HOME Settlement Agreements: What Claims can be Waived or Not Waived? That is the Question. by Sharon P. Morgan & Suzanne K. Lehman Finally, a contentious case with an employee is resolved. You think to yourself, the hard part is over, and all I need to do is pull out the company’s standard settlement agreement and make a few changes. Not so fast. A recent decision by the Fourth Circuit Court of Appeals requires every employer to take a second look at those standard settlement agreements. In Taylor v. Progress Energy, Inc., the plaintiff had signed a general release agreement that contained a catchall category for claims under federal law but did not specifically mention the Family and Medical Leave Act (‘FMLA”). The plaintiff subsequently challenged the validity of the release, relying upon a U.S. Department of Labor ("DOL") regulation, 29 C.F.R. § 825.220(d), which provides that “employers cannot waive, nor may employers induce employees to waive, their rights under FMLA.” The Fourth Circuit sided with the plaintiff, and held that agreements releasing claims under the FMLA are unenforceable and that FMLA rights can only be waived with the approval of the Department of Labor (“DOL”) or a court. The Court concluded that the DOL regulation prohibits both the retrospective and prospective waiver of any FMLA right – whether substantive, which includes the right to take up to twelve weeks leave, or proscriptive, which includes the right not to be discriminated or retaliated against for exercising substantive FMLA rights – unless the waiver has the prior approval of the DOL or a court. The Fourth Circuit is the first federal court of appeals to rule that a general release agreement may not be valid with respect to FMLA claims, and rejected the Fifth Circuit Court of Appeals' earlier decision in Faris v. Williams WPCI, Inc., which upheld the validity of a waiver of an FMLA claim pursuant to a general release agreement. The U.S. Supreme Court ultimately may need to resolve this split among the circuits. In the meantime, however, until the split is resolved, employers in Maryland, Virginia, West Virginia, North Carolina and South Carolina should be aware that any non-DOL or court-approved release of an FMLA claim is subject to challenge. Moreover, although employers in other states are not affected directly by the Fourth Circuit's decision in Taylor, they should proceed cautiously if their respective federal courts of appeals have not yet ruled on the issue. It is important for employers to review their standard settlement agreements not only regarding the release of FMLA claims, but for all other federal and state law claims as well. Generally, federal employment law claims under Title VII, the ADA, ERISA, the WARN Act, 42 U.S.C. § 1981, and retaliation and whistle-blower claims are waivable. However, with respect to the ADEA, it is important to remember that unless the statutory requirements of the Older Workers Benefits Protection Act (“OWBPA”) are strictly followed, a release of a federal age discrimination claim is not “knowing or voluntary” and, therefore, is invalid. For example, the Eighth Circuit recently invalidated a release of age discrimination claim because it was not written in a manner calculated to be understood by the person signing the release – one of the statutory requirements under the OWBPA. Finally, be aware that future claims, False Claims Act/Qui Tam claims, and the right to file a Charge of Discrimination with the EEOC cannot be waived. Although workers’ compensation and unemployment compensation laws vary from state to state, such claims are generally not waivable. In addition, claims under the Fair Labor Standards Act generally may not be waived without court or DOL approval. For more information, please contact the author(s) at morgan@elarbeethompson.com or lehman@elarbeethompson.com. [PRINTER FRIENDLY VERSION]