The Limitations of a Comp C & R Settlement: New Case Requires Extra Care in Attempting to Settle FMLA, Other Potential Claims



Robert J. Baker

ROBERT J. BAKER is a partner in Chartwell's Harrisburg Office.  He is a 1997 graduate of Indiana University of Pennsylvania, where he received a Bachelor of Arts degree in Economics. Mr. Baker also received a Master of Arts degree in Industrial and Labor Relations in 1999 from the Indiana University of Pennsylvania. Mr. Baker is also a graduate of the Widener University School of Law. Prior to joining The Chartwell Law Offices,...

The Limitations of a Comp C & R Settlement:

New Case Requires Extra Care in Attempting to Settle FMLA, Other Potential Claims

 

Chartwell Law

By: Robert J. Baker, Esquire

 

On September 11, 2017, the United States Court of Appeals for the Third Circuit issued a decision in the Zuber v. Boscov’s case, outlining the limitations of a C & R settlement under the Pennsylvania Workers’ Compensation Act.  The court held that the C & R did not prevent the employee from suing his employer under the Family and Medical Leave Act (“FMLA”).

Zuber worked as an employee of Boscov’s when he sustained a work-related injury on August 12, 2014.  Zuber filed for workers’ compensation benefits and received a leave of absence from work.  Although Zuber returned to work on August 14 and 17, 2016, he then requested an additional week of medical leave, which was granted and Zuber returned to work on August 26, 2016. On September 10, 2016 Boscov’s fired Zuber (for a reason not disclosed in the Opinion from United States Court of Appeals).  Ultimately, on April 8, 2015, the parties resolved the workers’ compensation claim by a Compromise & Release Agreement, which was approved by the Workers’ Compensation Judge (“WCJ”).

On July 9, 2015, Zuber sued Boscov’s under the FMLA and Pennsylvania common law. Zuber alleged that: (1) Boscov’s interfered with his FMLA rights by failing to notify him of those rights and by not designating his leave as FMLA protected; (2) Boscov’s retaliated against him for exercising his FMLA rights; and (3) Boscov’s retaliated against him for filing a workers’ compensation claim in violation of Pennsylvania common law. Boscov’s motioned for dismissal of the Complaint, arguing that he waived his FMLA and common law rights because the C&R is a general release of any claim. The District Court dismissed Zuber’s Complaint because of paragraphs sixteen and nineteen of the Agreement.

Paragraph sixteen stated, in relevant part:

 

The issues involved in this claim is [sic] the nature and extent of the alleged work injuries, disability and need for medical treatment as well as the overall compensability of the claim. The parties are entering into the herein Compromise and Release Agreement to amicably resolve these issues and to avoid the costs and risks associated with any litigated matter.

Paragraph nineteen stated, in relevant part:

 

Employer and Employee intend for the herein Compromise and Release Agreement to be a full and final resolution of all aspects of the 8/12/2014 alleged work injury claim and its sequela whether known or unknown at this time. In exchange for Employer paying Employee the one-time lump sum payment as noted in paragraph number 10 of the herein Compromise and Release Agreement, Employee is forever relinquishing any and all rights to seek any and all past, present and/or future benefits, including, but not limited to, wage loss benefits, specific loss benefits, disfiguement [sic] benefits, medical benefits or any other monies of any kind including, but not limited to, interest, costs, attorney’s fees and/or penalties for or in connection with the alleged 8/12/2015 [sic] work injury claim as well as any other work injury claim(s) Employee may have with or against Employer up through and including 4/7/2015. Employee understands that if this Compromise and Release Agreement is approved by the Workers’ Compensation Judge, the 8/12/2014 claim is closed forever and can never be reopened in the future even if the alleged work injuries would worsen. Employee and Employer waive all rights under the Pennsylvania Workers’ Compensation Act to appeal the Final Decision and/or Order of the WCJ approving this Agreement.

Ultimately, the Court of Appeals reversed and remanded, concluding that Zuber merely released his right to bring a future workers’ compensation claim against Boscov’s.  Consequently, the C & R did not prohibit Zuber from bring FMLA or Pennsylvania common law claims against Boscov’s.

The Court concluded that the purpose of the Compromise & Release Agreement was to resolve “work injuries, disability and need for medical treatment” and that neither party intended to release claims that emanate from a lack of notice, a failure to properly designate leave, and acts of retaliation, such as Zuber’s FMLA and common law claims.”

The Court also noted that the employee certification of the Compromise & Release Agreement reinforced this interpretation. Again, the Court noted “[i] n that section of the C&R, Zuber confirmed that ‘[u]nless specifically stated in [the C&R], [he] understand[s] that [the C&R] is a compromise and release of a workers’ compensation claim . . . .’”

Upon initial review, the question arises of how the Court of Appeals could render such a Decision when the parties, Zuber and Boscov’s, are resolving a dispute by contract.  The answer is found in the Pennsylvania Workers’ Compensation Act, as amended (“Act”). 

The scope of the Act, stated simply, provides for the liability of an employer to pay damages for injuries received by an employee in the course of employment.  The Act does not contemplate employment issues, including but not limited to FMLA.  The Act provides for the resolution of a workers’ compensation claim, and does not give a WCJ jurisdiction to review the terms of a general release.  A WCJ can only approve or disapprove a Compromise & Release Agreement based on a determination of whether the Claimant understands the full legal significance of the agreement.   The WCJ has no authority to incorporate or include the terms of a general release.  This is why, as a practical matter, WCJ’s will often refuse to hear testimony with respect to the Claimant’s resignation from employment or allow submission of a general release agreement/resignation letter as an exhibit for purposes of the legal record. 

Although general employment release and settlement terms cannot be included within the four corners of the C & R paperwork, the C & R discussions present an excellent opportunity for the employer to negotiate and resolve an array of potential employment liabilities.  In every C and R, consideration should be given to issues such as whether to obtain a resignation from employment; whether potential future federal, state and local causes of action will be waived; whether future employment will be considered; and resolution of other pending issues such as payment for commissions, outstanding expense or other reimbursements and the like.   This is golden opportunity for the employer to take action to limit or even eliminate the potential for future litigation and damages way beyond the issues addressed in the comp case, but it must be done thoughtfully and it must be done along side, rather than through, the C & R approval process.   

Remember that Pennsylvania courts have held that an employer may terminate an employee for any reason, unless prohibited by contract (or collective bargaining agreement) from doing so, and unless such termination is contrary to public policy.  The Pennsylvania Supreme Court recognized that the exception to the employment at-will rule can be applied if an employer terminates an employee in retaliation for bringing a workers' compensation claim.  Therefore, to avoid a potential claim for retaliation in Pennsylvania, a general release agreement separate and apart from the workers’ compensation settlement should be considered, and if appropriate, specifically addressed through the terms of the general release agreement.  When doing so, the general release agreement language must be unambiguous, and there must be adequate consideration in exchange for the general release.    

The drafting of a Compromise & Release Agreement should not be taken lightly and should be handled by an experienced workers’ compensation attorney.  The related matters of general and specific releases, resignations from employment, and other issues beyond the scope of the comp case should be handled by an experienced employment lawyer.  Often an employer is represented in the comp case by counsel selected by the comp insurance carrier, but the comp lawyer on the case may not have the requisite experience to handle the employment law aspects of the case.   Chartwell’s Labor and Employment Practices Section can assist both self-insured and insured employers in gaining the best possible protection against future litigation and damages.  Chartwell looks forward to being of service in this regard.

Our Labor and Employment team can be contacted, by telephone at (717) 909-5170 ext. 107, or by email to rbaker@chartwelllaw.com.