Danger for the Small Employer: 'Estopping' yourself into coverage

Most statutes which provide rights for employees have some numerical limitation, e.g. Title VII, 15 employees, ADEA and COBRA, 20 employees. So with less than 20 employees an employer should be home free on a COBRA claim, right?

Well, not necessarily as the 6th Circuit points out this morning in Thomas v. Miller (6th Cir. 6/27/07) [pdf]. Because of last years' decision by the Supreme Court in Arbaugh v. Y & H Corp, the Court holds it is clear that numerical limits are no longer jurisdictional, and thus an employer's conduct under certain circumstances can cause it to be covered, even though it falls below the statutory threshold.

Here, plaintiff argued that because she overheard a conversation in the office about COBRA benefits being offered to a white male employee, that the employer was estopped to deny that she, a black, female was not entitled to COBRA benefits because of race and sex discrimination. The 6th Circuit held that the basic premise that the employer could have to provide benefits under the doctrine of collateral estoppel was correct, but not in these circumstances.

To prove collateral estoppel, she would have had to show:

• the employer must have used “conduct or language amounting to a representation of material fact;”
• the employer must have been aware of the true facts;
• the employer must have had an intention that the representation be acted on, or have
  conducted itself in such a way that the employee had a right to believe that the employer's conduct was so intended;
• the employee must have been unaware of the true facts; and
• the employee must have detrimentally and justifiably relied on the representation.

A pretty steep burden in any case, and not met here, but clearly a word to the wise for the small employer.