Fourth Circuit Holds Department of Labor or Court Approval Required for Release of Family & Medical Leave Act Claims

Employers routinely include releases of Family & Medical Leave Act (FMLA) claims in separation agreements with departing employees. Last week, the Fourth Circuit ruled that those releases are no longer valid with respect to claims under the FMLA unless the parties get Department of Labor (DOL) or Court approval. See Taylor v. Progress Energy, Inc. (Taylor II), -- F3d --, No. 14-1525 (4th Cir. July 3, 2007).

The DOL-promulgated FMLA regulations include a provision that "Employees cannot waive, nor may employers induce employees to waive, their rights under FMLA." 29 C.F.R. 825.220(d). The DOL narrowly interprets this provision to prohibit only prospective waivers, and endorses release of retrospective FMLA claims. In a surprising move, however, the Fourth Circuit Court of Appeals, rejected this view, and interpreted the regulation to allow releases of FMLA claims only with DOL or Court approval.

The plaintiff in Taylor missed a number of days of work due to pain and swelling in her leg. After a barrage of tests, she ultimately was diagnosed with an abdominal mass, and underwent surgery to remove the mass. Her employer refused to grant the plaintiff FMLA leave for any of her pre-surgery absences, and granted FMLA leave for only four of the six weeks she was out following the surgery. The plaintiff was then given a poor productivity rating and a lower-than-average pay increase because of her health-related absences. Five months after her surgery, the plaintiff was laid off as a part of a reduction in force. She signed a severance agreement that included a general release of claims in return for approximately $12,000 in severance benefits. The plaintiff then brought suit against her former employer alleging violations of the FMLA.

The District Court granted the employer's motion for summary judgment based on the release the plaintiff had signed. In 2005, in the first Taylor decision, the Fourth Circuit Court of Appeals reversed the summary judgment order, holding that the release the plaintiff had signed was unenforceable with respect to the plaintiff's FMLA claims based on the DOL regulation prohibiting employees from waiving their FMLA rights. Taylor v. Progress Energy, Inc. (Taylor I), 415 F.3d 364 (4th Cir. 2005).

The Fourth Circuit vacated this decision in 2006, and re-heard the case on October 25, 2006. The DOL participated in the rehearing as amicus curiae, arguing that the regulations only prohibit prospective waivers, and that an...