United States Court of Appeals: On Rehearing Published
United States Court of Appeals: On Rehearing Published
PUBLISHED
BARBARA TAYLOR,
Plaintiff-Appellant,
v.
PROGRESS ENERGY, INCORPORATED,
Defendant-Appellee.
NATIONAL EMPLOYMENT LAWYERS
ASSOCIATION; NORTH CAROLINA
ACADEMY OF TRIAL LAWYERS,
Amici Supporting Appellant,
EQUAL EMPLOYMENT ADVISORY
COUNCIL; SOCIETY FOR HUMAN
RESOURCE MANAGEMENT;
CHAMBER OF COMMERCE OF THE
UNITED STATES OF AMERICA; ELAINE
CHAO, Secretary of Labor,
Amici Supporting Appellee.
No. 04-1525
COUNSEL
ARGUED: April Gordon Dawson, DAWSON, DAWSON & DAWSON, P.A., Graham, North Carolina, for Appellant. Zebulon Dyer
Anderson, SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L.L.P., Raleigh, North Carolina, for Appellee.
Howard Marc Radzely, UNITED STATES DEPARTMENT OF
LABOR, Office of the Solicitor, Washington, D.C., for Elaine Chao,
Secretary of Labor, Amicus Supporting Appellee. ON BRIEF: Robert M. Elliot, J. Griffin Morgan, ELLIOT, PISHKO, MORGAN, P.A.,
Winston-Salem, North Carolina, for National Employment Lawyers
Association and North Carolina Academy of Trial Lawyers, Amici
Supporting Appellant; Marissa M. Tirona, THE NATIONAL
EMPLOYMENT LAWYERS ASSOCIATION (NELA), San Francisco, California, for National Employment Lawyers Association,
Amicus Supporting Appellant. Stephen A. Bokat, Robin S. Conrad,
Robert J. Costagliola, NATIONAL CHAMBER LITIGATION CENTER, INC., Washington, D.C., for The Chamber of Commerce of the
United States of America; Ann Elizabeth Reesman, MCGUINESS,
NORRIS & WILLIAMS, L.L.P., Washington, D.C., for Equal
Employment Advisory Council and Society for Human Resource
Management, Amici Supporting Appellee. Steven J. Mandel, Associate Solicitor, Paul L. Frieden, Counsel for Appellate Litigation,
Lynn S. McIntosh, UNITED STATES DEPARTMENT OF LABOR,
Office of the Solicitor, Washington, D.C., for Elaine Chao, Secretary
of Labor, Amicus Supporting Appellee.
OPINION
MICHAEL, Circuit Judge:
The central issue in this appeal, now before us on rehearing, is the
meaning of 29 C.F.R. 825.220(d) (section 220(d)), a regulation
the "right to sue," that is, the right to assert a claim, is a "right under
the FMLA" that cannot be waived prospectively under the regulation.
Brief of Secretary of Labor as Amicus Curiae at 4 n.6, Dougherty,
2007 U.S. Dist. LEXIS 27200 (Dougherty Amicus Br.). We will consider the DOLs shifting arguments momentarily, but first we will
explain why the section 220(d) phrase "rights under FMLA" plainly
includes claims under the FMLA. The explanation is simple.
There are three categories of "rights under FMLA," substantive,
proscriptive, and remedial. Substantive rights include an employees
right to take a certain amount of unpaid medical leave each year and
the right to reinstatement following such leave. 29 U.S.C.
2612(a)(1)(D), 2614(a)(1). Proscriptive rights include an employees right not to be discriminated or retaliated against for exercising
substantive FMLA rights. Id. 2615(a)(2). The remedial right is an
employees "[r]ight of action," or "right . . . to bring an action" or
claim, "to recover [ ] damages or [obtain] equitable relief" from an
employer that violates the Act. Id. 2617(a)(2), (a)(4). The regulation, by specifying "rights under FMLA," therefore refers to all rights
under the FMLA, including the right to bring an action or claim for
a violation of the Act.
This reading is confirmed by the regulations relationship to
2615(a)(1) of the statute. Section 2615(a)(1) makes it "unlawful for
any employer to interfere with, restrain, or deny the exercise of or the
attempt to exercise, any right provided under [the FMLA]." (emphasis
added). The regulation implements (among others) this statutory provision, making clear that an employer cannot "induce employees to
waive[ ] their rights under FMLA" because that would interfere with
an employees exercise of, or attempt to exercise, FMLA rights. See
29 C.F.R. 825.220(d). Because 2615(a)(1) prohibits employer
interference with "any right provided under [the FMLA]," including
2617(a)(2)s right of action, the regulations phrase, "rights under
FMLA," also refers to the statutory right of action or claim.
Section 220(d)s use of the word "rights" to refer to a right of
action or claim is consistent with common usage. See Brooklyn Sav.
Bank v. ONeil, 324 U.S. 697, 705 (1945) (stating that an employees
Fair Labor Standards Act (FLSA) claim for liquidated damages is a
"statutory right" that cannot not be waived in a settlement agreement);
Blacks Law Dictionary 1348 (8th ed. 2004) (defining "legal right" as
"[t]he capacity of asserting a legally recognized claim against one
with a correlative duty to act").
For all of these reasons, section 220(d)s prohibition on the waiver
of rights includes a prohibition on the waiver of claims.
We now turn to the specifics of the DOLs evolving argument. In
its amicus brief to us the agency points out that "the regulation refers
only to the waiver of FMLA rights and makes no mention of the settlement or release of claims." DOL Amicus Br. at 4. Thus, the DOL
starts out with the assertion that section 220(d) "regulates only the
prospective waiver of FMLA rights, not the retrospective settlement
of FMLA claims." Id. But the DOL then seeks to narrow the scope
of the regulation even further by adopting the holding of Faris v. Williams WPC-I, Inc., 332 F.3d 316 (5th Cir. 2003). See DOL Amicus
Br. at 6 (noting "Departments and [Fariss] plain reading" of section
220(d)); id. at 4-5 (endorsing district courts "correct[ ] conclu[sion],"
which is identical to Fariss, as to the meaning of section 220(d)).
Faris held that the regulation prohibits only the prospective waiver of
the FMLAs substantive rights. 332 F.3d at 322.
In endorsing the Faris holding, the DOL advanced an interpretation
of the regulation that would allow an employee to waive prospectively her proscriptive and remedial rights under the FMLA. Thus, on
her first day on the job an employee could prospectively waive (1) her
proscriptive right to be free from employer retaliation for her attempts
to exercise FMLA rights and (2) her right to sue for an employers
refusal to grant FMLA leave. This interpretation would undermine the
purpose of the FMLA and section 220(d) and turn the FMLAs substantive rights into empty and unenforceable pronouncements.
The DOL acknowledged this problem in its later-filed amicus brief
in Dougherty, where it rejected Fariss determination that the regulation applies only to substantive rights. Dougherty Amicus Br. at 4 n.6.
There, the DOL recognized that the "right to sue" (or assert a claim)
is also a "right under the FMLA" that cannot be waived prospectively.1
1
Id. The DOL thus abandoned its previous position that section 220(d)
does not prohibit the waiver of any claim. According to the DOLs
most recent interpretation, an employee cannot prospectively waive
claims for future violations of the FMLA, but she can waive claims
for past violations. The relevant distinction for the DOL is therefore
between prospective and retrospective waivers, not between rights
and claims as it argued in its amicus brief before this court.
There is nothing in the text of section 220(d) that permits a distinction between prospective and retrospective waivers. The regulation
states plainly that "[e]mployees cannot waive . . . their rights under
FMLA." 29 C.F.R. 825.220(d). As we pointed out in Taylor I, the
word "waive" has both a prospective and retrospective connotation.
415 F.3d at 370. Courts, including the Supreme Court, frequently use
the word "waive" to refer to the post-dispute or retrospective release
or settlement of claims. See, e.g., Oubre v. Entergy Operations, Inc.,
522 U.S. 422, 426-27 (1998) ("An employee may not waive an
ADEA claim unless the waiver or release satisfies [statutory] requirements.") (internal quotations omitted); Brooklyn Sav. Bank, 324 U.S.
at 710 (stating that employee could not "waive claim[ ] for liquidated
damages" against employer for past violations of the FLSA); Jefferson v. Vickers, Inc., 102 F.3d 960, 964 (8th Cir. 1996) (stating that
an employer can condition certain retirement benefits on an employees "waiver of employment claims"); Allen v. Sybase, Inc., 468 F.3d
642, 646 (10th Cir. 2006) (noting that employees signed a release
form "in which they waived any claims they had against the company"). Because the word "waive" has a retrospective connotation, the
regulation applies to the retrospective waiver of claims.
B.
The DOL urges us to consider the recent Dougherty decision in the
Eastern District of Pennsylvania. 2007 U.S. Dist. LEXIS 27200.
There, the court, on reasoning developed on its own, reached the
result sought by the DOL. The court held that section 220(d) does not
prohibit the retrospective waiver or settlement of a claim because "the
decision to bring a claim" is not a right under the FMLA. Id. at *23.
The reasoning behind this holding does not withstand close analysis.
The court first stated that section 220(d) prohibits waivers of the
FMLAs "substantive protections (i.e. FMLA leave) and its proscriptive ones (i.e. right to sue for retaliation)."2 Id. at *24. It concluded,
however, that retrospective waivers are permissible because the "decision to bring a claim (saying that you are going to exercise your right
to sue) is not a separate right under the FMLA." Id. (emphasis in original). It added, "Nowhere does the FMLA (or the regulation) mandate
that an aggrieved employee must exercise her proscriptive rights and
bring an FMLA claim." Id.
To begin with, Doughertys conclusion that "the ability [or decision] to bring [an FMLA] claim" is "a kind of right" but not a "right
under the FMLA" ignores FMLAs text. The FMLA explicitly
makes the "right . . . to bring an action" or claim for a violation a right
under the Act. See 29 U.S.C. 2617(a)(2), (a)(4).
Moreover, Dougherty confuses the decision to exercise rights with
waiver of rights. The regulation does not prevent an employee from
deciding not to exercise her FMLA rights. An employee denied
FMLA leave could, for example, decide initially not to bring a claim
for the violation. This employee does not waive any rights because
she could reconsider and decide to bring a claim at a later time. However, an employee who signs a release or settlement agreement does
more than decide not to exercise her right to sue; she relinquishes that
right entirely. While section 220(d) does not prevent an employee
from deciding not to exercise the right to sue, it does prevent her from
waiving or relinquishing that right.
We are not persuaded by the reasoning in Dougherty.
C.
The DOL contends that its reading of section 220(d) "is consistent
with the well-accepted policy disfavoring prospective waivers [of
rights], but encouraging settlement of claims, in employment law."
DOL Amicus Br. at 5. This statement overlooks an important exception in employment law to the general policy favoring the post2
The Dougherty court, like the DOL, categorizes the right to sue as a
proscriptive right. 2007 U.S. Dist. LEXIS 27200, at *21.
the minimum leave specified, without the option to deny it and buy
out claims at a later date.
The DOL fails in its attempt to analogize the FMLA to Title VII
and the Age Discrimination in Employment Act (ADEA), under
which the retrospective waiver of claims is allowed. To begin with,
neither Title VII nor the ADEA has an implementing regulation, like
section 220(d), that prohibits the waiver of all rights under the statute.3
Furthermore, Title VII and the ADEA are not labor standards laws
like the FMLA. Rather, Title VII and the ADEA were enacted to outlaw discrimination against specific classes of employees and provide
redress for injuries caused by discrimination. See Landgraf v. Usi
Film Prods., 511 U.S. 244, 254 (1994). Private settlements further
these purposes by imposing a cost on discrimination that encourages
compliance. The same cannot be said with respect to the FMLA,
where settlements that are cheaper than compliance would encourage
noncompliance, thereby undermining the Acts purpose of imposing
minimum standards for family and medical leave. In short, Title VII
and the ADEA do not provide the best settlement model for the
FMLA. Congress has indicated as much by analogizing the FMLA to
the FLSA, under which the private settlement of claims is prohibited.
29 U.S.C. 2616, 2617(b); see also S. Rep. 103-3, at 35 (1993),
reprinted in 1993 U.S.C.C.A.N. 3, 37 (stating that the FMLAs "enforcement scheme is modeled on the enforcement scheme of the
FLSA"). Indeed, as we discuss in part II, the DOL itself likened the
FMLA to the FLSA when it promulgated section 220(d) and prohibited employee waiver of all FMLA rights.
II.
The DOLs present interpretation of section 220(d) is also inconsis3
Such a regulation would not be possible under either Title VII or the
ADEA. The Equal Employment Opportunity Commission, the agency
charged with the administration and enforcement of Title VII, lacks
authority to issue binding substantive regulations with respect to that
statute. See General Elec. Co. v. Gilbert, 429 U.S. 125, 141 (1976); 42
U.S.C. 2000e-12(a). The ADEA, for its part, specifically authorizes the
"knowing and voluntary" retrospective waiver of claims. See 29 U.S.C.
626(f)(1).
10
tent with what the DOL said it intended the regulation to mean at the
time it was promulgated. We do not defer to an agencys interpretation if "an alternative reading is compelled by . . . indications of the
Secretarys intent at the time of the regulations promulgation."
Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994) (citation
omitted). As we pointed out in Taylor I, when the regulation was
being finalized, the DOL specifically considered and rejected proposed amendments that would have permitted the interpretation now
advanced by the DOL. See 415 F.3d at 370-71. In the "Summary of
Major Comments" published in the 1995 preamble to the final version
of section 220(d) and other FMLA implementing regulations, the
DOL acknowledged the concerns expressed by the U.S. Chamber of
Commerce and several corporations regarding "the no waiver of
rights provisions" in section 220(d). Preamble to the Final Regulations Implementing the Family and Medical Leave Act of 1993, 60
Fed. Reg. 2180, 2218 (Jan. 6, 1995). These representatives of business "recommended explicit allowance of waivers and releases in
connection with [the] settlement of FMLA claims and as part of a severance package (as allowed under Title VII and ADEA claims, for
example)." Id. In response the DOL explained that it had "given careful consideration to the comments on this section [section 220(d)] . . .
and . . . concluded that prohibitions against employees waiving their
rights and employers inducing employees to waive their rights constitute sound public policy under the FMLA, as is also the case under
other labor standards statutes such as the FLSA." Id. By rejecting
businesss suggestion that the regulation be modified to permit waivers and releases in connection with the settlement of FMLA claims,
the DOL made clear that it intended for section 220(d) to prohibit the
retrospective waiver of claims.
The DOL now says that it actually made no response to the claims
settlement comment from the business representatives. According to
the DOL, our decision in Taylor I "incorrectly interpreted the Departments silence as to the retrospective settlement of FMLA claims in
the preamble to the final regulations as an indication that such settlements are prohibited under section 220(d)." DOL Amicus Br. at 9.
The DOL asks us to take what it calls silence "as an indication that
it did not perceive [retrospective] settlements as falling within the
scope of the regulation." Id. The DOL was not silent. It did respond
and its response must take into account the comment. The comment
11
12
We note that the DOL appears to have section 220(d) under consideration in connection with its rulemaking responsibilities under the FMLA.
Shortly after oral argument the DOL issued a notice that includes a
request for public comment on section 220(d). Request for Information
on the Family and Medical Leave Act of 1993, 71 Fed. Reg. 69504,
69509-10 (Dec. 1, 2006). The notice sets forth our interpretation of the
regulation in Taylor I and notes that the agency argued for a different
interpretation in its post-decision amicus brief. The notices information
request couched in language that telegraphs the DOLs current interpretation "seeks input on whether a limitation should be placed on the
ability of employees to settle their past FMLA claims." Id.
13
14
15
Majority Op. at 12 n.4 (noting that the DOL has issued notice that it
is considering modifying the regulation to codify unambiguously its
present interpretation).
Nevertheless, I fully agree that the history of the regulation at issue
provides a model of how not to proceed during the rulemaking process. See Majority Op. at 9-12. Furthermore, timely intervention by
the DOL before we issued Taylor I would have obviated the necessity
of an additional hearing in this appeal, with its attendant expenditure
of judicial and party resources.
With these cautionary addenda, I respectfully dissent.