Employers: Make Sure Your Settlement Agreement Gets You What You Want!

Scott F. Cooper

On September 11, 2017, the United States Court of Appeals for the Third Circuit revived a lawsuit under the Family and Medical Leave Act (“FMLA”) that the employer claimed was barred by settlement of an employee’s workers’ compensation claim.

The case of Zuber v. Boscov’s provides valuable lessons for employers who think they have concluded matters with an employee through a settlement only to find out that not all claims were released.

After suffering a workplace injury, employee Craig Zuber entered into an approved Compromise and Release (“C&R”) of his workers’ compensation claims. When he later filed suit for violations of the FMLA, the employer was able to convince the trial court that the FMLA claims were included in the workers’ compensation settlement and thus barred. The Third Circuit reversed, and basing its decision on the precise language in the C&R, held that the release only covered the workplace injury suffered by the employee and did not cover statutory claims that were distinct from the injuries.

Employers who are trying to obtain global resolution of claims with employees should consider several practical steps:

  • If one of the claims is for workers’ compensation, as was the case in Zuber, ensure that counsel handling the workers’ compensation case coordinates with labor and employment counsel to ensure as full and complete a release as possible.
  • Where you are settling a workers’ compensation claim and obtaining a release of other potential claims as well, make sure that there is additional consideration in the release agreement to cover a waiver of employment claims so that the employee does not later allege a release without anything of value.
  • To the fullest extent possible, include language in any release agreement that covers federal, state, and local employment claims, as well as possible tort and contract claims that the employee could bring.
  • Check the language of the release very carefully. Zuber turned on whether a single word covered one claim or multiple claims. Failure to check the form language could well lead to settlement in case number one funding case number two!

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