NEW DEVELOPMENTS IN FLSA AND FMLA LAW - Fourth Circuit Continues to Limit Waiver of FMLA Claims
October 8, 2007
Robert W. Vyverberg- Chicago
The Fourth Circuit Court of Appeals recently issued its decision in Taylor v. Progress Energy, Inc., No. 04-1525 (July 3, 2007), holding once again that the language of a Department of Labor (DOL) regulation precludes both the prospective and retrospective waiver of claims under the Family Medical Leave Act (FMLA). The decision provides yet another reminder to employers of the special requirements that must be met to settle an FMLA claim.
The DOL regulation (Regulation) at issue states, in relevant part, as follows: “Employees cannot waive, nor may employers induce employees to waive, their rights under the FMLA.” 29 C.F.R. §825.220(d). This Regulation has been interpreted to prohibit the unsupervised waiver or settlement of FMLA claims, similar to the Fair Labor Standards Act (FLSA) model. In a 2005 decision, the Fourth Circuit ruled that the Regulation prohibits both the prospective and retrospective waiver of any FMLA rights unless prior approval of the waiver is provided by the DOL or a court. Taylor v. Progress Energy, Inc., 415 F.3d 364 (4th Cir. 2005). Because no such approval had been obtained, the Court held that the employee was free to sue her employer under the FMLA despite her prior execution of a comprehensive waiver and release. The Court’s 2005 decision was vacated last year, and the employer filed a petition for rehearing which was supported by the DOL.
On rehearing, the DOL contended that its Regulation only prohibited the prospective waiver of FMLA rights. A number of organizations filed amici briefs in support of that position, including the National Employment Lawyers Association, the Equal Employment Advisory Council, the Society of Human Resource Management and the U.S. Chamber of Commerce. The DOL argued that the word “rights” in the Regulation does not include FMLA claims, an argument undercut by an amicus brief it had filed in an unrelated case earlier this year.
In rejecting the DOL’s position, the Court identified three categories of FMLA “rights”: (1) an employee’s substantive right to both take a certain amount of leave and to reinstatement following such leave; (2) an employee’s proscriptive right not to be discriminated or retaliated against for exercising substantive FMLA rights; and (3) an employee’s remedial right to bring a claim or lawsuit for an employer’s FMLA violations. The Court concluded that the phrase “rights under the FMLA” refers to each of the above categories of rights.
The Court also recounted the DOL’s inconsistent arguments with respect to the Regulation. In its latest interpretation, the DOL turned its focus to the difference between the prospective waiver of future claims and the retrospective waiver of past claims, arguing that the latter was appropriate and permissible. The DOL attempted to analogize the FMLA to Title VII and the Age Discrimination in Employment Act (ADEA), both of which allow the retrospective waiver of claims without supervision. Disagreeing with the DOL’s argument, the Court distinguished “labor standards laws” such as the FMLA and the FLSA, with statutes such as Title VII and the ADEA, which were enacted to address and remediate discrimination against specific classes of employees. The Court also found it significant that before the Regulation was finalized, the DOL rejected the recommendation of business representatives that waivers and releases be allowed in connection with severance packages and the settlement of FMLA claims. (The plaintiff in Taylor had signed a global release in exchange for a $12,000 severance payment.) In fact, the DOL went the other direction by choosing to adopt the “no-waiver-of-rights policy” applicable to the FLSA.
Prospective vs. Retrospective Waivers
Ultimately, the Fourth Circuit found there was nothing in the language of the Regulation permitting a distinction between prospective and retrospective waivers. It reaffirmed its previous holding that without prior DOL or court approval, the Regulation bars the waiver or release of any rights under the FMLA, including the right to bring a claim or action for an FMLA violation. The Court did not believe that the additional hurdles associated with DOL or court supervision would create an undue burden or problems for parties seeking releases of FMLA claims.
Shortly after oral argument in Taylor, the DOL issued a request for information and public comment on the FMLA and its regulations. In a somewhat ambiguous fashion, the DOL specifically sought “input on whether a limitation should be placed on the ability of employees to settle their past FMLA claims.” 71 Fed. Reg. 69504, 69509-10 (December 1, 2006). This topic was not addressed in any detail in the DOL’s resulting Family and Medical Leave Act Regulations: A Report on the Department of Labor’s Request for Information, 72 Fed. Reg. 35550 (June 28, 2007).
Employers may see an amended regulation or subsequent decisions in the future which allow for the waiver of certain FMLA claims without DOL or court approval. Unless and until such a change is made, however, employers must continue to be cognizant that a release of FMLA claims will not be valid and enforceable unless approved by the DOL or a court. In addition, companies should ensure that separation and release agreements are drafted to include appropriate claims and a severability clause, to prevent an unenforceable FMLA waiver provision from invalidating an entire agreement.
The Fourth Circuit hears appeals from cases arising in Maryland, North Carolina, South Carolina, Virginia and West Virginia.
For more information, email Robert W. Vyverberg at robert.vyverberg@hklaw.com or call toll free, 1-888-688-8500.
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