InsideCounsel » September 2007
Fourth Circuit Invalidates FMLA Waivers
Barbara Taylor had worked for Progress Energy for seven years when she developed health problems that took her out of work intermittently...
Barbara Taylor had worked for Progress Energy for seven years when she developed health problems that took her out of work intermittently. She eventually needed surgery and six weeks of recovery. The missed work counted against her substantially during a later performance evaluation; a supervisor told Taylor most of her absences didn't qualify for FMLA leave. Months later, with layoffs looming, Taylor discovered that her absences did qualify and asked her supervisor to amend her performance evaluation. The supervisor never updated her file, and the company laid her off.
Progress offered to give Taylor a severance package in return for signing a general release of claims against the company. Taylor signed, but turned around and sued anyway, alleging FMLA violations. The district judge dismissed the case. But the 4th Circuit reversed in 2005, ruling that the waiver was unenforceable under section 220(d) of FMLA, which says "Employees cannot waive, nor may employers induce employees to waive, their rights under FMLA."
The decision troubled many employers that routinely ask employees to waive claims when they leave a job and shocked the Department of Labor (DOL), which stepped into the suit and asked the court for a rehearing, arguing the decision ran contrary to its interpretation of FMLA.
Yet despite those protestations, in Taylor v. Progress Energy Inc. (Taylor II), handed down July 3, the court said workers cannot sign away their right to sue under the FMLA unless they have permission from a court or the DOL.
Unable to include FMLA in their waivers, employers in the 4th Circuit will have to find creative alternatives to limit their liability—or simply hope the issue doesn't come up.
"There isn't a good answer right now, other than [to] write your Congressmen and try to get them to change the law," says Edmund McKenna, a partner at Ford & Harrison and counsel to the North Carolina Retail Merchants Association, an amicus curiae for the defense.
Types of Rights
In Taylor II the DOL, which has responsibility for administration and rulemaking with regard to the FMLA, argued the statute only forbids employees from waiving their right to sue prospectively. A waiver of retrospective rights—rights to sue after employment has ended, as in Taylor's case—would be perfectly legal under the DOL's interpretation of FMLA. The DOL also argued that requiring it to approve these waivers would create a severe backlog, burdening everyone involved. In the 2003 case Faris v. Williams WPC-I Inc., the 5th Circuit adopted that reasoning to allow employees to retrospectively waive FMLA rights.
But the 4th Circuit rejected these arguments. Judge M. Blane Michael said the department's interpretation of the law was inconsistent with the "plain language" of the regulation, which does not distinguish between prospective and retrospective rights. The majority also suggested that FMLA would be toothless without the right to sue retrospectively.
"[The DOL's] interpretation would undermine the purpose of the FMLA � and turn the FMLA's substantive rights into empty and unenforceable pronouncements," Michael wrote.
