How do I get rid of this *&%$ worker!!
Editor’s comment: We keep getting asked so we want to outline the legal issues relating to general release/resignations in Illinois. Some of this advice will relate to workers’ compensation claims and the rest will relate to employment practices liability.
Definitions:
- Release: To give up a right as releasing one from his/her obligation to perform under a contract, or to relinquish a right;
- Resignation: An oral or written statement that one is resigning a position.
Of great concern to the human resources professional is getting all mutual rights and responsibilities to end when the worker leaves your place of employment. Illinois generally remains an “at-will” state which means an employer can arguably terminate an employee for any reason and at any time, so long as there is no discriminatory action. Conversely, the typical employee can leave employment at any time and for any reason, be it personal or professional. To avoid or greatly minimize litigation, whenever and wherever you see trouble brewing when you are trying to get rid of a nettlesome worker, consider a written general release/resignation signed by the employee. If you need a sample form, we are happy to share ours, so simply send a reply requesting one and we will email it back.
In the workers’ compensation area, there are various concerns about the legal effect of resolution of the workers’ compensation claim when the employee simultaneously resigns at the time the workers’ compensation claim settlement is approved by an Arbitrator or Commissioner. Coincidental resignation by an employee can occur as a combination of a multitude of factors including a personal decision not to return to work, the lingering physical or social effects of the workers’ comp injury, labor disputes with the employer, problems with fellow employees or the union and loss of job due to plant or company closing.
A prudent workers’ compensation professional must understand workers’ compensation benefits are only one of a variety of benefits or claims which an employee might receive at the end of the employment relationship. If one resolves only the worker’s compensation claim, you may be leaving all employee’s other employment rights, benefits or claims ‘unresolved.’ As attorneys we always seek certainty in an uncertain world. An excellent example of this concept occurs when an employee resigns as ‘part’ of the settlement of a work injury claim. Your concern is the employee might later claim they were ‘coerced’ into the resignation to receive any workers’ compensation settlement at all. While we have not yet seen a reported workers’ compensation case on a claim for retaliatory discharge as a result of a coincidental resignation, your organization does not want to have to litigate the issue as a matter of first impression in the Illinois courts.
Second, an employee may have labor disputes pending. These disputes might be pending at the local grievance level or at a national level as a result of an appeal of local determination. Obviously, a resignation as part of a workers’ compensation settlement leaves such labor disputes ‘pending’ without a proper resolution.
Also, it is important to recognize workers’ compensation benefits arise from state statutes. The settlement of a state workers’ compensation claim has no direct impact on the employee’s federal rights. There is a plethora of federal statutes which impact on an employee’s rights while working and the employee’s rights at the time of termination and resignation. These include the American with Disabilities Act, Title VII of the Civil Rights Act, the Fair Labor Standards Act, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Employment Retirement Income Security Act and the National Labor Relations Act, to name a few.
The obvious response of the HR or claims professional when presented the above list is to remark, “What does that have to do with my claims?” The reply has to be your organization pays you to recognize and anticipate claim-related problems and to forestall them, if at all possible. Therefore, it is our recommendation that you do not ignore an employee’s claim or rights with regard to any common law or statutory claim whether it is a federal or state statute. In an appropriate claim, when the employee resigns, we recommend that you obtain a common law release as part of that resignation which specifically outlines both federal and state rights and ‘terminates’ (or in some instances, reserves) rights at the time of resignation/settlement. Use your knowledge and expertise to control the situation as much as possible.
An appropriately drafted general release, based upon appropriate consideration (in lay terms, usually money), should effectively defeat or block an employee from maintaining any suit or claim following resignation. We do not feel that you are sufficiently protected in obtaining a resignation with a general release if it is not supported by consideration paid by the employer.
A. There may be rights which you want to survive the resignation
At the time that the employee resigns, there are major issues which you should certainly address as you may want to work with the employee and not extinguish all of the employee’s rights when he or she resigns. The most important of these rights are pension benefits. An employee may be part of a pension or profit sharing plan which he or she should certainly be entitled to due to contributions by your organization and the employee. We have generally advised there is a west coast decision which ruled a general release blocked an employee’s pension claim–a result which may have been unintended by either employee or employer and which would certainly result in a fountain of litigation. Where an employee has pension rights or benefits available, it would seem appropriate to preserve such rights at the time of resignation. The general release should be tailored to cover the possibility.
A second concern is COBRA—you are going to have to allow the employee to maintain health care coverage if such coverage was afforded while the worker was employed. A general release/resignation should cover this federal requirement.
A third and more delicate issue is unemployment benefits. With the recent changes in this law, such benefits may provide substantial benefit to an employee who has left employment. However, such benefits allow the employer to dispute such a claim following application by the employee. If you are willing to allow the employee to make such a claim and not contest the question of resignation versus termination, you may be placing your organization in a contradictory position. If you want the employee’s unemployment benefits to be treated as if he or she resigned and thereby render the employee unable to obtain benefits until after the waiting period for a resignation, it should be clearly outlined in the general release. Therefore, it is our suggestion that such a determination be made in conjunction with counsel and all matters should be covered in settlement negotiations. Be certain to confirm the final decision on unemployment benefits is up to the applicable state agency.
B. When should a general release/resignation be utilized?
Any time an employee is leaving your employ for any reason and is simultaneously entering into a workers’ compensation settlement, we recommend that a combined general release/resignation strategy be considered. As a workers’ compensation professional, even if you settle a “small” claim where a petitioner is changing jobs, it is a prudent idea to consider obtaining a common law release and resignation. The worst nightmare of any workers’ compensation professional would have to be resolving a total and permanent disability claim with a coincidental resignation. Immediately following completion and payment of the settlement, petitioner indicates they are withdrawing the resignation and seeks accommodation consistent with the Americans with Disabilities Act, claiming to be unaware of their disabled status and the requirement the employer accommodates the worker. Even worse would be a claim the employer coerced the resignation as part of settlement to take advantage of the disabled status and thereby retaliatorily discharged them.=
These are just two of the examples which might conceivably occur. There are a variety of other potential scenarios which could just as easily develop which might leave the workers’ compensation professional in an embarrassing or annoying position. Your highest priority must be to insure that once you have settled the workers’ compensation claim with a coincidental resignation, every effort is made to insure the resignation ‘sticks.’ You do not want petitioner to return with any sort of litigation or benefit claim which you have not contemplated and have ‘allowed’ him or her to make (such as the claim for pension benefits outlined above). Every possibility should be considered as part of settlement negotiations. It is our recommendation the only way to insure this has taken place is to obtain a written general release/resignation with appropriate consideration to support same.
C. One caveat: workers’ compensation lawyers may not be well-versed in employment law
One interesting aspect of utilizing a general release in conjunction with a workers’ compensation settlement is the workers’ compensation attorney is not typically retained to provide advice with regard to the wider range of employment law issues and may be ill-informed with regard to same. Illinois workers’ comp attorneys are retained by their clients pursuant to a specific statutory language on a Commission approved form. This form sets out the narrow scope of the attorney’s retention and limits the fee to the workers’ comp claim only. It is an open question as to the amount of the fee the attorney might receive on monies paid to support the general release/resignation.
Many workers’ compensation lawyers will balk at being asked to review the broader employment law issues if you tender a general release and resignation at the time of the worker’s compensation settlement. It becomes incumbent upon you to insist the attorney provide the client/employee with appropriate legal advice or refer the matter to an employment lawyer competent to advise the employee.
Remember the workers’ compensation lawyer when settling a total and permanent disability claim typically receives a hefty fee. As part of the services which earn the fee, the lawyer should be equipped to fully and properly advise the client with regard to the bundle of rights which may be affected by the settlement of the workers’ compensation claim along with relinquishment of employment coincidental thereto. If the attorney gives you any indication they are unable or unwilling to properly advise the client, you should insist it is their responsibility to do so to avoid any claim by the employee they did not receive effective representation by counsel. Do not allow the workers’ compensation lawyer to claim ignorance or apathy and utilize it to the benefit of the client. You have to insist and insure the attorney has fully advised petitioner of the rights being preserved or being given up to avoid later confusion or litigation.
Please also remember the workers’ compensation hearing officer in Illinois and most states will not consider, review nor approve a release/resignation—it is outside their statutory authority. Trust us; they have enough headaches in dealing with the many forces that pull on them from every direction. They don’t need to be involved in general employment law concerns.
D. A note of caution in setting up the settlement with a release/resignation
When you present the settlement to opposing counsel, it is our suggestion you do so by first splitting the workers’ compensation settlement and monies reserved to support the general release. For example, if it is your intention to settle the case for a total of $150,000 to include monies to support the release/resignation, present the settlement to counsel by indicating you will pay $145,000 to settle the workers’ compensation case. You should also indicate you will provide an additional $5,000 to support the coincidental general release and resignation.
The purpose of bifurcating the finds in advance is to avoid the suggestion you are intimidating or coercing the employee to settle the worker’s compensation case and part of the plan was you would not pay any monies in settlement unless petitioner was forced to resign. You want the monies that legal effect to the resignation and release to be “fresh money.”
E. Do you need two defense lawyers to effectuate a general release/resignation?
There is a major U.S. insurer that requires its accounts to hire separate defense counsel when they are seeking a general release/resignation. For our clients who require it, we are happy to participate. But in all candor, we consider it a complete waste of time and money. The problem is workers’ compensation insurers aren’t paid to resolve general employment rights but when they hire defense counsel to represent you, the attorney’s responsibility is to ethically protect you in every way possible. If that ethical responsibility includes spending some time covering your employment liability, so be it.
F. Your overall goal in obtaining a release/resignation.
The goal of the workers’ compensation professional in settling a claim where petitioner has left employ is to be certain the employee does not come back or cost you thousands after they leave. You also want to be similarly satisfied you have no exposure to litigation or administrative claims subsequent to the resolution of the employment status. We strongly suggest you consider a strategy employing a coincidental general release/resignation in conjunction with the workers’ compensation settlement to insure this necessary result. We also strongly caution that you should always discuss this with counsel whether petitioner is represented by an attorney or not.
If you have questions or concerns about handling a general release/resignation or if you want our form, please send a reply or forward your comments and concerns.
