posted on Thursday, September 21, 2006 4:42 PM
by
Lou Michels
Ineffective Releases of Employment Claims
Termination releases of claims are common tools used by employers to preclude litigation by ex-employees. A federal court in Pennsylvania recently decided that an employee could not knowingly waive her rights under the Family and Medical Leave Act, or the Americans with Disabilities Act, despite signing a comprehensive waiver and release of all claims in exchange for a severance payment, even when she keeps the payment. In Dougherty v. Teva Pharmaceuticals, the court determined that, notwithstanding her signature on a general waiver and release of all claims against her former employer, and her acceptance of several months of pay and health insurance, the plaintiff was not prevented from suing her employer on a claim of violating the FMLA and, her concurrent ADA claim as well.
Circuits across the country are split on whether employees can waive an FMLA claim because of fairly straightforward Department of Labor regulations found in 29 C.F.R. ยง 825.220, which say that employees cannot waive nor be induced to waive their rights under the FMLA. Some courts have interpreted this to mean that the clause only applies to current employees and that it only limits a prospective waiver of rights (rights that would attach in the future) under the statute. Other courts have held that the regulation bars outright any waiver under any circumstances.
The court here seems to lean towards decisions in the middle ground, which prohibit waivers of FMLA rights unless they are approved by the Department of Labor or a court.
The court then went on hold that even though the plaintiff retained her severance payment and health insurance benefits after she discovered the release was voidable, there could be no ratification of the agreement because the Third Circuit refuses to apply ratification to claims involving federal employment discrimination statutes. Finally, having found there was no valid release of FMLA claims, the court determined that it could not sever the void FMLA waiver from the possibly valid ADA waiver under the language of the agreement. It therefore invalidated the entire release, allowed the plaintiff to keep the compensation that her employer paid in consideration of the release, and let her ADA and FMLA claims go forward to trial.
This is a particularly dangerous area for employers. Because of the vague notice requirements under the FMLA, employers can easily find themselves having accepted what they believe to be complete and total releases of all claims from their employees, only to find themselves sued for latent FMLA claims not brought to their attention at the time. In these situations, it is important for employers to draft agreements that specifically mention that the employee is giving up an FMLA entitlement, and put severability language in the agreement so that other claims can be protected from the void FMLA claim. This issue seems ripe for Supreme Court resolution given the wide disparity between the cases.