NYS Workers’ Compensation Board to Scrutinize General Releases Attendant to Section 32 Agreements
Knowledge

NYS Workers’ Compensation Board to Scrutinize General Releases Attendant to Section 32 Agreements

Key Takeaways

  • The New York State Workers Compensation Board has announced a change in policy regarding the Section 32 Agreement, effective December 6, 2021

  • The new WCB policy mandates the party signing the Section 32 agreement on behalf of the carrier/self-insured employer to affirm that there are no additional agreements between the parties that are not reflected in the Section 32 agreement

  • Such general releases will be heavily scrutinized by the WCB, which may lead some law judges to refuse to approve the Section 32 Agreement simply because they view the general release as unacceptable

 

On Friday, October 8, 2021, the New York Workers’ Compensation Board announced that, as of December 6, 2021, it would begin mandating an affirmation by the party signing the Section 32 Agreement on behalf of the carrier/self-insured employer that there are no additional agreements between the parties that are not reflected in the Section 32 Agreement. The stated aim of this was to force the parties to disclose any general release of liability that was agreed attendant to the Section 32 Agreement. The WCB has traditionally taken a dim view of general releases, but has seldom acted upon them, so this is a change in policy.

The claim of the employer and carrier community has long been, and remains, that the WCB has no jurisdiction over general releases, and that the terms exist outside the purview of the workers’ compensation law. We hope that there will be legislative action to clarify this issue, but for now, we need to assume this mandate will be enforceable. This means that for our clients looking to have a general release executed attendant to a Section 32 Agreement, we will need to come up with a plan of action. This may mean that we insert language directly in the Section 32 Agreement or attach it as a supplemental exhibit, depending on the scope of the release.

Most of all, we need to discuss whether it remains worthwhile to seek a general release. The language of the WCB’s announcement makes it clear that such general releases will be heavily scrutinized; they will not be rubber-stamped just because the parties disclose the existence of a general release. As such, some thought should also be given to the amount of consideration in said release, as well as the scope.

We must also note that in light of this new mandate, we will no longer be able to sign a Section 32 Agreement on the client’s behalf where a general release and/or resignation is part of the agreement; said agreements will need to be executed by an employee of the carrier/self-insured employer.

There is a very good possibility that law judges will simply refuse to approve the Section 32 Agreement because they view the general release as unacceptable on its face. The WCB, as noted, disfavors general releases and the language of their announcement is chilling. The directive takes effect on December 6, but we expect that there will be individual judges who will be aggressively policing this issue before that time.

To discuss the ramifications of this with any Section 32 Agreement, please contact: