An Indiana employer must now respond to charges it misled employees when it promised
The case, recently decided by the 7th Circuit Court of Appeals, shows the problems that arise when employers promise more than they are willing to deliver in their employee handbooks. Even an employer savvy enough to write a handbook in a way that does not create a contract still must keep all the promises it makes in the handbook. When employees rely on employer promises, the promises can become a contract in some states.
The 7th Circuit’s decisions apply in Illinois, so employers here should pay particular attention to this case.
It started with a shoulder injury
Steven Peters, a therapeutic specialist for pharmaceutical maker Gilead Sciences in Indiana, suffered a shoulder injury at work. Almost a year later, he aggravated the injury and filed a workers’ compensation claim. His physician imposed lifting restrictions, and Peters worked with those restrictions for several months until he had corrective surgery.
Relying on Gilead’s company handbook, Peters applied for . Gilead responded with a letter explaining that FMLA leave was available to all workers who had worked for the company for 12 months and at least 1,250 hours over the previous 12 months. Neither the letter nor the handbook referred to the FMLA’s requirement that employers have 50 or more employees within a 75-mile radius. Gilead didn’t have 50 employees within 75 miles, but it appeared to grant its employees FMLA leave anyway.
Peters returned to work 11 days later, but did not recover as well as his doctors had hoped. After a few months, they prescribed a drug called Neurontin that had side effects so severe Peters was forced to take more FMLA leave.
Mistakes and miscommunication
Gilead sent another letter to Peters detailing how much FMLA leave he had remaining. The dates of Peters’ FMLA usage and his return date were wrong in this letter. Peters never knew this, he said, because he never received the letter.
As a result, he did not know Gilead expected him back to work a month sooner than it should have. Because of the communication breakdown, Gilead received no feedback from Peters letting it know its dates were wrong.
Peters’ doctor wrote to Gilead giving it the date Peters could return—a date within the 12-week period the FMLA allows. But Gilead, working off the wrong dates, filled the position and terminated Peters. Gilead also informed Peters that it had designated him a “key employee” and therefore he was not entitled to reinstatement under the FMLA (see box below).
An offer refused
Gilead offered Peters another position, but he refused it. Instead, he filed suit, claiming discrimination under Title VII of the Civil Rights Act, the FMLA and the ADA. Peters argued he had relied on the information in Gilead’s handbook, which he said constituted a promise—and therefore a contract under Indiana state law.
Gilead moved to have all the charges dismissed, and a federal district court agreed. Peters appealed to the 7th Circuit Court of Appeals, which agreed with the district court on the Title VII, FMLA and ADA charges.
But it sent the case back to the lower court to determine whether the employer’s handbook language and letters to Peters created a contract. A jury now will decide the issue.
Parsing handbook language
Improperly worded handbooks can become contracts that bind employers’ hands. In this case, even HR apparently believed that the company was subject to the FMLA. For whatever reason, neither the handbook nor the letters sent to Peters included the 50-employees/75-mile-radius requirement.
Advice: Generally speaking, employers not subject to the FMLA shouldn’t put an in their handbooks. Publishing the policy can only mislead employees into believing they are eligible.
Employers should also have their attorneys look over their handbooks to make sure they include everything they should—and nothing they shouldn’t.
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