This issue comes up frequently in the workplace: absent statutory or contractual obligations, can employers discriminate in the benefits they offer or give to their employees? In their treatment of employees?
Sylvia Thomas (“Thomas”) was employed by Elmwood Cemetery (“Elmwood”). Elmwood consistently employed fewer than twenty people during that time period. Thomas had health insurance coverage provided by Elmwood while she was employed there. During Thomas’s employment, notwithstanding that Elmwood employed fewer than twenty people, Elmwood offered COBRA benefits to another employee, John Winn (“Winn”). Thomas became aware of Elmwood’s provision of those benefits to Winn from conversations overheard within the small office in which she formerly worked.
After her termination, Thomas developed serious cardiac and respiratory problems. Due to those maladies, Thomas incurred substantial medical expenses, portions of which were outstanding or were paid using borrowed funds at the time she filed suit against Elmwood.
Thomas alleged that Elmwood had a duty under COBRA to notify her “of her right to continue in force without interruption the health insurance that she had been provided as a perquisite of her employment.” Thomas alleged that Elmwood failed to meet that duty. As a consequence, she requested relief in the form of continued health coverage during the litigation, notification of her rights under COBRA, $100 per day as a penalty for failure to comply with the COBRA statute, and other appropriate remedies. She also sought attorney’s fees and costs.
Elmwood argued that COBRA did not apply to Elmwood because, at all times relevant to the litigation, Elmwood employed fewer than twenty people. COBRA applies only to employers with twenty or more employees.
Thomas conceded that Elmwood did not employ twenty or more people. Nevertheless, she claimed that Elmwood offered COBRA benefits to Winn after he left Elmwood and that she relied upon COBRA being available to her, should she ever leave Elmwood’s employ, because she knew that Winn got COBRA when he left. Thomas said Elmwood was equitably estopped from denying her the same COBRA benefits that Elmwood provided to Winn.
Under Illinois law, in order for a party to employ equitable estoppel against another party, the following elements must be satisfied. First, the party to be estopped must have used “conduct or language amounting to a representation of material fact.” Second, that party must have been aware of the true facts. Third, that party must have had an intention that the representation be acted on, or have conducted himself in such a way toward the party asserting estoppel that the latter had a right to believe that the former’s conduct was so intended. Fourth, the party asserting estoppel must have been unaware of the true facts. Finally, the party asserting estoppel must have detrimentally and justifiably relied on the representation. All of these elements must be present before a court may order estoppel. The court stated that, because Thomas could satisfy neither the first nor the third element, she could not prevail on her estoppel claim. With respect to the first element, Thomas would only be able to prevail if she could argue that Elmwood represented to her that she would have COBRA benefits. Elmwood never made such a representation to her. Thomas claimed that others near her in the office talked among themselves about Winn’s receipt of benefits, and that she then inferred from hearing those conversations that she too would receive COBRA benefits. Without more, inferences drawn by a party from overheard conversations about another employee do not amount to representations to or about the overhearing party.
Thomas was also unable to satisfy the third element of an equitable estoppel. Since Thomas only overheard conversations among others about another employee, she was unable to present any evidence that Elmwood intended her to rely, in conducting her own affairs, on those conversations or on Elmwood’s provision of COBRA to Winn.
Please do not hesitate to call us if you have any questions about the legality of an employer’s different treatment of similarly-situated employees.