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Treading Lightly Within Employment Law

Published:  August 9, 2018

A recent federal court ruling highlighted a risk for employers, particularly small employers, about which you may not be aware. If you are a small business, you may not pay close attention to employment law decisions because many employment laws require a minimum number of employees and therefore may not apply to your business. However, the recent case, Reid v. Centric Consulting, LLC, demonstrates why you should still tread lightly when it comes to issues involving employment law. In Reid, the District Court for the District of Massachusetts ruled that an employee can bring a claim of FMLA retaliation even if the employee was not eligible for FMLA leave in the first place. The employee was not eligible for FMLA leave because the employer did not employ the requisite number of employees to be covered by the statute. Nonetheless, the court ruled that the employee could bring an FMLA-retaliation claim because the employer had erroneously represented the employee’s leave as FMLA leave. Even though this sounds like it doesn’t make sense, the ruling is based on two legal concepts that may be unfamiliar to employers: “estoppel” and “detrimental reliance.”

Estoppel Rule of Law

In layman’s terms, estoppel is rule of law that makes a representation enforceable if another person reasonably relied on the representation to their detriment. This is an equitable doctrine that allows the court to enforce an otherwise unenforceable agreement to avoid injustice. In order for estoppel to apply, the reliance must: 1) be reasonable; and 2) the reliance must have had a detrimental effect.

In the Reid case, the court ruled that, even though the employer was not covered by the FMLA, the employer’s statement made the employee reasonably believe he was covered by FMLA. The judge ruled that “[i]t would defeat the basic purpose of applying the doctrine of equitable estoppel if an employee was allowed to rely on an employer’s misrepresentation to take [FMLA] leave, but could then be fired for doing so.”

This case demonstrates why you should be extremely careful when writing and communicating policies to your employees. Even if your business is not covered by the FMLA, you may offer other types of family-related leave (such as Parental Leave) or medical-related leave (such as leave as a reasonable accommodation for a disability). Regardless of whether you aren’t covered by the FMLA, you could be held liable for FMLA interference or retaliation claims if you erroneously label the leave FMLA leave.

As an example, you might be an employee with 5 employees. An employee requests three days off to attend a funeral for her cousin. Even though you are not required to provide time off for bereavement leave, you’re a generous employer and you agree to give her the time off. If you refer to this leave as Family/Medical Leave because this leave is related to the employee’s family member, this unprotected, gratuitous leave might now provide the employee with the protections given to employees actually covered by the FMLA. If the employee reasonably and detrimentally relied on that erroneous representation, equitable estoppel may apply.

This same problem also exists when writing personnel policies, which you may distribute in an employee handbook. Even if you’re not covered by an applicable leave law, you might gratuitously provide employees leave for medical issues or serious family issues. If you phrase this gratuitous leave as Family and Medical Leave, just because it’s a logical name, you may also have created a situation wherein an employee reasonably and detrimentally relies on this erroneous representation.

If these hypotheticals make you nervous, you are not alone. Many employers, especially small employers, are not familiar with the way that subtle changes to wording can drastically affect your legal rights and obligations. If you have any concerns about the wording of your policies, you should consult an employment law specialist so you don’t find yourself in hot water, even if you were trying to do right by your employees.

 

If you would like more information, or have any questions on any aspect of labor and employment law, please contact the attorneys at Royal, P.C.

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