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Tuesday, October 11, 2005

Enforceability of Release of FMLA Claims

Is a release of an employee's retrospective and prospective claims under the Family Medical Leave Act ("FMLA") enforceable?  The Fourth Circuit says no; the Fifth Circuit says yes.

In Taylor v. Progress Energy, Inc., 415 F.3d 364 (4th Cir. 2005), the Fourth Circuit recently held that an  employee's retrospective and prospective FMLA claims cannot be waived or settled by private agreement between the employee and employer.  In Taylor, an employee was terminated based upon medical related absences, which her employer misinformed her were not covered by the FMLA.  Upon her termination from employment, she signed a general release in exchange for additional severance and benefits.  The Fourth Circuit held that, to the extent it waived FMLA claims, the general release was not enforceable because the FMLA regulations (CFR 825.220(d)) do not allow an employee to waive her rights under the FMLA.

The Fourth Circuit disagreed with the analysis of the Fifth Circuit in Faris v. Williams WPC-I, Inc., 332 F.3d 316 (5th Cir. 2003).  In Faris, the Fifth Circuit interpreted the regulations to include only current employees, and held that a former employee could waive FMLA claims.

From law.com, drafting advice to employers in the Fourth Circuit:

unless they want to invite scrutiny by seeking approval of the DOL or a court. . ., employers should modify their general release agreements used within these states to remove any reference to the waiver of FMLA claims and avoid the catchall language that was deemed unenforceable in Taylor.  The result is that employers in the 4th Circuit that pay severance to their departing employees in exchange for a general release of claims do so fully aware of the fact that the employees may turn around and sue for violations of the FMLA.

Alternatively, for employers in the Fourth Circuit and circuits that have not yet decided the issue:

employers can choose to leave their agreements unchanged and continue to condition eligibility for severance pay upon a release of all claims, including those arising under the FMLA. Employers opting for this approach run the risk that this provision will be invalidated. Therefore, these employers should ensure that they the release contains "severability" language stating that if one provision of the agreement is struck down, the remaining provisions remain intact.

Another possible approach:

eliminate reference to the FMLA, retain the catchall provision and add a sentence that the general release agreement applies to the waiver of claims "except to the extent such waiver is prohibited by law." At such time as an employee who signs a release commences an FMLA action, the employer can determine whether it wishes to raise the general release agreement as an affirmative defense to the employee's claims.

[Meredith R. Miller]

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