Court Strikes Down Unsupervised Waiver of FMLA Claims
Employees may not waive Family and Medical Leave Act (FMLA) rights either retrospectively or prospectively without approval from the Department of Labor (DOL) or a court, at least according to the U.S. Court of Appeals for the Fourth Circuit (MD, NC, SC, VA, WV).
Barbara Taylor, an employee of Progress Energy who had a dispute with the company over whether certain past absences qualified as FMLA leave, was terminated and given monetary compensation in exchange for signing a broad release of claims. Taylor then sued Progress Energy for alleged violations of the FMLA. The company claimed that the lawsuit must be dismissed as a result of the waiver. Taylor argued that the waiver was unenforceable due to a DOL regulation implementing the FMLA that provides: “Employees cannot waive, nor may employers induce employees to waive, their rights under FMLA.” When the case first reached the Fourth Circuit in 2005, the court agreed with Taylor, holding that, in the absence of prior approval of the DOL or a court, the regulation bars the waiver of both substantive and proscriptive FMLA rights, regardless of whether the waiver is executed before or after the employer commits the FMLA violation.
The court later vacated its opinion and agreed to rehear the case in order to consider a DOL assertion that the court incorrectly interpreted the regulation and that the regulation bars only prospective waivers of FMLA rights. Courts normally defer to an agency’s interpretation of its own regulation, unless the interpretation is “plainly erroneous or inconsistent with the regulation.” When the case came back around to the Fourth Circuit, the court reaffirmed its earlier decision, finding that DOL’s interpretation was indeed inconsistent with its own regulation.
The court noted that the FMLA confers three kinds of rights: (1) substantive rights, including the right to take a certain amount of unpaid medical leave each year and the right to reinstatement upon return; (2) proscriptive rights, including an employee’s right to be free from discrimination and retaliation for exercising substantive FMLA rights; and (3) a remedial right, which is the right to bring an action or claim (i.e., to sue) to recover damages for violation of another FMLA right. Because the regulation refers to “rights under the FMLA,” it refers to all rights under the FMLA, including the right to sue, according to the court.
The court rejected DOL’s claim that the regulation prohibits employees from waiving, in advance, claims for future violations of the FMLA but permits them to waive claims for past violations. The court found nothing in the text to support that distinction, finding instead that the word “waive” has both a prospective and a retrospective connotation. The court also rejected DOL’s claim that the FMLA is like Title VII and the Age Discrimination in Employment Act, under which waivers of past violations are allowed. The court instead found the FMLA to be more like the Fair Labor Standards Act, under which waivers unsupervised by DOL or a court are not allowed.
A petition for rehearing is again expected in this case. However, until and unless the court reverses its ruling, employers at least in the Fourth Circuit are advised to consult legal counsel before attempting to secure from employees any waiver, settlement, or release of FMLA claims.
Taylor v. Progress Energy, Inc., Case No. 04-1525 (4th Cir., 7/3/07).
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