In Taylor v. Progress Energy, Inc., the Fourth Circuit considered the meaning of 29 C.F.R. § 825.220(d) which states that "employees cannot waive, nor may employers induce employees to waive, their rights under FMLA." The Court concluded that, without prior Department of Labor ("DOL") or court approval, section 825.220(d) bars both prospective and retrospective waiver or release of all FMLA rights, including the right to bring an action or claim for a violation of the Act.

The DOL argued that section 220(d) barred only the prospective waiver of FMLA rights, not the retrospective settlement of FMLA claims, because the word "rights" does not include "claims." The Court found that there are three categories of rights under the FMLA: (1) substantive rights, including an employee's right to take a certain amount of unpaid medical leave each year and the right to reinstatement following such leave, (2) proscriptive rights, including an employees right not to be discriminated or retaliated against for exercising substantive FMLA rights, and (3) remedial rights, including an employee's right to bring an action or claim to recover damages or obtain equitable relief from an employer that violates the Act. Because the regulation specifies "rights under the FMLA," the Court found that it refers to all rights under the FMLA, including the right to bring an action or claim for a violation of the Act.

The Court rejected the DOL's reliance on Farris v. Williams WPC-1, Inc., 332 F.3d 316 (5th Cir. 2003) which held that the regulation prohibited only the prospective waiver of FMLA substantive rights. The Court found that "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 Court also rejected the DOL's reliance on Dougherty v. TEVA Pharmaceuticals USA, Inc., 2006 U.S. Dist. Lexis 62179 (E.D. Pa. 2006) which held that section 220(d) does not prohibit the retrospective waiver or settlement of a claim. The Court found the reasoning in Dougherty to be unpersuasive and stated that Dougherty's conclusion "ignores FMLA's text."

Rejecting the DOL's attempt to analogize the FMLA to Title VII and the Age Discrimination in Employment Act, the Court found instead that Congress had analogized the FMLA to the Fair Labor Standards Act, under which private settlement of claims is prohibited.

In light of the Fourth's Circuit's decision, employers should carefully evaluate their settlement and release agreements with counsel to ensure that they are compliant with the limits placed on the release of certain claims such as FMLA claims.