When Addressing a Workers’ Comp Claim, Don’t Forget FMLA (and ADA)…

If you hire or manage employees, chances are at some point or another at least one of your employees will be hurt on the job–and then you will be dealing with a claim for workers’ compensation benefits. Suppose you find yourself in such a situation and you settle the claim. Your employee receives benefits, and signs a release. For whatever reason you terminate your employment relationship with that employee a few months later. To your dismay, you then find yourself facing a lawsuit–for FMLA interference and retaliation. Your company moves to dismiss the lawsuit, since the employee  already signed a release. It should be a slam-dunk, right? Well maybe not. Read on to find out why at least one federal circuit court of appeals says it isn’t….

Yes, I am referring to a real case. ( I usually do.) The name is Zuber v Boscov’s. You can find the opinion here.

Here’s what happened? Mr. Zuber worked at Boscov’s at Fairgrounds Farmer’s Market, in Reading, Pennsylvania. In August 2014 he sustained a work-related injury and immediately filed a workers’ compensation claim. He received workers’ compensation leave. He returned to work about  two days later. So far so good. Five days after his return, he requested and received an additional week of medical leave and returned to work after the end of that leave as well. Again, so far so good. Approximately two weeks later, Buscov’s fired him. Then on April 8, 2015, Zuber and Boscov’s signed a Compromise and Release Agreement before the Pennsylvania Department of Labor and Industry Workers’ Compensation Office. Again, things sound good, right? Well, don’t get too comfortable.  Zuber sued Boscov’s on July 9, 2015.

Wait. Wasn’t the matter settled? Both Boscov’s and the United States District Court for the Eastern District of Pennsylvania seemed to think so, but on appeal the Third Circuit did not agree and reversed. Why? First, let’s look at why Mr. Zuber sued (beyond the facts that he was miffed and wanted money, because we should temper any cynicism we might have).

Mr. 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.

OK, all well and good, but again, didn’t Mr. Zuber sign a settlement of his claim with Boscov’s? Yes, he did. Let’s look at the relevant language of the settlement, then let’s see what the Third Circuit had to say–then we’ll get to the takeaways for employers. The Compromise and Release Agreement read 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, disfigurement [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. (Emphasis added).

The Third Circuit acknowledged that the settlement certainly waived any claim for further benefits under Workers’ Compensation. The question was whether the waiver could also apply to FMLA claims. The Third Circuit said “No”. Why? The court applied Pennsylvania contract law and case precedent, holding that “a release covers only those matters which may be fairly said to have been within the contemplation of the parties when the release was given.” The court then said that the ordinary language contained in the release suggests that the parties did not intend it to cover FMLA or common law claims. The court focused on the fact that the language (particularly that which I have italicized) focused on the right to bring an additional “work injury” claim.  Zuber did not in fact bring such a claim. He did bring an FMLA interference and retaliation claim and a claim of retaliation for exercising his workers’ comp rights. The court essentially held that the language in the release could not reasonably be understood to apply to these claims, however.

Some of you may be aware that the US Department of Labor amended FMLA regulations in 2008 specifically to allow for settlement of FMLA claims based on past conduct, without need of approval from the DOL or from a court. Why didn’t that help here? Again, the language of the release did not support a finding that the parties to the release intended to settle potential FMLA claims.

So what are the takeaways for employers? Yes, you need to make sure that whoever drafts the release is careful and clear and includes all potential claims. That is always the case.  If we stopped there, however we would miss a crucial point in dealing not just with workplace injuries but with employee leave. Are you ready? Here it is:

Zuber alleged that Boscov’s failed to notify him of his FMLA rights and designate his absences as FMLA leave after he reported his workplace injury. He also alleged that Boscov’s retaliated against him for exercising his FMLA (and workers’ comp) rights.  In other words, Boscov’s, focused only on the monetary benefits Zuber received under Workers’ Comp, and failed to even consider potential rights and claims under the FMLA — and possibly the ADA as well.  This is an area where more than one law may apply at the same time. Employers will often have intersecting obligations and need to be aware of them.  So the short answer is: don’t lose sight of potential FMLA and ADA claims when an employee sustains a work-related injury.

Now, if you want to learn more about these intersecting laws, I can help you there too. Recordings of my webinar,   Navigating the Overlap in Employee Leave (FMLA, ADA and Workers’ Comp) are now available.

You can register by clicking the title above.

OK, that’s it for now. See you next week!

Contents of this post are for educational/informational purposes only, are not legal advice, and do not create an attorney-client relationship. Consult with competent employment counsel in the state(s) in which you employ people with your specific questions.

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