave Act (FMLA). As you noted correctly, that statute comes into play when the employee has worked at least 1250 hours and has been employed for at least a 12-month period.
At the end of 2006, the federal Court of Appeals for the First Circuit explored what the 12-month requirement means. (Take a look at the case of Rucker v. Lee Holding Co., d/b/a Lee Auto Malls, No. 06-1633 (1st Cir. December 18, 2006).) In that decision, the First Circuit held that the FMLA was “ambiguous as to whether previous periods of employment count toward the 12-month requirement . . .” (Emphasis added.)
In the case of first impression (i.e., the court had not previously analyzed and decided this issue), the appellate court held that a five-year gap in an employee’s employment with the same employer did NOT prevent him from satisfying the FMLA’s 12-month requirement. The court found that both the statutory language and the language of the Department of Labor regulations were susceptible of differing interpretations. In the Rucker decision, the court decided to give that language an expansive reading that benefited the discharged employee.
While I recognzie the statutory and regulatory language are less than perfectly clear, I thought the Rucker decision was a stretch. The analysis simply did not seem like a common sense interpretation of the statute. Silly me! In 2007, there have been two decisions that make Rucker seem eminently reasonable. In O’Connor v. Busch’s Inc., 492 F. Supp.2d 736 (E.D. Mich. 2007), the federal district court adopted the Rucker analysis, applying it to a fact pattern where there was a 20-year gap between the employee’s initial employment for the company and her rehiring. After working for the company in the 1980s, the employee left her employment. She was rehired in 2005 as the VP of Finance. Later the same year, she was injured in an automobile accident. Suffering from headaches and depression as a result of her accident-related injuries, she requested time off. Although the company advised her that it would provide her time off after the end of the year reconciliation of the company’s books, this proposal was not satisfactory to the employee, leading to her resignation. The employee then sued under the FMLA.
In the words of the modern day philosopher, Ferris Bueller, the court “bought it,” even while paying lip service to the notion that it was “troubled by the potential consequences of permitting Plaintiff . . . to combine periods of employment separated by nearly twenty years.”
Similarly, in the case of Thomas vs. Mercy Memorial Health Center, Inc., 2007 WL 2493095 (Aug. 29, 2007, E.D. Okla.), the employee had worked for the defendant-employer’s predecessor company in 1991, 1992 and 1994. She also worked for defendant in 2002 and early 2003. She returned to work in April 2004 but only worked for about eight months before she was fired for absenteeism relating to her own and her husband’s health problems. The district court combined the prior periods of employment, concluding that the employee had worked for more than 12 months and therefore was FMLA eligible.
In light of these cases, telling your employee to “pound sand” would likely be imprudent. Although it is counter-intuitive, your former employee seemingly has a legitimate claim. So, while I generally endorse the idea of “lawyering-up,” in this instance your resources may be better spent trying to resolve your differences with your ex-employee on an amicable basis.
As for “sanctions,” not this time.
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