Throwing the Flag Employee MisconductThis past week saw the Seattle Seahawks skillfully avoid winning back-to-back Super Bowls because of (arguably) bad decision-making (all the Seahawks had to do was move the ball 36 inches into the end-zone – the only other decision worse than passing in that situation was having Katy Perry perform at half-time, but I digress).

An employer found itself in a similar situation and after further review its victory in an employment-related discrimination claim was reversed because of poor decision-making in relation to its employee manual.

Specifically, the Sixth Circuit Court of Appeals (the federal circuit that covers Michigan employers) reversed a trial decision in favor of an employer in Tilley v. Kalamazoo Cnty. Rd.Comm’n (1/26/2015). The employer was sued for claims under the Family Medical Leave Act (FMLA) (29 USC § 2601 et seq.) and under Michigan’s Elliott-Larsen Civil Rights Act.

The FMLA and Eligibility

For background purposes, the FMLA provides employees “a total of 12 workweeks of leave during any 12-month period for . . . a serious health condition that makes the employee unable to perform the functions of the position of such employee.” 29 U.S.C. § 2612(a)(1)(D). Importantly, these FMLA benefits are not available to all employees. Only an “eligible employee” who works for an “employer” – as both terms are defined under Act – may obtain such benefits.

The Court of Appeals agreed with the district court that the plaintiff employee was not FMLA eligible pursuant to what is called the FMLA’s 50/75 Employee Threshold (to be FMLA eligible, an employer must employ at least 50 employees at, or within 75 miles of, the employee’s worksite at the time the FMLA leave was requested). Again, it was undisputed that the Road Commission did not employ at least 50 employees at, or within 75 miles of, his worksite at the time the plaintiff sought FMLA leave.

At this point, the employer should have been well into its touchdown dance. But there was a flag on the play – an incorrectly drafted employee manual. The Court, while acknowledging the plaintiff employee was no FMLA eligible, noted that the employer’s manual said otherwise:

[Plaintiff] showed that the Road Commission’s Personnel Manual (the “Manual”) contained a clear misrepresentation as to his eligibility to apply for FMLA benefits … This is an unambiguous and unqualified statement that Road Commission employees, like [Plaintiff], who have logged 1,250 hours in the year before seeking FMLA leave are covered by the FMLA and are eligible to apply for FMLA benefits …. The Road Commission could have qualified its statement concerning employee eligibility … the Road Commission’s unqualified statement that employees in [Plaintiff’s] position are covered under the FMLA satisfies the misrepresentation element of the equitable estoppel test.

The equitable estoppel reference refers to a doctrine that courts may apply to employer policy statements regarding an employee’s FMLA eligibility. If applied, the doctrine prevents the employer from raising non-FMLA eligibility as a defense.

Take-Away for Employers

The employee manual is one of the most basic and recognized tool in an employer’s toolbox. It really should be the fundamental cornerstone for any employer’s HR best practices.

And one of the most popular questions our law firm gets from start-up companies and growing companies is “Why should my company pay your law firm for an employee manual when I can just [insert any number of sources where employee manuals are magically produced]?” This case perfectly answers that question – when an employee manual is not properly drafted or is not regularly updated, it is as bad as not having one in the first place and can cost your company significant multiples of what it would have cost to properly draft it in the first place.

For more information about complying with federal or Michigan employment law, including implementing HR best practices and drafting employee manuals, contact employment attorney Jason Shinn. His law firm offers complete employment and HR packages that provide a solid game plan for start-up and growing businesses.