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FMLA Coverage by Estoppel - Via State Law Claims

By Michael W. Fox, Esq.

I have posted before about the dangers of creating coverage by estoppel relying in part on the Supreme Court decision in Arbaugh v. Y & H Corp. See The Progeny of Arbaugh and Danger for the Small Employer.

Without mentioning Arbaugh, the 7th Circuit points out that there are state court theories that could result in coverage under the FMLA. In its handbook, and repeated in its letters to an employee who requested FMLA leave, the employer used the following language about eligibility:

To be eligible for FMLA benefits, an employee must have worked for a covered employer for a total of 12 months and have worked at least 1,250 hours over the previous twelve months.

What was missing was the so called 50/75 exception, that an employee is not eligible if they are at a worksite with less than 50 employees within a 75 mile area.

Unfortunately, that was exactly the situation in Peters v. Gilead Sciences Inc. (7th Cir. 7/14/08) [pdf]. Peters was at a work site where the 50/75 exception would have been applicable. When FMLA protection became an issue, Peters lost at the trial court.

Without addressing the concept of equitable estoppel, the Court found that the Indiana state law claims of contract law (based on the handbook) and promissory estoppel might be enough to create coverage and reversed the trial court's grant of summary judgment. It also said that whether equitable estoppel ( where Arbaugh might make a difference) might also be available, remained an open question under 7th Circuit law and one that they need not decide now.

Word to the wise, words matter. If you intend to rely on a 50/75 exception, you should say so.

Full post as published by Jottings By An Employer's Lawyer on July 16, 2008 (boomark / email).