Thursday, July 21, 2005

FMLA claims cannot be settled without court or DOL approval

Yesterday in Taylor v. Progress Energy, Inc. , No. 04-1525 (4th Cir. July 20, 2005) (PDF), the Fourth Circuit held that "without prior DOL or court approval, 29 C.F.R. § 825.220(d) bars the prospective and retrospective waiver or release of the FMLA’s substantive and proscriptive rights." This ruling places FMLA claims in the same boat as FLSA claims. While claims under Title VII and the ADEA may be waived by private agreements (including employee severance agreements) out of court, FLSA and FMLA claims cannot.

In Taylor, the employee accepted a $12,000 severance package and signed a release of all claims. She then sued her employer for violating both her substantive FMLA rights and her proscriptive FMLA rights to be free from retaliation for complaining about the employer's FMLA abuses. concerned. The district court, relying on Faris v. Williams WPCI, Inc., 332 F.3d 316 (5th Cir. 2003), held that § 825.220(d) prohibits only the prospective waiver of substantive FMLA rights. Thus, according to the district court, the regulation did not apply to (1) the retrospective waiver or release of FMLA claims or (2) the waiver or release of claims that an employer has discriminated or retaliated against an employee for the exercise of her substantive FMLA rights. The Fourth Circuit disagreed with the district court and split with the Fifth Circuit's interpretation in Faris:
We disagree with the district court’s interpretation of § 825.220(d). The regulation’s plain language prohibits both the retrospective and prospective waiver or release of an employee’s FMLA rights. In addition, the regulation applies to all FMLA rights, both substantive and proscriptive (the latter preventing discrimination and retaliation). Finally, the DOL, by recognizing that the FMLA’s enforcement scheme is analogous to that of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., has indicated that § 825.220(d) permits the waiver or settlement of FMLA claims only with the prior approval of the DOL or a court.
It would be nice if there were a summary proceeding available in the federal courts to obtain approval of FMLA and FLSA settlements. Have a special master appointed who could review the facts and the amount of the settlement, and give a speedy thumbs up or thumbs down would be great. Most employers balk at the prospect of involving the DOL in their affairs just to settle one employee's claim. But if an employer realizes it has some exposure and wants to settle with the employee, they shouldn't have to involve the courts or the DOL just to get a good release of the claims--especially where the employee is represented by counsel.

2 comments:

Julie Shank said...

I recently heard about this case while I was researching for a topic for the W. Va. Law Review. I was wondering if you thought that this would be useful if I did write about this topic. if you have any other interesting ideas for a note topic, please let me know.

Budhak0n said...

Unfortunately I am BOTH an former Law Student/practicioner AND a litigant involved in an issue where this directly applies...

In fact I'm considering submitting an Amicus Curiae to the case before the Supreme Court in favor of the Employee in Taylor.

The Problem lies herein, to allow the employer and their counsel to be the final determinant of the facts of a specific case thereby completely eliminates the intent and nature of the statute.

It is akin to a private bank being able to self determine federal regulations regarding economic and financial disclosure requirements...

If the employer is allowed to simply appoint counsel who then becomes the "trier of fact" in such a case.. the statute has no effect and imposes no additional duty other than those traditionally inferred or expressed in a typical employer employee relationship.

The courts are there for a REASON. For an employer who is often the source of the legal problem to claim that the "procedural" difficulties in defending actual litigation preclude enforcement of a federal statute is ludricrous.