Sep 30, 2008Client Alert

Can an Exiting Employee Who Released All Claims Still File an FMLA Claim?

Although the Seventh Circuit, which covers Illinois, Indiana and Wisconsin, has not yet addressed the issue, the Northern District of Illinois recently held that retrospective FMLA claims may be waived. Butler v. Merrill Lynch Business Financial Services, Inc., No. 08C834 (8/14/08), involved a former employee who agreed to release Merrill Lynch from all claims related to the termination of his employment, including claims brought under the FMLA, in exchange for a severance package. Butler then turned around and sued Merrill Lynch, claiming that the company terminated him because he took FMLA leave. To get around the release of claims he signed, Butler argued that such releases are unenforceable under the Department of Labor’s regulations mandating that “[e]mployees cannot waive, nor may employers induce employees to waive, their rights under the FMLA.”

Only a handful of courts from various circuits have addressed this issue. The Northern District of Illinois sided with the majority of circuits and held that retrospective FMLA claims can be waived. The court reconciled its decision with the language of the regulation by drawing a distinction between a “claim” and a “right” under the FMLA. A “claim” is a means to protect a right, not a right in and of itself. The court also noted that its position was consistent with a strong federal policy favoring the enforcement of waivers in other labor-related contexts, such as the ADEA and Title VII.

This is good news for employers, with a couple of caveats. First, the court made it clear that prospective claims not yet in existence cannot be waived by signing a general release or waiver. Second, the court recognized that there is a circuit split and the Seventh Circuit has not yet addressed the issue. Therefore, the possibility exists that this decision could be overturned by the Seventh Circuit Court of Appeals. Nevertheless, employers should take advantage of this decision by always including such waivers in their separation agreements. For more information or assistance assuring your releases are enforceable, please contact the author(s) of this alert.

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