On October 8, 2021 the New York Workers’ Compensation Board announced that as of December 6, 2021, all Section 32 Waiver Agreements submitted to the Board for approval must be accompanied by an affirmation or affidavit executed by the person who signs the agreement on behalf of the carrier/self-insured employer, or its designated third-party administrator, affirming under penalty of perjury that the agreement submitted to the Board for approval contains all the terms and conditions agreed to by and between the claimant and the carrier/self-insured employer, and that no separate agreements or contracts have been entered into by the parties that are not reflected in the agreement submitted to the Board for approval. The full announcement is here: https://content.govdelivery.com/accounts/NYWCB/bulletins/2f633a4
The point of this is obviously to attack the process whereby employers seek General Releases and Resignations at the time of Section 32 settlement.
The Board has created a new form (because of course it did!) which can be viewed here.
Note bene: The Board announcement does not mention resignations but this article will as they are analog to the practice of seeking general waivers at the time of Section 32 settlement.
This article covers the relevant laws, our current practice, and provides guidance to the practitioner on how we will adjust our Best Practices moving forward.
We are also holding two LIVE webinars on this topic, on Monday, October 18 at 12PM EST or 3PM EST. You are invited to register to attend here.
Current Law and Practice: Releases
What the Law Says
Whether by desk review or at a hearing, the Board must approve every Section 32 agreement brought before it unless it finds one of the following conditions to exist:
- The proposed agreement is unfair, unconscionable, or improper as a matter of law;
- the proposed agreement is the result of an intentional misrepresentation of material fact; or
- within 10 days of the submitting the agreement one oath parties requests the Board disapprove the agreement.
See WCL § 32(b).
The Board is using the first condition (“unfair, unconscionable, or improper as a matter of law”) to claim authority to review general waivers of liability obtained from claimants which are also obtaining a Section 32 settlement from their employer.
What the Law Says About Contracts or Agreements Outside The WCL
The Board has absolutely no jurisdiction over any contracts or agreements made between any employers and employees except when those agreements or contracts conflict with the application of the New York Workers’ Compensation Law. In general, the New York Workers’ Compensation law does not prohibit any contracts or agreements between employers or employees except for the following circumstances:
- The employer is asking the employee to waive their right to workers’ compensation in advance of a workplace accident or as a condition of employment.
- The employer is attempting to settle, resolve, or obtain dismissal of a workers’ compensation claim outside of the workers’ compensation court.
- The employer or employee are including agreements or waivers in a Section 32 waiver that exceed the jurisdictional boundaries of the worker’s compensation law.
- The employer discriminates against an employee who has filed a worker’s compensation claim against them. WCL § 120.
- As set forth above, where the employer or employee are including terms in a Section 32 settlement which violate a valid provision of the Workers’ Compensation law (on their face). For example, this would include a requirement of employment resignation as required consideration for receiving a workers’ compensation settlement.
Are General Releases Disallowed?
No, general releases are not disallowed.
However, the Board is clearly signaling that they will disapprove of any Section 32 where as a condition of the Section 32 agreement, another agreement has been reached and made a condition precedent to the Section 32 settlement.
So, as long as the General Release is not conditioned on the Section 32 settlement, then both will be allowed.
Put another way, the fact that the parties reach an agreement on a general release should not automatically disqualify the Section 32 settlement. However, we will specifically indicate the the General Release or Waiver is being obtained AND provide the required Affirmation of such so that the Board can approve the Section 32 settlement.
Current Practices Regarding Releases
An employer can seek a general release of claims that could have arisen from the employment relationship. Of course, most of these potential claims have nothing to do with the Workers’ Compensation claim, and are not the proper subject of the workers’ compensation settlement (i.e., are per se matters which could not be settled in the workers’ compensation forum.) Further, the releases are not filed anywhere or entered in any docket; they are merely kept as part of the defense counsel or employers file as prophylactic against potential future claims.
Why Seek a General Release?
So why do employers seek these prospective releases?
Releases and Waivers are sought to foreclose future litigation arising out of the employment relationship. The releases attempt to waive or extinguish a future right or benefit, or limit liability from an unknown (and potentially future) harm. While some rights and claims can be validly waived via such agreements (for example, most statutory claims, including discrimination claims like Title VII, ADA, FEHA, WARN Act, etc. that are brought to court, may be released by an employee, as well as common law claims, disability claims, and class action claims), many future claims cannot (for example, wage & hour claims, USERRA claims, age discrimination, unemployment claims, and of course future additional [consequential] workers’ compensation claims).
Another reason to seek a release is that General Releases or General Waivers impart an understanding of “finality” on the claimant.
Problems With General Releases
There are several problems with general releases which must be addressed.
- Unenforceable; Patently Defective
- Lack of Adequate Consideration
- Exceed the Scope of the Representation
In general, a well-crafted release accompanied by adequate consideration should avoid these typical problems.
Best Practices for Obtaining Releases / General Waivers of Liability When a Section 32 is Contemplated
Defense Practitioners must advise their clients that unless the following conditions can be met, the Board may disapprove the Section 32 settlement:
1. Update Language in the General Release
The General Release must state that it is being voluntarily offered and accepted, and that the acceptance of the General Release is not a precondition for the Section 32 settlement which may also be offered; and
2. Separate Consideration
The General Release must state that separate consideration is being provided to obtain the Release (i.e., the Release must not reference the workers’ compensation settlement in any way, and must not reference the workers’ compensation settlement as the consideration for the release); and
3. Add Language to the Section 32 Agreement
Language will be added to the Section 32 that although a General Release of other claims has been requested and obtained from the claimant, the Section 32 is not contingent on nor the basis of consideration for the General Release; and
4. Advise that Board May Look at Consideration Offered
Defense counsel must advise the employer that the Consideration (money paid for) the General Release must be deemed “adequate” and not “Unconscionable” and therefore should be more than de minimis to escape scrutiny of the Workers’ Compensation Board; and
5. Prepare and File An Affirmation (C-32F)
Defense counsel should prepare and file an Affirmation (C-32F) which states that the foregoing ([a]-[d]) conditions were met.
6. We Do Not Recommend Submission of Releases OR Any Correspondence Regarding Releases to the Board
It is our position that we NEVER submit correspondence, emails, documents, information, or copies of executed General Releases to the Board. the only information that the Board will get regarding the Release or Waiver is that (a) we include a reference to same in the Section 32 document, indicating that a waiver or release was sought, but that the Section 32 is not contingent upon same; and (b) We will file the required Affirmation (C-32F).
The actual General Release/Waiver of Other Claims should never be filed in the workers’ compensation docket nor supplied to the Board (by us).
That position does not change.
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