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Imprecise or Sloppy Handbook Language Can Lead to Breach of Contract or Promissory Estoppel Claims

Recently, the Seventh Circuit Court of Appeals (which covers Indiana, Illinois and Wisconsin) held that a pharmaceutical sales representative who was approved for leave under the Family and Medical Leave Act, was replaced before he used 12 weeks of leave, and later was deemed ineligible under the statute, can nevertheless proceed with claims for breach of contract or promissory estoppel based on eligibility statements in the employee handbook. (Peters v. Gilead Sciences Inc., 7th Cir., No. 06-4290, 7/14/08)

The company handbook promised 12 weeks of family and medical leave for employees who had worked at least 1,250 hours during the previous 12 months, all in accord with the FMLA's language. The handbook, however, made no mention of the FMLA requirement that the employer have at least 50 employees working within 75 miles of the worksite.

Although the employee was ineligible for FMLA leave because the 50/75 requirement was not met, the court found that it is possible that the handbook provisions, repeated in two letters to the employee approving his medical leave, were sufficient to create an enforceable contract, or at a minimum a promissory estoppel claim, under Indiana law.

"There is no reason employers cannot offer FMLA-like leave benefits using eligibility requirements less restrictive than those in the FMLA, ... and that is what the Gilead did. Peters' statutory ineligibility is irrelevant to the contract-based theories of liability," the court said.

The bottom line is that the handbook promised leave benefits with less restrictive eligibility requirements than the FMLA, and the employer paid the price. This case shows just how precise employers must be in crafting their handbook language. While this case involved FMLA-language, employers must also take care to be precise in all aspects of handbook language to avoid a breach of contract or promissory estoppel claim.

If you have any questions regarding this, or any other legal issue, please feel free to contact a member of Greenebaum's Labor and Employment Practice Group.

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Greenebaum Doll & McDonald PLLC is a widely-respected business law firm with approximately 200 legal professionals in six offices, serving local, national and international clients in virtually every industry. A forward-thinking business law firm, Greenebaum is committed to the practice of Breakthrough Law®.

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