News & Insights

Handbook Statements Are Binding
May 20, 2013
by Robert Conte


South Bend / Mishawaka, IN – The Seventh Circuit Court of Appeals recently held that statements made by the employer in an employee handbook regarding eligibility for leave under the Family and Medical Leave Act (FMLA) were sufficient to create an enforceable contract under Indiana law. (Peters v. Gilead Sciences, Inc., 7th Cir., No. 06-4290, July 2008). The Court determined that the employee can proceed with his or her claims for breach of contract or promissory estoppel based on statements made in the employee handbook which promised 12 weeks of family and medical leave for employees who had worked at least 1,250 hours during the previous 12 months, but no mention was made of the FMLA requirement that the employer have at least 50 employees working within 75 miles of the worksite. The Court stated: “There is no reason employers cannot offer FMLA-like leave benefits using eligibility requirements less restrictive than those in the FMLA . . . (the employee’s) statutory ineligibility is irrelevant to the contract-based theories of liability.”

The Court analyzed two legal concepts: equitable estoppel, a defensive doctrine used to bar the opposing parties from asserting a claim or defense, and promissory estoppel, which is a legal claim calling for “the enforcement of a promise that otherwise lacks the element of a contract.”

The Court found that the Indiana Supreme Court has recognized promissory estoppel claims in the employment context which require proof that a promise was made with the expectation that a promisee would rely on it, that the promise induced reliance by the promisee of a definite and substantial nature, and that justice requires enforcing the promise.

Questions regarding the FMLA should always be referred to an experienced employment attorney.