Federal Appeals Court Rejects Waiver of FMLA Claims Not Approved by DOL or Court

Tuesday, November 1, 2005
by Jackson Lewis

In a potentially far reaching decision on the validity of waiver and release clauses in private agreements, including individual or group separation agreements, a federal appeals court has ruled that unapproved waivers of claims under the federal Family and Medical Leave Act are unenforceable.

In Taylor v. Progress Energy, Inc., (4th Cir. July 20, 2005), the United States Courts of Appeals for the Fourth Circuit held that, without prior U. S. Department of Labor or court approval, the FMLA bars the prospective or retrospective waiver or release of FMLA claims. Under the ruling, FMLA waivers or releases must be obtained using the same process followed for waivers or releases under the Fair Labor Standards Act. The broad ruling applies even if waivers were negotiated through attorneys representing employees.

Facts of the case
Beginning in April 2000, the employee missed a significant amount of work due to severe pain and swelling in her legs. Her employer subsequently gave her a poor productivity rating because of the absences, despite the fact that she had requested, and was denied, FMLA leave on numerous occasions. With a planned company layoff pending, the employee asked that her performance evaluations be corrected to reflect that the absences qualified as FMLA leave. Her requests were denied and, in May 2001, based on the poor evaluations, the employee was terminated. When terminated, the employee received certain benefits in exchange for a general release waiving her right to bring any federal claims against the company.

When the employee later sued the employer for a violation of her FMLA rights, the company offered the release as a complete defense to the claims and requested summary judgment against the employee. However, the employee argued that the Department of Labor's FMLA regulations, specifically 29 C.F.R. 825.220(d), barred the enforcement of the release. That section of the regulations provides that "employees cannot waive, nor may employers induce employees to waive, their rights under the FMLA." In granting summary judgment for the company, the trial court followed the reasoning of the U.S. Court of Appeals for the Fifth Circuit in another case holding that 29 C.F.R. 825.220(d) did not apply to the retrospective waiver or release of FMLA rights, or claims of discrimination or retaliation for exercising FMLA rights (see Faris v. Williams WPC-I, Inc., 332 F.3d 316 (5th Cir. 2003)).

Fourth Circuit Decision
Reversing the trial court and rejecting the rationale of the earlier Fifth Circuit decision, the Fourth Circuit held that the DOL regulation s plain language prohibits the retrospective and prospective waiver or release of an employee's substantive and prospective FMLA rights. Under the FMLA, an employee has the substantive right to take up to 12 weeks of unpaid leave, and the prospective right to be free from discrimination or retaliation when doing so.

The Fourth Circuit agreed with the DOL that Congress intended the FMLA to set a minimum standard for family and medical leave and, therefore, was more similar to the FLSA than employment discrimination statutes such as Title VII. Based on this view, the Fourth Circuit also agreed the FMLA's waiver provisions should track those under the FLSA. Under the FLSA, to be enforceable, a waiver of substantive or prospective rights must have DOL or court approval.

What Employers Should Do
While many employers view FMLA claims as employment discrimination claims, and therefore obtain waivers of FMLA claims through the same agreements used to obtain waivers of employment discrimination claims, this ruling rejects such an approach. Until this conflict between the Circuits is resolved by legislation or the United States Supreme Court, employers seeking to settle potential claims under the FMLA should consider including the Department of Labor in that process or recognize the risk that a waiver not approved by the DOL or a court may not bar a subsequent FMLA (or FLSA) claim.
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