Lead Opinion
Opinion reinstated by published opinion. Judge MICHAEL wrote the majority opinion, in which Judge PAYNE joined. Judge DUNCAN wrote a dissenting opinion.
OPINION
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 implementing the Family and Medical Leave Act of 1993 (FMLA or Act), 29 U.S.C. § 2601 et seq. The regulation reads: “Employees cannot waive, nor may employers induce employees to waive, their rights under FMLA.” In our vacated opinion we held that the regulation prohibits both the prospective and retrospective waiver of any FMLA right unless the waiver has the prior approval of the Department of Labor or a court. Taylor v. Progress Energy, Inc. (Taylor I),
I.
An agency’s interpretation of its own regulation is “controlling unless plainly erroneous or inconsistent with the regulation.” Auer v. Robbins,
A.
Again, the regulation states: “Employees cannot waive, nor may employers induce employees to waive, their rights under FMLA.” 29 C.F.R. § 825.220(d). The DOL contends that in Taylor I we erred in interpreting section 220(d) by failing to focus on the word “rights.” In its amicus brief to us the DOL argued that the word “rights” does not include claims. Later, the DOL substantially undercut this argument in an amicus brief filed in the Eastern District of Pennsylvania. In Dougherty v. TEVA Pharms. USA Trac., No. 05-2336,
There are three categories of “rights under FMLA,” substantive, proscriptive, and remedial. Substantive rights include an employee’s 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 employee’s right not to be discriminated or retaliated against for exercising substantive FMLA rights. Id. § 2615(a)(2). The remedial right is an employee’s “[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 regulation’s 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 employee’s 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 regulation’s 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. O’Neil,
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 DOL’s 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.,
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 employer’s refusal to grant FMLA leave. This interpretation would undermine the purpose of the FMLA and section 220(d) and turn the FMLA’s substantive rights into empty and unenforceable pronouncements.
The DOL acknowledged this problem in its later-filed amicus brief in Dougherty, where it rejected Faris’s 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.
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.
B.
The DOL urges us to consider the recent Dougherty decision in the Eastern District of Pennsylvania.
The court first stated that section 220(d) prohibits waivers of the FMLA’s “substantive protections (i.e. FMLA leave) and its proscriptive ones (i.e. right to sue for retaliation).”
To begin with, Dougherty’s conclusion— that “the ability [or decision] to bring [an FMLA] claim” is “a kind of right” but not a “right under the FMLA” — ignores FMLA’s 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 post-dispute settlement of claims.
For example, under the FLSA, a labor standards law, there is a judicial prohibition against the unsupervised waiver or settlement of claims. See D.A. Schulte, Inc. v. Gangi,
The reasons for the prohibition on private settlement of FLSA claims apply with equal force to FMLA claims. Congress explains in the FMLA’s legislative history that the Act “fits squarely within the tradition of the labor standards laws that ... preceded it,” such as the FLSA and the Occupational Safety and Health Act. S.Rep. No. 103-3, at 5 (1993), reprinted in 1993 U.S.C.C.A.N. 3, 7. The FMLA, following the FLSA model, provides a “minimum floor of protection” for employees by guaranteeing that a minimum amount of family and medical leave will be available annually to each covered employee. Id. at 18. As with the FLSA, private settlements of FMLA claims undermine Congress’s objective of imposing uniform minimum standards. Because the FMLA requirements increase the cost of labor, employers would have an incentive to deny FMLA benefits if they could settle violation claims for less than the cost of complying with the statute. Further, employers settling claims at a discount would gain a competitive advantage over employers complying with the FMLA’s minimum standards. See Taylor I,
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.
II.
The DOL’s present interpretation of section 220(d) is also inconsistent with what the DOL said it intended the regulation to mean at the time it was promulgated. We do not defer to an agency’s interpretation if “an alternative reading is compelled by ... indications of the Secretary’s intent at the time of the regulation’s promulgation.” Thomas Jefferson Univ. v. Shalala,
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 Department’s 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
The DOL also argues that its statement in the preamble that “an employee on FMLA leave may be required to give up his or her remaining FMLA leave entitlement to take an early-out offer from the employer,” 60 Fed.Reg. at 2219, made clear that section 220(d) would not affect releases in connection with severance packages. We disagree. This statement only addressed the ERISA Industry Committee’s concern that an employee who takes early retirement while on FMLA leave might continue to assert leave rights, such as the right to continuing group health coverage. The DOL’s response simply clarifies that the employee does not waive any FMLA rights in this circumstance because the employee’s right to FMLA leave ends with the cessation of the employment relationship. See Brohm v. JH Props., Inc.,
For these reasons we adhere to our Taylor I assessment of the DOL’s intent at the time of section 220(d)’s promulgation: “By rejecting business’s suggestion that waivers and releases should be allowed in connection with the post-dispute settlement of FMLA claims, the DOL made clear that § 825.220(d) was never intended to have only prospective application.”
III.
In Taylor I we relied on the congres-sionally recognized similarities between the FMLA and the FLSA to conclude that section 220(d) “must be construed to allow the waiver or release of FMLA claims with prior DOL or court approval,” as is the case with respect to FLSA claims.
IV.
We reaffirm our conclusion that, without prior DOL or court approval, 29 C.F.R. § 825.220(d) bars the prospective and retrospective waiver or release of rights under the FMLA, including the right to bring an action or claim for a violation of the Act. We therefore reinstate our prior opinion in Taylor v. Progress Energy, Inc.,
Notes
. The DOL characterizes the right to sue as a proscriptive right. See Dougherty Amicus Br. at 4 n. 6. The right to sue for violations of the FMLA, see 29 U.S.C. § 2617(a)(2), is better characterized as a remedial right. Nevertheless, we agree that the right to sue is a "right under the FMLA.”
. The Dougherty court, like the DOL, categorizes the right to sue as a proscriptive right.
. 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,
. 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 notice's information request— couched in language that telegraphs the DOL's current interpretation — "seeks input on whether a limitation should be placed on the ability of employees to settle their past FMLA claims.” Id.
Dissenting Opinion
dissenting:
The Family and Medical Leave Act (the “FMLA”) provides aggrieved employees with a “[r]ight of action,” 29 U.S.C. § 2617(a)(2), or a “right ... to bring an action,” id. § 2617(a)(4), against an employer who commits any of the acts prohibited by the statute. The Department of Labor (the “DOL”), in its regulations implementing the FMLA, has declared: “Employees cannot waive, nor may employers induce employees to waive, then-rights under FMLA.” 29 C.F.R. § 825.220(d). The crux of the majority’s reasoning is that “[t]he regulation, by specifying ‘rights under FMLA,’ ... refers to all rights under the FMLA,” Majority Op. at 457, including in particular the “Might of action” or “right ... to bring an action” described in § 2617(a)(2), (4) (emphasis added).
The majority’s position is, standing alone, eminently reasonable. Indeed, we defensibly so held after first hearing oral argument in this appeal. See Taylor v. Progress Energy, Inc. (Taylor I),
The course of this appeal was unexpectedly diverted, however, when the DOL rejected the analysis of Taylor I in its belated amicus brief supporting Progress Energy’s petition for rehearing en banc. See Amicus Br. for Secretary of Labor at 4 (interpreting the regulation not to prohibit the waiver of causes of action). After such interposition, the question in the case was necessarily recast. See Auer v. Robbins,
I feel constrained to conclude that it is not. There are few words in the legal lexicon more ubiquitous and freighted than the term “right.” See United States v. Patrick,
Given the existence of at least some measure of ambiguity in the regulation’s use of the term “rights,” then, I cannot but conclude that deference to the DOL’s interpretation is appropriate under Auer,
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 461-63. 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.