Highest Federal Maryland Court Decides That Employees Cannot Waive FMLA Claims
August 2, 2007

Highest Federal Maryland Court Decides That Employees Cannot Waive FMLA Claims


In Taylor v. Progress Energy Inc., 2007 WL 1893362 (4th Cir. 2007), the United States Court of Appeals for the Fourth Circuit, the highest federal appeals court in Maryland, held that employees cannot waive claims under the Family Medical Leave Act (?FMLA?) without court or Department of Labor (?DOL?) approval. The FMLA provides 12 workweeks of unpaid leave to any employee who is employed by an employer with fifty (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.


The Facts


Barbara Taylor was a management assistant at Progress Energy who missed a number of work days due to medical testing and treatment. When she asked her employer about the possibility of FMLA leave, she was erroneously informed she was ineligible because she had been absent from work for more than five consecutive days. Due to medical complications, Taylor missed more time. She received a written warning that stated she had exceeded the company's average sick time and had to improve her attendance. Taylor then learned she needed immediate surgery. When she advised her employer and asked whether any of the time she missed from work qualified as FMLA leave, she was again erroneously advised she did not qualify because she had been out of work for more than five consecutive days. Taylor then had surgery and was on leave for six weeks. She requested FMLA leave for the entire period but was credited for only four of the six weeks.


Shortly thereafter, based on these health-related absences, Taylor received a poor
performance evaluation and a below-average raise. When Taylor learned the company was planning a reduction in force, she became concerned and contacted the DOL. She also 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. Two weeks later, she was terminated. At that time, Progress presented Taylor with a release and severance agreement providing for seven 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.


Taylor again contacted the DOL concerning the company's failure to designate her
health-related absences as FMLA leave, the negative performance evaluation, and the company's use of that evaluation in its decision to terminate her. The DOL advised her to try to resolve her concerns with the company. Taylor contacted her employer, who corrected her performance evaluation but did not address her other issues.


Taylor then filed suit against Progress under the FMLA alleging 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 Court's Decision


The trial court granted summary judgment to the 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 provides ?[e]mployees cannot waive, nor may employers induce
employees to waive, their rights under the FMLA.? Holding that employees cannot waive their FMLA rights prospectively or retrospectively, the Fourth Circuit held that the regulation refers to all rights under the FMLA, including the right to bring an action or claim for a violation of the Act. The Court found that 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. The Fourth Circuit 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.


Claims Cannot Be Settled Without DOL or Court Approval


In concluding that the regulation was a permissible construction of the FMLA and not
arbitrary or capricious, the 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 FMLA was enacted to set a minimum labor standard for family and medical leave and was analogized to child labor and occupational safety laws as well as the FLSA. 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 it does with 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 that tracks the standard governing FLSA waivers.


Employer's Remedies


This decision will have a negative impact on an employer's ability to settle potential FMLA claims without court or DOL involvement. Employers will have to contact the DOL to obtain approval of the settlement of any FMLA claim. Based upon this decision, settlement of FMLA claims without court or DOL approval will make the waiver of claims and general release ineffective against FMLA lawsuits.


Waiver of Prospective Claims


In a similar vein, the Supreme Court held long ago 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 case from the United States Court of Appeals for the Eighth Circuit, an African American basketball coach signed an employment agreement which contained a salary guarantee and an agreement for the coach 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.


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 the Congress' aim to deter discriminatory conduct by employers. Allowing prospective waivers would give employers a license to discriminate.


Some Practical Tips


The law with respect to releases of employment claims has never been simple, but it is becoming increasingly more complicated. A release that is valid under one statute may be unenforceable, and even itself a violation, under another statute. The adage that an ounce of prevention is worth a pound of cure was never more apropos; contact labor and employment counsel if you have any doubt.

If you have questions, please contact:
Frank Laws or Sara Levinson

(410) 752-2468