In July 2007, the Fourth Circuit Court of Appeals held in Progress Energy v. Taylor, 493 F.3d 454 (4th Cir. 2007), that, under the Department of Labor’s (DOL’s) regulations and the Family and Medical Leave Act (FMLA), employees cannot waive their rights under the FMLA in a private agreement, such as a severance agreement. To waive FMLA rights, the Fourth Circuit held that the agreement must first be court- or DOL-approved. Progress Energy, supported by several other business groups, appealed the decision to the U.S. Supreme Court, citing a split between the Fourth and Fifth Circuits. On January 14, 2008, the Supreme Court asked the DOL to submit its view on the issue. This type of request is often a signal that the Supreme Court will review the decision.
The background of the case is relatively simple. Taylor, the employee, was terminated by Progress Energy as part of a reduction in force in which past performance evaluations were used to determine which employees to terminate. Taylor received poor performance evaluations after several health-related absences that Progress Energy determined were not FMLA protected. Although Taylor tried to have the evaluations changed, she was unsuccessful. Upon her termination, Taylor and Progress Energy entered into a severance agreement where Taylor received $12,000 in exchange for waiving all rights to litigate. The agreement did not specifically mention Taylor’s rights under FMLA, but it referenced rights under “other federal laws.”
Despite the agreement, Taylor sued in federal court, claiming retaliation for exercising her FMLA rights. The district court found that her suit was barred by the waiver in the severance agreement, but the Fourth Circuit reversed. In the Fourth Circuit’s view, the FMLA’s enforcement provisions were designed by both Congress and the DOL to mirror those of the Fair Labor Standards Act (FLSA). For its part, the FLSA requires that both retrospective and prospective waivers have court or DOL approval.
Ironically, when the case was before the Fourth Circuit, the DOL filed an amicus (or friend-of-the-court) brief that sided with the employer. In that brief, the DOL argued that only prospective waivers require court or DOL approval and that the applicable regulations permit settling disputed FMLA claims retrospectively or after the fact. The DOL further asserted that its interpretation of the FMLA regulations should be given deference. I n interpreting the regulations in this way, the DOL argued that the FLSA is not similar to the FMLA because the FLSA, dealing with minimum wage and overtime issues, is designed to protect workers with the least bargaining power at the bottom of the pay scale. The FMLA, in contrast, protects all workers and is similar to other employment statutes that allow retrospective settlements.
In light of the DOL’s position before the Fourth Circuit, the Supreme Court’s request for input from the department gives employers a reason to be optimistic that the Court will accept the appeal and issue an employer-friendly ruling. Should the Supreme Court refuse to hear the case, as Taylor’s attorney has urged, the enforceability of FMLA releases in Ohio will be open to question – at least until the Sixth Circuit weighs in. With any luck, the Supreme Court will make Sixth Circuit review unnecessary.