Imagine that an employee of yours gets injured at work. He files a claim for workers’ compensation, goes out on leave, and returns to work two weeks later. Two weeks after that, the employee is fired for a policy violation. Several months later, the employee signs a Compromise and Release Agreement (“C&R”) to settle his workers’ compensation claims. In the C&R, the employee releases all aspects of his work injury claim and its “sequela whether known or unknown” at the time of its execution. You breathe a sigh of relief, knowing that will be the last you hear from this employee.
Except it’s not. Several months after signing the C&R, the employee sues your company in federal court, claiming that it interfered with his rights under the Family and Medical Leave Act (“FMLA”) by failing to notify him of his rights under the FMLA or designating his leave as FMLA-qualifying. He also claims that he was retaliated against for exercising his FMLA rights and for filing a workers’ compensation claim. Your company argues that these claims should be dismissed, as they are encompassed by the release language in the C&R.
Except they’re not. In a decision issued earlier this fall, the U.S. Court of Appeals for the Third Circuit, faced with this very fact pattern, found that the employee’s FMLA and common law wrongful termination claims were not precluded by the C&R. In particular, the court found that the release, which was intended to waive the employee’s work injury claims and any work injury claim suit (or “sequela”), was not the general release that the employer thought it was.
This decision highlights why employers should be careful and precise when drafting release agreements, which courts will examine very closely under contract law principles. For questions about this or any other labor and employment topic, please do not hesitate to contact a member of our Labor and Employment Department.