Taylor v. Progress Energy, Inc.

• Decision Date: 03 July 2007
• Docket Number: No. 04-1525.,04-1525.
• Citation: 493 F.3d 454
• Parties: 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.
• Court: U.S. Court of Appeals — Fourth Circuit

493 F.3d 454

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.

United States Court of Appeals, Fourth Circuit.

Argued: October 25, 2006.

Decided: July 3, 2007.

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, DC, 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, DC, for The Chamber of Commerce of the United States of America; Ann Elizabeth Reesman, McGuiness, Norris & Williams, L.L.P., Washington, DC, 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, DC, for Elaine Chao, Secretary of Labor, Amicus Supporting Appellee.

Before MICHAEL and DUNCAN, Circuit Judges, and Robert E. PAYNE, United State District Judge for the Eastern District of Virginia, sitting by designation.

Opinion reinstated by published opinion. Judge MICHAEL wrote the majority opinion, in which Judge PAYNE joined. Judge DUNCAN wrote a dissenting opinion.

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 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), 415 F.3d 364, 369 (4th Cir.2005), vacated, No. 04-1525, 2006 U.S.App. LEXIS 15744 (4th Cir. June 14, 2006). The losing party (the defendant) in Taylor I filed a petition for rehearing en banc, and the Secretary of Labor (the DOL) filed an amicus brief in support of that petition. The DOL disagreed with our interpretation of section 220(d), and we granted panel rehearing to consider the DOL's contrary interpretation. The case was reargued, this time with the agency participating. The DOL contends that section 220(d) bars only the prospective waiver of FMLA rights. After reconsideration we remain convinced that the plain language of section 220(d) 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. We therefore reinstate our opinion in Taylor I.

I.

An agency's interpretation of its own regulation is "controlling unless plainly erroneous or inconsistent with the regulation." Auer v. Robbins, 519 U.S. 452, 461, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997) (internal quotation marks and citation omitted). As we will demonstrate, the DOL's interpretation of section 220(d) is inconsistent with the regulation.

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, Inc., No. 05-2336, 2007 WL 1165068, 2007 U.S. Dist. LEXIS 27200 (E.D.Pa. Apr. 9, 2007), the DOL conceded that 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 WL 1165068, 2007 U.S. Dist. LEXIS 27200 (Dougherty Amicus Br.). We will consider the DOL's 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 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, 324 U.S. 697, 705, 65 S.Ct. 895, 89 L.Ed. 1296 (1945) (stating that an employee's Fair Labor Standards Act (FLSA) claim for liquidated damages is a "statutory right" that cannot not be waived in a settlement agreement); Black's 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 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., 332 F.3d 316 (5th Cir.2003). See DOL Amicus Br. at 6 (noting "Department's and [Faris's] plain reading" of section 220(d)); id. at 4-5 (endorsing district court's "correct[ ] conclu[sion]," which is identical to Faris's, as to the meaning of section 220(d)). Faris held that the regulation prohibits only the prospective waiver of the FMLA's 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 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.¹ Id. The DOL thus abandoned its previous position that section 220(d) does not prohibit the waiver of any claim. According to the DOL's 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 ...