There’s been a significant increase the last month in Section 32 Agreements disapproved, or to which revisions have been demanded, due to a general release or resignation attendant to same.
Until recently, the WCB had not been policing these provisions, but this has now changed.
If you require a general release, it should be tailored narrowly as possible and only deal with claims resultant, or potentially resultant, from the injury of the workers’ compensation claim.
We’ve seen in the last month a significant increase in the number of Section 32 Agreements that a Workers’ Compensation Law Judge has either disapproved, or to which they have demanded revisions, due to a general release or resignation attendant to same.
To provide some background, it is important to note that in New York, a Section 32 Agreement is the only way to resolve a workers’ compensation claim on a full and final basis; a general release referencing a workers’ compensation claim is not sufficient.
The WCB indicated on Oct. 8, 2021 that, henceforth, it would demand that the parties to an agreement disclose any outside agreements attendant to a Section 32. (See here.) At that point, we had to file any resignations or releases reached with the claimant along with the Section 32.
On Sept. 30, 2022, the WCB issued guidance for general releases in which it indicated that while general releases were not, per se, going to be disapproved, it would review these with significant scrutiny. The main concern in that bulletin was that releases are not overbroad, and instead limit the release to claims related to the injury of the claim. (See here.)
Until recently, the WCB had not been policing these provisions, but this has changed.
First, we have seen several law judges disapprove the aforementioned resignations based upon provisions indicating that the claimant was not permitted to apply for employment with the employer in the future. The theory behind this is that such language is in violation of WCL sec. 120, which prevents an employer from discriminating against a person who has, or pursues, a workers’ compensation claim.
Second, we have seen judges begin to scrutinize the releases, as well. There was a very recent released Board Panel Decision in which the board disapproved a Section 32 Agreement based on a general release that it found to be unconscionable — the product of a disparity in bargaining power and inclusive of unrelated claims. At least one law judge has indicated that she is refusing to approve any Section 32 Agreement that includes a general release going forward.
Finally, apart from treatment by the law judges, we have seen numerous claimant attorneys refuse to allow their clients to execute releases in conjunction with Section 32 Agreements. Resignations have not usually been a problem.
Our best advice for this situation is that if you absolutely require a general release, that any such release should be tailored narrowly as possible and only deal with claims resultant, or potentially resultant, from the injury of the workers’ compensation claim. We cannot predict how this will be treated going forward, but it is consistent with the WCB guidance of Sept. 30, 2022. We also need to advise that some claimant attorneys will not allow a release to be executed, no matter how narrowly tailored.
We have more leeway on resignations; so long as they are not forbidding the claimant from applying for work moving forward, these should not be a problem with either claimant attorneys or law judges.
In any event, when we are discussing settlement, the need for a resignation or release must be brought up very early in the process so that we can advise appropriately and negotiate in good faith.
This is a fluid situation and we expect to see more comments from judges in the days and weeks to come. Please contact our team to discuss this further.
If you have any questions about these changes or how they impact your business, please contact:
Or another member of our Workers’ Compensation team