The FMLA Blog

Supreme Court Declines Case Addressing Enforceability of FMLA Waivers in Severance Agreements

On Monday, the Supreme Court declined, without comment, to review the decision of the Fourth Circuit in Progress Energy v. Taylor, 493 F.3d 454 (4th Cir. 2007), which questioned whether the anti-waiver provisions of 29 CFR 825.220(d) preclude the private settlement or release of claims under the FMLA absent the approval of a court or the U.S. Department of Labor.

29 CFR 825.220(d) provides:

Employees cannot waive, nor may employers induce employees to waive, their rights under the FMLA.

In Progress Energy, the Fourth Circuit strictly interpreted this language to preclude all FMLA settlements that were not approved by a court or the U.S. Department of Labor.  The U.S.Department of Labor and most other courts do not agree with the Fourth Circuit's restrictive reading of 825.220(d).  The DOL and other courts would allow an employee to settle an an accrued FMLA claim without the involvement of a court or the U.S. Department of Labor.  

The DOL and all courts agree that an employee may not prospectively waive their FMLA rights.  For example, an employment agreement that required an employee, as a condition of employment, to waive their right to take FMLA leave in the future, or only take 6 weeks a year instead of 12, is unenforceable. 

On behalf of the Bush administration, former Solicitor General Paul Clement urged the Supreme Court to deny the petition for certiorari.  After observing that the Bush administration viewed the Fourth Circuit's opinion was incorrect, Clement argued that the court should turn down the case because the Labor Department was revising the existing FMLA regulations to make it clear that waiver prohibition only applies to prospective rights and not past claims.      

Comment:    The decision of the Supreme Court keeps the split in the circuits on this issue alive, at least for the time being.  It will be interesting to see what happens when the Fourth Circuit gets the opportunity to revisit the issue after the DOL has issued its revised anti-waiver provision.  Until then, to be valid, FMLA settlements in the fourth circuit (N. and S. Carolina, Virgina, W. Virginia & Maryland) require court or DOL approval.

Supreme Court Invites U.S. Solicitor General to Express U.S. Government Position on Waiver of FMLA Claims by Settlement

On Monday, January 14, 2008, the Supreme Court issued an Order inviting the Solicitor General of the United States to file a brief expressing the views of the United States Government in Progress Energy, Inc. v. Taylor.  In that case, the Fourth Circuit held that the anti-waiver provisions of 29 CFR 825.220(d) prohibit an employee from waiving their right to sue for violation of the FMLA as part of a release without the assistance of the U.S. Department of Labor or a court.  Progress Energy petitioned the U.S Supreme Court to review the decision of the Fourth Circuit on October 22, 2007.  The recent Order suggests that the Supreme Court may agree to grant the petition and address the issue. 

Comment:  There is a split in the circuit courts regarding the enforceability of employee releases of FMLA claims.  The Fourth Circuit in Progress Energy has essentially found such agreements unenforceable. The Fifth Circuit in Faris v. Williams WPC-1, Inc., 332 F.3d 316 (5th Cir. 2003) has found that an employee may waive their procedural right to sue for FMLA violations. They may not, however, waive substantive FMLA rights, such as the right to take leave.  Perhaps the Supreme Court will resolve the issue.

The Progress Energy and Faris decisions are addressed in prior posts and may be found under Wavier of rights.

Fourth Circuit Reaffirms that FMLA Anti-Waiver Provisions Prohibit Prospective and Retrospetive Waiver or Release of FMLA Claims Absent Prior DOL or Court Approval

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.    

Waiver of FMLA Claims in Severance Agreement Enforceable

A federal court recently held that the FMLA does not prohibit an employee from waiving the right to sue for past violations of the FMLA in a severance agreement.  Employees may not, however, prospectively waive substantive FMLA rights (i.e., the right to take leave) or procedural FMLA rights (the right to sue). 

Arbitration of FMLA Claims Pursuant to Employment Contract Enforceable

In Moncrief v. The Terminix International Co. Limited Partnership, No. 06-1047-JTM, 2006 U.S. Dist. Lexis 43816 (D.Kan. June 27, 2006), the court found that Moncrief must arbitrate her FMLA claims in accordance with an employment and arbitration agreement she signed as a condition of her employment.  The Agreement requires arbitration of all employment disputes.  The court, citing the Supreme Court, noted that compelled arbitration is permitted for alleged violations of federal employment statutes where a valid employment contract so requires.  The court distinguished the enforcement of a broad arbitration provision in a valid employment contract from a wavier provision in a severance agreement, noting Fourth Circuit case law that agreeing to arbitration is entirely different from agreeing to waive a claim. 

Comments:  The anti-wavier provisions of 29 CFR 825.220(d) do not apply to valid, pre-employment agreements to arbitrate FMLA claims in lieu of civil suit.

 

Severance Agreement Wherein Employee Waives Right to Sue Employer for FMLA Violations Unenforceable

In Dougherty v. Teva Pharmaceuticals USA, No. 05-2336, 2006 U.S.Dist. LEXIS 62179 (E.D.Pa. Aug. 29, 2006) found that section 825.220(d) prohibits an employee from waiving their right to sue for FMLA violations through a severance agreement.  825.220(d) provides that:

Employees cannot waive, nor may employers induce employees to waive their rights under [the] FMLA.

In Dougherty, Teva’s human resources manger suggested that Dougherty leave Teva due to continuing conflicts with her supervisor.  Plaintiff was subsequently provided a Separation Agreement and General Release.  The Separation Agreement provided that, in exchange for agreeing to its terms Dougherty would receive one month’s salary and continued health insurance through COBRA.  The Agreement released all claims against Teva arising out of her employment.  Dougherty initially indicated that she did not want to leave the company but wanted to take a leave of absence.  Teva sweetened the offer by increasing the compensation to two months salary and two months of continued COBRA coverage.  Dougherty accepted the deal and signed a modified Agreement.  A week after she signed the Agreement and took the money Dougherty called her employer and stated that she wanted to revoke the Agreement.  She subsequently filed suit alleging violation of the FMLA.            

The court noted that whether an employee can, as part of a severance agreement, waive his or her right to sue for violations of the FMLA was a matter of first impression in the Third Circuit.  The court noted that the circuits are split on this issue.  The Fourth Circuit held that the plain language of 825.220(d) prohibits any waiver of the substantive and protective rights conferred by the FMLA unless approved by the DOL or a court.  The Fifth Circuit found that separation agreements were enforceable because 825.220(d) prohibited only the prospective wavier of FMLA “rights” (e.g., leave and reinstatement) and that the ability to file a civil suit was not such a “right” but merely a means of enforcement.  The court in Doughtery found the decision of the Fourth Circuit more persuasive.  The court went on to reject the argument that the plaintiff ratified the agreement by retaining the two months severance pay, finding that the third Circuit has concluded that “concepts of ratification and tender back are inapplicable to federal remedial statutes.”

Comment:    The courts are split on the enforcement of severance agreements waiving FMLA rights.  To avoid financing future litigation against it, employers should determine whether such agreements are enforceable in their State before entering into such agreements.