Dear Atty., Help! Our Employee Handbook Landed Us In Hot Water

The “Dear Atty.” column is aimed at answering employers’ legal questions that surround issues in human resources. Attorney Pete Albrecht of Albrecht Backer Labor & Employment Law, S.C. welcomes you to submit questions here for future editions of “Dear Atty.”

A stack of employee handbooks sits on a deskDear Atty.,

I run a small business. We have fewer than 50 employees so I don’t think that we are covered by the Family and Medical Leave Act. Our HR manager recently redid our handbook and I’m pretty sure that he simply downloaded it from the internet. The new handbook, which was given to all of our employees, states that, “we are pleased to provide Family and Medical Leave Act coverage to all of our employees.”

Here’s where it gets dicey. We had an employee take time off for what we thought was a minor medical procedure. After being absent from work for a couple of weeks, the HR manager believed that the employee was taking too much time off so he fired the employee. The employee now has challenged the termination saying that he was protected by the FMLA and that we had no business firing him. Legally, though, we are not even covered by the FMLA because we don’t have enough employees. Please tell me that I don’t need to worry about the employee suing me under the FMLA.

Signed,

Wishing I had Double Checked the Handbook

 

Dear Wishing,

For your sake, I am wishing that you had too. I am aware of a very recent case that arose under similar facts. In that case, a court in Michigan relied on a theory called “equitable estoppel” in finding that the mistaken language in the employer’s handbook provided employees with FMLA coverage even though the employer otherwise would not have been covered by the FMLA.

The Law: In order to prevail on an equitable estoppel argument, an employee need show only (1) a definite misrepresentation as to a material fact; (2) a reasonable reliance on the misrepresentation; and (3) a resulting detriment to the employee stemming from his reliance on the misrepresentation.

Unfortunately, all three of those elements apply to your situation. First, your handbook misrepresented that your employees would be covered by the FMLA despite the fact that your company does not have enough employees to actually be covered. Second, your employee likely will argue that he relied on the representation of FMLA coverage in deciding to take an extended leave of absence (i.e, your HR manager fired him after being absent for a couple of weeks but the employee likely will argue that he thought he had up to 12 weeks off under the FMLA). Lastly, the employee clearly suffered a detriment as a result of relying on the representation of FMLA coverage – – he was fired. In short, the employee would seem to have a decent case under the equitable estoppel theory.

Enough of the legal gibberish. Your focus at this point undoubtedly is on how to get out of this mess. If it is not too late, I would suggest that you try to resolve the matter with the employee, even if that means reinstating the employee and paying his lost wages. To prevent this from happening in the future, you could issue a revised handbook eliminating the reference to FMLA coverage or you could send a notice to all employees indicating that the language in the handbook is not intended to waive the actual coverage requirements set forth in the FMLA. Regardless of the approach you choose, keep in mind that it is likely to have a negative impact from an employee relations standpoint. You may end up deciding that it is not such a bad thing to offer FMLA benefits after all.

The lesson to be learned here is that employers need to be careful with what they say in their handbooks. A handbook is not simply a puff piece introducing employees to the
company – – it can have legal consequences. I’m sorry that you had to learn this lesson the hard way. Oh, and tell your HR manager to stop downloading employment policies from the internet…most of them are junk.

Signed,

Atty.

 

If you would like additional information about this topic, please contact Pete Albrecht. He is the president and a shareholder at Albrecht Backer Labor and Employment Law. Pete has represented employers for over 28 years and his law office is located in Madison, Wisconsin.

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