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Federal Appeals Court Bars Waiver of FMLA Rights

July 16, 2007

On July 3, 2007, the U.S. Court of Appeals for the Fourth Circuit ruled that a Department of Labor (“DOL”) regulation implementing the Family and Medical Leave Act of 1993 (“FMLA”) prohibits both the prospective and retrospective waiver of any FMLA right. Taylor v. Progress Energy Inc., 2007 WL 1893362 (4th Cir. July 3, 2007).

The case arose when a terminated employee, Barbara Taylor sued her former employer, Progress Energy, Inc., for violating the FMLA. Taylor alleged that Progress had denied her leave to which she was entitled under the FMLA and had retaliated against her for asserting a claim for FMLA leave. Progress asserted that Taylor’s claim was barred because, upon her termination and in exchange for a severance package, she signed a general release of all claims. The district court dismissed the lawsuit, but the Court of Appeals reversed that decision in 2005, finding waivers of FMLA rights are not permitted. Upon reconsideration, the Court of Appeals has now reaffirmed its prior ruling overturning the dismissal of Taylor’s lawsuit.

The DOL regulation at issue, 29 C.F.R. § 825.220(d), provides that “Employees cannot waive, nor may employers induce employees to waive, their rights under FMLA.” The DOL, supporting the position of the employer in the Taylor case, argued that its regulation prohibits only prospective waivers of FMLA rights, but not waivers of past violations. For example, an employer clearly may not condition an employee’s hire upon his or her agreement to waive any future FMLA entitlement; on the other hand, the DOL asserted, it is entirely permissible for an employer to secure a waiver of any claim the employee may have based on past violations – in essence, to enter into a settlement resolving the employee’s claims. In support of its position, the DOL attempted to analogize the FMLA to Title VII and the Age Discrimination in Employment Act (“ADEA”), under which retrospective waivers of claims are permitted. The court rejected the DOL’s argument, holding that “the plain language of section 220(d) precludes both the prospective and retrospective waiver of all FMLA rights, including the right of action (or claim) for a past violation of the Act.” The court observed that unlike the FMLA, neither Title VII nor the ADEA has an implementing regulation prohibiting waivers. The court also reasoned that unlike these other federal statutes, FMLA “provides a ‘minimum floor of protection’ for employees by guaranteeing that a minimum amount of family and medical leave will be available annually to each covered employee.” Permitting a retrospective waiver of FMLA claims, the court concluded, would be less expensive than compliance for employers, and would therefore “encourage noncompliance.”

The outcome in Taylor is troubling for employers. Under this ruling, an employer who obtains a general release from an employee in exchange for severance or other consideration will not necessarily be insulated from claims under the FMLA. Other lower federal courts have reached the opposite result and have sustained retrospective waivers of FMLA claims. Because the result in Taylor turned largely upon the court’s interpretation of the DOL regulation, it is possible that the DOL will revise its regulation to more clearly state its position that the FMLA permits retrospective waivers. Otherwise, this disagreement among the lower federal courts may have to await a definitive decision by the Supreme Court.