Waiving Labor Law Claims: What Employees Need To Know

Employees can waive labour law claims, but it depends on the country and state in which they work, as well as the nature of the claim. For example, in Belgium, employees can waive their rights to claims arising from their employment contract after its termination, by concluding a valid settlement agreement with their employer. In the United States, state law governs the validity of waivers, and these vary. For instance, under the Minnesota Age Discrimination Act, a release must give the employee fifteen days to change their mind after signing, while in California, a waiver cannot release unknown claims unless specific language is included. In California, there are certain rights provided by the Labor Code that employees cannot waive, including minimum wage, overtime, and expense reimbursement.

Characteristics and Values

Severance agreements and discrimination claims

Severance agreements are contracts between employers and employees that specify the terms of an employment termination, such as a layoff. They are usually supported by "consideration," which is something of value that the employee is not already entitled to. Severance agreements often include a release or "waiver" of liability for all claims connected with the employment relationship, including discrimination claims under civil rights laws.

While it is common for senior-level executives to negotiate severance provisions when initially hired, other employees are typically offered severance agreements and asked to sign a waiver at the time of termination. It is important to note that employees cannot be required to waive their claims in exchange for payment for hours already worked or benefits already owed to them.

In the United States, the Equal Employment Opportunity Commission (EEOC) enforces civil rights laws, including the Age Discrimination in Employment Act (ADEA), Title VII of the Civil Rights Act, the Americans with Disabilities Act (ADA), and the Equal Pay Act (EPA). Waivers of ADEA claims in severance agreements are only enforceable if the employer meets certain requirements, such as giving the employee at least 21 days to consider the waiver and advising them to consult an attorney.

Additionally, provisions in severance agreements that attempt to prevent employees from filing a charge with the EEOC or participating in an investigation are unenforceable. This means that employees cannot be required to return their severance pay or other consideration before filing a charge. However, a court may reduce the amount of any monetary award by the consideration received for signing the waiver.

State law typically governs the validity of waivers and severance agreements. For example, under California law, a waiver cannot release unknown claims unless it contains specific language providing for such a waiver. Other states may have additional requirements for obtaining an effective waiver of certain state law claims.

In summary, severance agreements and discrimination claims are complex, and it is recommended that employees assess all circumstances and consult a lawyer before signing a severance agreement to ensure they understand their rights and the validity of any waivers.

Minimum wage and overtime laws

Employees cannot waive, or enter into contracts contrary to, many of California's Labor Code requirements. This is because if employees could waive the rights given to them under the Labor Code, employers could simply require the employee to waive the rights on the first day of work, rendering the Labor Code meaningless.

In California, the Labor Code section 510 provides that nonexempt employees will be paid one and one-half their wages for hours worked in excess of eight per day and 40 per week, and twice their wages for work in excess of 12 hours a day or eight hours on the seventh day of work. Section 1194 provides a private right of action to enforce violations of minimum wage and overtime laws. By its terms, the rights to the legal minimum wage and legal overtime compensation conferred by the statute are unwaivable.

In Virginia, the state minimum wage increased from $7.25 to $9.50 per hour as of May 1, 2021. The federal minimum wage is $7.25 per hour. Virginia labor laws do not regulate or define benefits packages, vacation days, rest breaks, or meal periods. The new Virginia overtime law, which came into effect on July 1, 2021, includes most of the same exemptions from overtime pay as under federal law, but not all.

The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, record-keeping, and youth employment standards affecting employees in the private sector and in federal, state, and local governments. Covered nonexempt workers are entitled to a minimum wage of not less than $7.25 per hour effective July 24, 2009. Overtime pay at a rate not less than one and one-half times the regular rate of pay is required after 40 hours of work in a workweek. The federal minimum wage is $7.25 per hour. Many states also have minimum wage laws. In cases where an employee is subject to both state and federal minimum wage laws, the employee is entitled to the higher minimum wage.

Expense reimbursement

In the United States, laws regarding expense reimbursement vary by state. For example, California has one of the most employee-friendly laws, requiring employers to reimburse employees for all necessary business expenses. Under federal law, if work-related expenses reduce an employee's earnings below the minimum wage, the employer must reimburse the employee to ensure their pay meets the minimum wage requirement.

According to California Labor Code §2802, employers must reimburse their workers for "all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer." This includes costs incurred while attending conferences or training that the employer requires the employee to attend. It also includes travel expenses, such as airfare, train tickets, mileage for personal vehicle use, car rentals, parking fees, and tolls when travelling for business purposes. Additionally, the Court of Appeals of California has ruled that home office expenses must be reimbursed, even if remote work was due to a government order, such as during the pandemic.

There are some exceptions to the expense reimbursement rule in California. For instance, employees in the construction industry whose wages are at least twice the minimum wage are not required to be reimbursed for the purchase and maintenance of hand tools and equipment customarily required by their trade or craft. Similarly, public entity employers are not required to pay the costs of purchasing, replacing, cleaning, and maintaining employee uniforms.

To ensure proper reimbursement for work-related expenses, employees should keep detailed records of their expenses, including receipts and documentation. Most companies have a deadline for submitting expense claims, so employees should submit their expenses promptly to avoid missing out on reimbursement. It is also important for employees to familiarise themselves with their company's expense reimbursement policy, including any limits or required documentation, to avoid incurring non-reimbursable expenses. If there is any confusion about whether an expense is reimbursable, employees should communicate with their supervisor or HR department before making the purchase.

Right to participate in Private Attorneys General Act (PAGA) representative actions

The Private Attorneys General Act (PAGA) is a California labor law that allows aggrieved employees to file representative actions and seek civil penalties for Labor Code violations on behalf of themselves, other aggrieved employees, and the state of California. PAGA was established to address labor and employment law complexities in California, which are considered more stringent compared to the rest of the United States.

Under PAGA, employees can file lawsuits to recover civil penalties for Labor Code violations. This means that if an employee believes they have been subject to violations of the Labor Code, they can take legal action not just for their own individual case but also on behalf of other employees who may have experienced similar violations. This is known as a representative action. The law specifically authorizes "aggrieved employees" to take legal action, indicating that the employees filing the lawsuit have personally been affected by the Labor Code violation.

The process of filing a PAGA claim is governed by specific requirements outlined in Labor Code Sections 2698-2699.8. It's important to note that PAGA has undergone reforms, with Governor Newsom signing AB 2288 and SB 92 into law on July 1, 2024, which brought about significant changes to the PAGA requirements and the optional cure process. These reforms were driven by concerns from business groups and nonprofits about the negative impact of PAGA on their operations, including the diversion of funds away from workers and patients and into attorneys' pockets.

While PAGA has been a popular avenue for employees to seek redress for labor code violations, with the Labor and Workforce Development Agency (LWDA) receiving approximately 4,000 PAGA notices annually since 2014, there have also been criticisms of the law. One of the main critiques is the lengthy wait times and lower average recoveries for workers in PAGA court cases compared to state-adjudicated cases. This is often attributed to the high attorney's fees associated with PAGA cases, which can result in workers receiving lower payouts even when employers pay out less per award.

In conclusion, the Private Attorneys General Act (PAGA) in California provides employees with the right to participate in representative actions and seek civil penalties for Labor Code violations. While PAGA has been a powerful tool for employees to hold employers accountable, it has also faced challenges and criticisms, leading to reforms aimed at improving the effectiveness of the law for both employees and employers.

Validity of waiver clauses

The validity of a waiver clause depends on the state in which the employee works. State law typically governs questions regarding the validity of waivers. For instance, under the Minnesota Age Discrimination Act, an employee must be given 15 days after signing the agreement to revoke their signature. In California, a waiver cannot release unknown claims unless the waiver agreement contains specific language providing for such a waiver.

In Belgium, the validity of waiver clauses in settlement agreements is rigorously evaluated by tribunals, and often leads to discussions between employers and their (former) employees. For a settlement agreement to be valid, it must meet various conditions, including mutual concessions by the parties and the lack of absence of consensus ad idem.

In the US, a waiver in a severance agreement is generally valid when an employee knowingly and voluntarily consents to the waiver. However, provisions in severance agreements that attempt to prevent employees from filing a charge with the Equal Employment Opportunity Commission (EEOC) or participating in an EEOC investigation are unenforceable. Under the Age Discrimination in Employment Act (ADEA), an employee is not required to return severance pay or other considerations before bringing an age discrimination claim. Under Title VII, the Americans with Disabilities Act (ADA), and the Equal Pay Act (EPA), the law is less clear.

In California, employees cannot waive or enter into contracts contrary to many of the state's Labor Code requirements. For example, Labor Code Section 510 provides that nonexempt employees will be paid one and one-half of their wages for hours worked in excess of eight per day and 40 per week. By its terms, the rights to the legal minimum wage and legal overtime compensation conferred by the statute are unwaivable. The California Supreme Court reviewed the issue of whether an employee could enter into an agreement to only seek remedies on an individual basis, not through a class action, and found that "at least in some cases, the prohibition of classwide relief would undermine the vindication of the employees' unwaivable statutory rights and would pose a serious obstacle to the enforcement of the state's overtime laws."

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