Employers publish employee handbooks to give their workers important information about their rights and responsibilities and, ideally, to help limit the company’s exposure to employment related claims and lawsuits. But a recent decision from the U.S. Sixth Circuit Court of Appeals, the federal appellate court whose decisions govern in Michigan, demonstrates that an employee handbook that is not carefully drafted and kept up to date can backfire on an employer, creating legal liabilities that would otherwise not exist.
In Tilley v. Kalamazoo County Road Commission, the plaintiff claimed that his employer violated his right to take medical leave provided by the Family and Medical Leave Act. The employer’s defense to the claim was simple: Mr. Tilley was not an “eligible employee” under the FMLA. The statute defines “eligible employee” to require, among other things, that the employer have at least 50 employees at, or within 75 miles of, the employee’s workplace. The court referred to this as the “FMLA 50/75-Employee Threshold.” The employer presented the trial court with uncontested evidence that it did not meet this standard, and the trial court accordingly dismissed the FMLA claim.
After Mr. Tilley appealed, the Court of Appeals agreed that the undisputed facts demonstrated that the employer did not meet the FMLA 50/75-Employee Threshold. Despite that conclusion, the Court of Appeals overturned the dismissal of the case. Why? Because even though Mr. Tilley was not an “eligible employee” under the FMLA, the employer’s handbook told him that he was.
The Court of Appeals reviewed the employer’s “Personnel Manual,” which it concluded “contained a clear misrepresentation as to his eligibility to apply for FMLA benefits.” The Personnel Manual, which told employees that it was “a guide to basic benefits, working conditions and policies” of the employer, stated: “Employees covered under the Family and Medical Leave Act are full-time employees who have worked for [the employer] and accumulated 1,250 work hours in the previous 12 months.” The Personnel Manual made no mention of the FMLA 50/75-Employee Threshold.
The Court of Appeals concluded this was “an unambiguous and unqualified statement” that employees like this plaintiff, who met these other FMLA requirements, were eligible for FMLA benefits through the employer, without application of the FMLA 50/75-Employee Threshold. The Court of Appeals also made clear that had the employer qualified its statement in the manual by also referencing the FMLA 50/75-Employee Threshold, the result of the case would have been different.
The Court of Appeals ultimately concluded that a reasonable person in Mr. Tilley’s position could fairly have believed – based upon the language in the Personnel Manual – that he was protected by the FMLA, and that accordingly the employer could not rely on the defense that he was not actually an “eligible employee” under the FMLA to deny his claim.
What are the lessons in this case for employers?
First, it is important to have an employee handbook that clearly and accurately states the rights and obligations of the employer and its employees. Employers already face myriad requirements under federal, state and local rules and regulations – the last thing any employer wants to do is self-impose additional obligations.
Second, it is very important that employers ensure that their handbooks remain up to date. New laws are passed, statutes get amended, new regulations are issued and all of these are subject to ongoing interpretation by the courts. Employers need to ensure that their handbooks are always up to date – a handbook that served you well a few years ago may not do the trick today. Your attorneys at Warner can help you draft an appropriate employee handbook, or review an existing handbook to ensure that it meets current compliance standards.
