In Lapidoth v. Telecordia Technologies, Inc., 2011 NJ Super. LEXIS 103 (App. Div. June 9, 2011), the New Jersey Appellate Division held that an employee, who took a 12-month maternity leave that was not covered by either the Family & Medical Leave Act ("FMLA") and/or New Jersey Family Leave Act ("NJFLA"), nonetheless had a binding contract with her employer guaranteeing her reinstatement rights to her position based on the language used by her employer in two letters authorizing her leave time.  This decision has significant ramifications for employers since it further erodes the employment at-will doctrine and underscores the importance of having clear and unambiguous employee communications and policies. 

FACTUAL BACKGROUND

Sara Lapidoth began working at Telecordia Technologies, Inc.'s ("Telecordia") predecessor in June 1986.  In 1991, at her request, Lapidoth began working part-time for Telecordia.  In the beginning of 2005, she started working as a part-time manager on a product called ARIS. 

On April 11, 2005, Lapidoth requested a six-month maternity leave due to the expected birth of her tenth child.  She previously requested and received leaves of absence for the births of her other nine children during her employment with Telecordia.  On June 20, 2005, Telecordia sent Lapidoth a form letter notifying her that her six-month leave was approved; it reiterated the Company's maternity leave policy, stating, in relevant part:  

[Y]our unpaid Family Care Leave of Absence from July 22, 2005 through January 22, 2006 is approved and will be counted towards your 12 weeks of 2005 and 2006 Family and Medical Leave Act (FMLA) entitlement ... This leave is granted with a guarantee of reinstatement up to 12 months to the same or comparable job, including the number of hours and days worked during the week, salary, and benefits prior to the Leave starting.  Reinstatement is not guaranteed if your job is declared surplus or the number of hours you request to work at the time of reinstatement is different than when the Leave commenced.

Under the policy, "declared surplus" means "the position the employee was filling is no longer required" or when there is "a reduction in force or force adjustment."  On January 6, 2006, Lapidoth requested another six-month leave to run from January 2006 to July 21, 2006.  That same day, Telecordia approved the leave, and again notified Lapidoth in writing that as long as her position was not declared surplus and she did not request a change in hours, her reinstatement was guaranteed.  In February 2006, the Company reorganized and determined that the ARIS product now required a full-time manager, which it filled with another employee during Lapidoth's leave.  In June 2006, Lapidoth informed the Company that she planned to return on July 20, 2006 in a part-time capacity.  In response, Telecordia advised that it needed Lapidoth to work in a full-time capacity since her position now required full-time hours.  She agreed to do so.   

Nonetheless, due to budgetary constraints, Telecordia determined that it could only maintain one full-time release manager. Based on comparative performance evaluations, Telecordia decided to keep the employee who filled Lapidoth's position while she was on leave.  Therefore, the Company terminated Lapidoth's employment. 

Throughout her employment, Telecordia's Code of Business Ethics contained the following at-will employment policy:  

This Code of Business Ethics as well as each of the policies, practices, and procedures contained in it and every other Telecordia document, is not a contract of employment and does not create any contractual rights, either express or implied, between the company and its employees.  The policies, practices, and procedures described in this Code may be changed, altered, modified, or deleted at any time, with or without prior notice from information in this code when making decisions related to employment with Telecordia.

Telecordia employees are employees at-will.  This means that employees have the right to terminate employment at any time, with or without grounds, just cause or reason and without giving prior notice.  Likewise, Telecordia has the right to terminate the employment of any of its employees at any time with or without grounds, just cause or reason and without giving prior notice.   

LAPIDOTH BRINGS SUIT

In February 2007, Lapidoth filed an action against Telecordia, claiming that the Company (1) discriminated and retaliated against her in violation of the FMLA and NJFLA; and (2) breached a contract to reinstate her at the conclusion of her leave.  The trial court dismissed all of Lapidoth's claims on summary judgment.  She subsequently appealed. 

GUARANTEED REINSTATEMENT DESPITE NO ENTITLEMENT TO FMLA/NJFLA LEAVE TIME

On appeal, the Appellate Division found that the trial court correctly dismissed Lapidoth's FMLA/NJFLA claims because both statutes only guarantee reinstatement to leaves that are 12 weeks or less in duration.  Therefore, there were no violations under the FMLA or NJFLA given that Lapidoth's leave clearly exceeded 12 weeks. 

However, the Appellate Division reversed the trial court's dismissal of Lapidoth's breach of contract claim, finding that the maternity leave policy contained in the two authorization letters may be construed by a "reasonable employee" as promising reinstatement.  In so holding, the Appellate Division reviewed the Company's at-will employment policy and well-settled precedent establishing that the appropriate disclaimer in an employment manual precludes a finding of an enforceable contract.  Nonetheless, the Appellate Division found that "while defendant's Code and employment application provided that employment was at-will and that nothing in the Code or any of defendant's other policies, practices, and procedures created any contractual rights, defendant's letters relating to its policy on maternity leave seem to contradict those general policies."  The Appellate Division further found that the policy's "declared surplus" exception did not apply because the ARIS release manager position was not eliminated, but rather upgraded to a full-time position; the court rejected the Company's argument that the other employee retained was more qualified than Lapidoth.

PRACTICAL TIPS

This decision certainly puts employers on notice that merely having an at-will employment policy is not enough to preserve at-will status in New Jersey.  Therefore, we recommend the following:

  • Make sure your employment policies are clear and unambiguous.  Employment policies should clearly state that the nature of the employee's relationship is at-will.  Additionally, employment policies should not grant reinstatement rights that conflict with the employment at-will doctrine.  Employers should undergo a comprehensive review of all employment policies and procedures to ensure that there are no reinstatement rights other than in situations required by law.
  • Be careful in communications with employees.  There should be no ambiguities in communicating with your employees, meaning that employers should refrain from guaranteeing any rights to employees in writing and verbally other than those required by law.
  • Be consistent.  Employers should make sure they do not deviate from their policies.  This decision makes it clear that courts will review how policies are actually administered in determining an employee's rights.  Clear policies alone are not enough.  Consistency in their application is paramount.