A recent decision of the Fourth Circuit has made it all but impossible to settle FMLA claims absent prior approval of the Department of Labor or a court. In Taylor v. Progress Energy, Inc., No. 04-1525, 2007 U.S. App. LEXIS 15846 (4th Cir. July 3, 2007), the court addressed on rehearing whether the anti-waiver provisions of 29 CFR 825.220(d) prohibit the prospective and retroactive waiver or release of FMLA claims by an employee. The regulation reads:
Employees cannot waive, nor may employers induce employees to waive, their rights under FMLA.
In a prior vacated opinion, the Fourth Circuit held that the regulation prohibits both the prospective and retroactive waiver of all FMLA rights, substantive and procedural, unless the waiver has the prior approval of the Department of Labor or a court. Taylor v. Progress Energy, Inc., 415 F.3d 364, 369 (4th cir. 2005), vacated, No. 04-1525, 2006 U.S. App. LEXIS 15744 (4th Cir. June 14, 2006). Progress Energy filed a petition for rehearing en banc, and the Secretary of Labor filed an amicus brief in support of that petition. The DOL disagreed with the Fourth Circuit's interpretation of 29 CFR 825.220(d). The Fourth Circuit granted the rehearing petition to consider the DOL's position. The DOL argued that 825.220(d) bars only the prospective waiver of FMLA claims. Under the DOL's interpretation, a claim is not a right subject to the anti-waiver provisions of 825.220(d).
The Court disagreed with the DOL's interpretation of 825.220(d). The Court noted that the plain terms of the anti-waiver provisions prohibit the waiver, i.e., release or settlement, of prospective and retroactive FMLA rights. FMLA rights include both procedural and substantive rights granted by the FMLA. Procedural rights include the right to file suit for an FMLA violation. The Court rejected the DOL's argument distinguishing the right to bring a claim as something other than an FMLA procedural or substantive right. Like FLSA minimum wage claims, the court found that permitting private settlements of FMLA claims for less than the statutory minimum would frustrate the legislative purpose of the Act to provide a minimum amount of family and medical leave to eligible employees.
Comment: The decision is well-reasoned. The decision reopens the split in the courts on the retroactive release of FMLA claims. All courts have interpreted 825.220(d) as prohibiting the prospective waiver of FMLA rights.
Employers should consult counsel before seeking a release or settlement of an FMLA claim. In light of the decision in Taylor, private releases or settlements of FMLA claims may no longer be effective. They are certainly no longer effecive in the Fourth circuit. Absent court or DOL supervision, an employer runs the considerable risk of financing the litigation against itself if it elects to pay an employee to release his or her FMLA claim. The employee may simply turn around and use the money to hire an attorney to sue the employer for violation of the FMLA.
The Fourth Circuit covers the Virginia's, the Carolina's and Maryland.
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