Business Owners Beware: Employees Cannot Waive FMLA Claims - ABA YLD 101 Practice Series

By Anastasia E. Thomas

Currently, there is a split in the circuit courts regarding the enforceability of employee releases of Family Medical Leave Act ("FMLA") claims. The FMLA provides 12 work weeks of unpaid leave to any employee who is employed by an employer with 50 or more employees; employees are eligible for FMLA leave once they have worked for an eligible employer for at least 1,250 hours and one year. In the Fourth Circuit, under Taylor v. Progress Energy Inc., 2007 WL 1893362 (4th Cir. 2007), employees may not waive any FMLA claims without court or Department of Labor ("DOL") approval. In contrast, the Fifth Circuit in Faris v. Williams WPC-1, Inc., 332 F.3d 316 (5th Cir. 2003) has found that employees may waive their procedural rights to sue for FMLA violations while they may not waive substantive FMLA rights, such as the right to take leave. It is likely that the Supreme Court will be asked to resolve the issue of conflicting interpretations in the near future.

In Taylor, Barbara Taylor was a management assistant at Progress Energy ("Progress") who missed a number of work days due to medical testing and treatment. When she asked her employer about the possibility of taking FMLA leave, she was erroneously informed she was ineligible. Due to medical complications, Taylor missed more time from work. She then received a written warning from her employer. Subsequently, Taylor learned she needed immediate surgery. When she notified her employer and asked whether any of the time she missed from work qualified as FMLA leave, she was again erroneously advised that none of the missed time qualified. Taylor went through with surgery and was on leave for 6 weeks. She requested FMLA leave for the entire period but was credited for only 4 of the 6 weeks. After she came back to work, Taylor received a poor performance evaluation and below-average raises, so she then contacted the DOL. Subsequently, she asked the company to correct her performance evaluation so that it indicated her absences were qualified under the FMLA. The company denied Taylor's request, and she was terminated 2 weeks later. At that time, the company presented Taylor with a release and severance agreement providing for 7 weeks of paid leave and additional compensation if she signed the document releasing, among other claims, "all claims" under "any other federal . . . law." Taylor signed the release and received a $12,000 check.

After her termination, the DOL advised Taylor to try to resolve her concerns directly with Progress. Taylor contacted her former employer, who corrected her performance evaluation but did not address her other issues. As a result, she filed suit against Progress under the FMLA alleging that Progress violated the statute by failing to inform her of her rights, improperly denying her requests for medical leave, terminating her employment because of medical absences, and terminating her employment because she complained about the company's violations of the FMLA. The trial court granted summary judgment to the former employer, holding that Taylor's waiver of claims was valid and enforceable, and that Taylor had waived any claims under the FMLA. The Fourth Circuit reversed the trial court's decision.

The regulation at issue in Taylor, Faris, and other similar cases provides that "[e]mployees cannot waive, nor may employers induce employees to waive, their rights under the FMLA." In Taylor, the Fourth Circuit held that: (1) employees cannot waive their FMLA rights prospectively or retrospectively; (2) the regulation refers to all rights under the FMLA, including the right to bring an action or claim for a violation of the FMLA; and (3) the regulation comports with the statutory language making it illegal for employers to interfere with, restrain, or deny the exercise of "any right" provided under that statute and that interpreting the regulation's use of the word "rights" to include legal claims is consistent with common usage. Finally, the Court held that the regulation's plain language prohibits the release or waiver of retrospective and prospective FMLA rights, whether substantive or proscriptive, absent prior approval of the DOL or the court.

In its analysis, the Taylor Court focused on the FMLA's similarity to the Fair Labor Standards Act ("FLSA"), rather than on employment discrimination statutes such as Title VII. The Court concluded that the FMLA was enacted to set a minimum labor standard for family and medical leave and used child labor and occupational safety laws and the FLSA as analogies. Per the Court, Congress indicated that the FMLA was to be implemented in the same way as the FLSA. The FMLA instructs the DOL to receive, investigate, and attempt to resolve FMLA violations in the same manner as violations of the FLSA. The DOL has statutory authority to approve the waiver or release of both FLSA and FMLA claims. Settlement of claims under the FLSA must be supervised by the DOL or a court. The DOL's approach in adopting a standard governing FMLA waivers reflects the standard governing FLSA waivers.

In a similar vein to Taylor, the Supreme Court held that employees cannot waive prospective rights under Title VII. Alexander v. Gardner-Denver Co., 415 U.S. 36, 51 (1974). Other federal courts have followed suit over the years and held that broad releases intended to waive prospective rights are invalid. For example, in a recent Eight Circuit case, an African American basketball coach signed an employment agreement which contained a salary guarantee plus an agreement to release and discharge the University from any liability of any nature related to his employment agreement and his termination for convenience by the University. Richardson v. Sugg, 448 F.3d 1046 (8th Cir. 2006). Seventeen years later, the coach sued for race discrimination under Title VII after he was terminated.

Ultimately, the Eighth Circuit held that the coach's prospective waiver of Title VII claims was invalid. Thus, the coach was permitted to sue the University for race discrimination, despite the release language in his employment agreement. The Court explained that allowing employers to pen a deal with an employee to waive prospective claims strikes at the heart of Congress' aim to deter discriminatory conduct by employers. Allowing prospective waivers would give employers a license to discriminate.

Whether or not other Circuits, and ultimately the Supreme Court, will adopt the Taylor interpretation remains to be seen. As for now, it is safer for employers to assume that the Taylor interpretation is binding, as opposed to relying upon the "employer-friendly" Fifth Circuit interpretation.

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