In the case of Taylor v. Progress Energy, Inc., ___ F.3d ___, 2007 WL 1893362 (CA 4 (N.C.) 2007), the Fourth Circuit Court of Appeals looked into the meaning of 29 C.F.C. §825.220(d) and determined that the FMLA precludes both the prospective and retrospective waiver of all FMLA rights, including the right of action (or claim) for a past violation of the Act unless the waiver has the prior approval of the Department of Labor or a court.

The regulation (section 220(d)) reads: “ Employees cannot waive, nor may employers induce employees to waive, their rights under FMLA.” In this case the Department of Labor (“DOL”) contended that section 220(d) barred only the prospective waiver of FMLA rights. Normally, an agency’s interpretation of its

own regulation is controlling unless plainly erroneous or inconsistent with the regulation.

The DOL advanced several arguments in support of its interpretation. The DOL argued that the court of appeals failed to focus on the word, “rights,” when is initially interpreted section 220(d). The DOL’s position was that “rights” does not include claims. The problem with that argument was that the DOL (in another litigation) had conceded that the “right to sue” is a right under the FMLA that cannot be waived prospectively. The right to sue is, of course, the right to assert a claim. In countering the agency’s position, the court of appeals explained that rights under the FMLA include substantive, proscriptive and remedial rights. It described substantive rights under the FMLA to include an employee’s right to take a certain amount of medical leave each year and the right to reinstatement following that leave. Proscriptive rights under the FMLA include an employee’s right to be free of discrimination or retaliation as a result of exercising those substantive rights. A remedial right under the FMLA is the right to bring an action or a claim. By referring to rights under the FMLA, section 220(d) refers to all rights under the FMLA including remedial rights.

The apeals court argued that its interpretation is confirmed by the regulation’s relationship to §2615(a)(1) of the statute. §2615(a)(1) prohibits any employer from interfering with, restraining, or denying the excercise of or the attempt to exercise, any right provided under the FMLA. “Because § 2615(a)(1) prohibits employer interference with ‘any right provided under [the FMLA],’ including § 2617(a)(2)’s right of action, the regulation’s phrase, ‘rights under FMLA,’ also refers to the statutory right of action or claim.”

Finally, section 220(d)’s use of the word, “rights,” to refer to a right of action or claim is consistent with common usage. The court concluded that for these reasons, section 220(d)’s prohibition on the waiver of rights includes a prohibition on the waiver of claims.

The DOL argued that that the regulation only prohibited the prospective waiver of the FMLA’s substantive rights. The court of appeals countered by stating that such a reading would allow an employee to waive prospectively her proscriptive and remedial rights under the FMLA. In other words, an employee, on her first day on the job, could waive her right to be free from discrimination and retaliation because of her use of FMLA leave as well as her right to sue as a result of an employer’s refusal to provide FMLA leave.

In a later case, the DOL backpedaled and changed its proposed reading of the regulation claiming that the regulation only applies to substantive rights as the right to assert a claim cannot be waived prospectively under the FMLA. So the DOL’s distinction existed between the right to sue over past violations versus future violations of the FMLA. The DOL claimed that the FMLA permitted the waiver of the former but not the latter.

The appeals court stated that nothing existed in section 220(d) that afforded a distinction between prospective and retrospective waivers. According to the court, “waive” has a prospective and retrospective connotation. From there, the court reasoned that because “waive” has a retrospective connotation, the regulation applies to the retrospective waiver of FMLA claims.

The DOL next argued 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.” The court succintly responded that the settlement or waiver of claims is probibited when it would thwart the legislative policy which the law was designed to effectuate. The court argued that the FMLA provides a minimum floor of family and medical leave. Private settlements of FMLA violations “undermine Congress’ objective of imposing uniform minimum standards.” According to the court, employers could potentially settle FMLA violation claims for less than it would cost to comply with the FMLA and that this must be prohibited. The court refused to accept the DOL’s analogy of the FMLA to Title VII and the ADEA because neither has an implementing regulation that prohibits the waiver of all rights under the statute and neither are labor standards laws like the FMLA.

Finally, the Fourth Circuit determined that when the regulation was being made final, the DOL specifically considered and rejected proposed amendments that would have allowed the DOL’s current interpretation. Having done so, the DOL’s current interpretation of section 220(d) would not be consistent with its original position on the regulation.

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