Concerns Raised Over Fourth Circuit Decision Limiting Private Resolution of FMLA Disputes

A federal appeals court ruling in Richmond that releases of Family and Medical Leave Act ("FMLA") claims by employees must be approved by a court or the U.S. Department of Labor in order to be valid may prove troubling for employers and employees alike, who now question whether they can resolve their FMLA disputes privately.

Among others in the legal community concerned about the Fourth Circuit Court of Appeals' decision in Taylor v. Progress Energy, members of the Association of Corporate Counsel ("ACC") worry that the court's holding wouldfurther complicate an already intricate web of FMLA and related leave management laws. ACC is a non-profit corporation with 22,000 individual in-house counsel members working at more than 9,000 businesses worldwide. The organization's Employment and Labor Law Committee turned to Jackson Lewis for assistance in filing a friend-of-the-court or amicus curiae brief with the United States Supreme Court, supporting Progress Energy's petition for review of the Fourth Circuit's ruling. Working with the Committee, Jackson Lewis submitted a brief on its behalf, urging the Supreme Court to consider the case.

When Barbara Taylor sued her employer, Progress Energy, for alleged FMLA violations, the district court said her lawsuit could not go forward because she previously signed a general release of all claims against the company—including FMLA claims—in exchange for a severance package. The Fourth Circuit, however, disagreed with the district court and ruled that Ms. Taylor should be allowed to pursue her claims. According to the Fourth Circuit, any waiver or release of FMLA rights to be enforceable had to be approved either by a court or by the Department of Labor ("DOL"), which administers the FMLA. Taylor v. Progress Energy, Inc., 493 F.3d 454 (4th Cir. 2007), reinstating 415 F.3d 364 (4th Cir. 2005). The severance agreement Ms. Taylor entered into with Progress Energy, like other private agreements, was not so approved. The court therefore rejected the agreement as a bar to Taylor's action.

As a result of the Taylor decision, in states covered by the Fourth Circuit (Maryland, North Carolina, South Carolina, Virginia and West Virginia), employers and employees cannot settle FMLA claims entirely on their own and, instead, must proceed with litigation. The ruling also affects an employer's willingness to enter into severance agreements with terminated employees as FMLA waivers contained within those agreements are not enforceable in the Fourth Circuit. Further, because the Fifth Circuit Court of Appeals (with jurisdiction over Louisiana, Mississippi and Texas) has ruled that the types of agreements at issue in Taylorare enforceable, employers may use different agreements in different states. This means that the compensation and benefits received by terminated employees may vary by state.

The brief Jackson Lewis filed with the Supreme Court on behalf of ACC's Employment & Labor Law Committee highlights the "damage wrought by uncertainty over the ability of employers and employees to resolve actual and potential FMLA disputes," in light of the confusion engendered by the Fourth Circuit decision. "As the DOL and courts work through [job-protected leave] issues, there must be an escape route for employees and employers having no desire to be trapped in the disruption, expense and uncertainty of employment litigation," ACC asserts in its brief.

Working with Jackson Lewis to prepare the amicus brief, ACC's Employment & Labor Law Committee amassed information from its members to help demonstrate the "real life" consequences of Taylor. An ACC member survey revealed the following, as recounted in its brief:

  • A financial services company employing approximately 10,000 employees and which normally executes more than 600 agreements a year containing FMLA waivers has been unable to complete some settlements because of the uncertainty over the validity of FMLA waivers.
  • Another financial services company employing approximately 31,000 employees has become hesitant to enter into any agreements resolving FMLA claims even where employees also would like to resolve the disputes.
  • A hospitality company employing approximately 90,000 employees has become more conservative on settlements and is allowing cases to go to litigation before obtaining a settlement approved by a court.
  • A manufacturing company employing approximately 18,000 employees has removed all references to FMLA waivers in its releases and accepted the reality that they may still be sued for such claims.
  • A manufacturing company employing approximately 3,000 employees has become more reluctant to enter into settlement agreements because of the uncertainty in the state of the law governing FMLA waivers.

Amicus Curiae Brief in Support of Petition for Certiorari

In addition to ACC's Employment & Labor Law Committee, the Society for Human Resource Management, the Chamber of Commerce of the United States and the Equal Employment Advisory Council also filed amicus curiae briefs in support of Progress Energy's petition.

The Supreme Court will likely decide whether or not to grant Progress Energy's request within the next few months. Because the Supreme Court receives thousands of certiorari petitions each term, the probability that any particular petition will be granted is low. Nevertheless, the importance of, and the widespread interest in, the issue presented may yet persuade the High Court to review the case.