Illinois - Northern District of Illinois Holds That Employee Can Waive FMLA Cause of Action
October 22, 2008
On August 14, 2008, the United States District Court for the Northern District of Illinois ruled that an employee who signed a release of his claims under the Family and Medical Leave Act (FMLA) was barred from litigating his FMLA claims.
Factual Background
In Butler v. Merrill Lynch Business Financial Services, No. 08 C 0834, 2008 WL 3522435 (N.D. Ill., August 14, 2008), the plaintiff, James Butler, alleged that he began working for the defendant, Merrill Lynch, on May 1, 2006. After more than one year of employment, Butler requested FMLA leave to care for his ill wife. Butler’s request was granted and he took FMLA leave from June 2, 2007, until July 16, 2007. Shortly after returning to work, on September 10, 2007, Butler was terminated for performance issues. The next day, in exchange for receipt of a severance package from Merrill Lynch, Butler signed an Agreement and Release (Agreement) in which he “release[d] and discharge[d] Merrill Lynch ... from any and all actions, causes of actions, claims, or charges known or unknown arising out of [Butler’s] employment and/or termination of employment, including ... violations of ... the Family and Medical Leave Act.”
Butler retained all of the severance benefits Merrill Lynch paid to him pursuant to the Agreement. Nevertheless, on February 8, 2008, he filed a lawsuit alleging that his termination violated the FMLA. Merrill Lynch responded by arguing that Butler had waived his FMLA claims.
The Court’s Analysis
The Court focused on 29 C.F.R. § 825.220(d) (the Regulation), which states, in relevant part: “[e]mployees cannot waive, nor may employers induce employees to waive, their rights under the FMLA.” Federal courts analyzing this Regulation have been unable to reach agreement as to the scope of the prohibition against releasing and waiving FMLA claims.
In 2006, the Fourth Circuit Court of Appeals held that the Regulation prohibits the release and waiver of future FMLA rights and claims based on past alleged violations of the FMLA, unless prior approval is obtained from the Department of Labor or a court. Taylor v. Progress Energy, Inc., 493 F.3d 454, 463 (4th Cir. 2006). The Butler court, however, rejected this interpretation of the Regulation. Instead, the Northern District of Illinois found the Fifth Circuit’s reasoning in Faris v. Williams WPC-I Inc., 332 F.3d 316, 320-21 (5th Cir. 2003), and the Eastern District of Pennsylvania’s decision in Dougherty v. Teva Pharmaceuticals USA, Inc., No. 05-2336, 2007 WL 1165068 (E.D. Pa. Apr. 9, 2007), to be persuasive.
In Faris, the Fifth Circuit held that the Regulation only prohibits an employee from waiving his or her “rights under the FMLA.” The Faris court further stated that “rights” are distinct from “causes of action,” which are designed to protect “rights.” As such, the Fifth Circuit Court of Appeals concluded that the Regulation does not prohibit an employee from settling his or her claims or waiving a cause of action for damages resulting from a previous violation of rights.
Like the Fifth Circuit Court of Appeals, the Dougherty court stated that “rights” are different than “claims,” which materialize after a violation of a right. According to the Dougherty court, “[b]y electing to waive (or settle) a claim that has accrued, an employee is not waiving any proscriptive or substantive rights under the FMLA.”
Relying on the reasoning in Faris and Dougherty, the Northern District of Illinois held that the Regulation does not prohibit waivers of past FMLA claims as part of a severance agreement. The court noted that its holding is in contrast to the 2002 Northern District of Illinois decision in Dierlam v. Wesley Jessen Corp., 222 F.Supp.2d 1052 (N.D.Ill. 2002), but reasoned that Dierlam was decided before other courts had an opportunity to thoroughly examine this issue.
What This Means for Illinois Employers
Although the issue of FMLA waivers has not been decided by the Seventh Circuit Court of Appeals, the Northern District of Illinois’ decision in Butler is a victory for Illinois employers. Before this decision, Illinois employers had reason to be concerned about whether waivers of FMLA claims in severance agreements would be enforceable. Employers in the Northern District of Illinois can now expect severance agreements containing FMLA waivers to be effective. Employers should keep in mind, however, that the Seventh Circuit Court of Appeals has not yet addressed the issue and any ruling by that Court would take precedence over the Butler decision.
For more information, contact:
Kelli A. Fitzgerald
312.578.6602
kelli.fitzgerald@hklaw.com
toll free: 1.888.688.8500
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