The U.S. Court of Appeals recently ruled that an employee not eligible for leave under the Family and Medical Leave Act (“FMLA”) is nonetheless entitled to FMLA leave, because the employee satisfied all conditions for FMLA leave set forth in the employee handbook. Peters v. Gilead Sciences, Inc., No. 06-4290 (7th Cir. July 14, 2008).
The FMLA provides leave to eligible employees. Employees are only eligible if they have worked more than 1,250 hours during the previous 12 months and the employer has at least 50 employees within a 75-mile radius of the work site (the “50/75 rule”). The employee handbook in the Gilead case, however, made no mention of the 50/75 rule.
In the lawsuit that eventually followed, the employer argued that Peters was ineligible for FMLA leave because he did not satisfy the 50/75 rule. The employee pointed out, however, that he satisfied all conditions for leave specified in the employee handbook. The U.S. Court of Appeals agreed that the employee may be entitled to leave as a matter of contract law based on the employee handbook.
Many employers incorrectly believe that employee handbooks are not binding legal contracts based on “disclaimers,” which state that the handbook is not a contract. These disclaimers, however, are often invalid. Under basic principles of contract law, whenever there is a conflict between general and specific contract terms, the general term is ignored, and the specific term is enforced. Thus, one cannot take away a specific contract right – like the right to progressive discipline or employee leave – with a general provision saying that the employee handbook is not a contract. If a handbook term gives employees specific rights, it is probably an enforceable employment contract.
The case stresses the importance for employers of understanding that employee handbooks and personnel policies are part of the law of the workplace and need to be written as such. Avoid idealistic polices that reflect the way an ideal workplace is supposed to work. Instead, write policies that are simple, that can be understood and followed by all managers and supervisors, and that are easy to apply in actual practice.