By Patricia C. Collins

Reprinted with permission from the October 24th edition of the The Legal Intelligencer © 2017 ALM Media Properties, LLC. All rights reserved.Further duplication without permission is prohibited.

In Zuber v. Boscov’s, United States Court of Appeals for the Third Circuit, No. 16-3217, the Third Circuit reversed a decision of the Eastern District of Pennsylvania that dismissed an employee’s claims under the Family and Medical Leave Act (“FMLA”) and common law on the basis of a compromise and release agreement signed by the employee to settle his workers’ compensation claims. 

The timeline is important to the Court’s determination.  Zuber was injured at work on August 12, 2014.  He filed a workers’ compensation claim and went out on leave, returning to work on August 26, 2014.  His employment was terminated on September 10, 2014.  On April 8, 2015, Zuber signed a Compromise and Release Agreement to settle his workers’ compensation claims.  On July 9, 2015, Zuber filed his FMLA claims against Boscov’s.

Zuber’s Complaint alleged that Boscov’s interfered with his FMLA rights by failing to notify him of his rights and by failing to designate his leave as covered by the FMLA.  He also alleged that Boscov’s retaliated against him for exercising his rights under the FMLA and for asserting a workers’ compensation claim under Pennsylvania common law. 

Boscov’s moved to dismiss the Complaint on the basis of the Compromise and Release Agreement, and the Eastern District of Pennsylvania agreed.  The district court found that the Compromise and Release Agreement was a general release meant to waive all claims, including the FMLA and common law claims.  The district court opined that the release include “broad, all-encompassing language” relating to the work injury claim and its “sequela.”  Specifically, the district court noted that the use of the words “sequela whether know or unknown at this time” broadened the scope of the release.

In so doing, the district court relied on two cases:  Hoggard v. Catch, Inc., No. 12-4783, 2013 WL 3430885 (E.D. Pa. July 9, 2013)(Kelly, J.) and Canfield v. Movie Tavern, Inc., No. 1303484, 2013 WL 6506320 (E.D. Pa., Dec. 12, 2013)(Baylson, J.).  In Hoggard, the release in question recited that it “completely resolves all claims and issues arising out of the claimant’s injuries….”  The Hoggard court found that this language resulted in release of all employment claims against the employer which arose from the work injury, including wrongful termination claims.  In Canfield, the release in question recited that it released all “workers’ compensation claims….”  Because it was specifically limited to workers compensation claims, the Canfield court found that the release did not waive the employee’s employment law claims. 

In reversing the district court to find that the Zuber release did not release the employee’s FMLA and common law claims, the Third Circuit analyzed the phrase “sequela, whether known or unknown at this time.”  The Third Circuit found that the release was unambiguous of its face, and refused to review parol evidence.  The Third Circuit noted that the word “sequela” means “suit,” and that the language of the release thus was intended to waive his work injury claims and any “work injury claim” suit.  The modifier “its” before the word “sequela” renders the release limited to the workers’ compensation claim.  Further, the Court noted that the agreement to forfeit any damages claims was also modified by the phrase “work injury claims.” 

Interestingly, the Third Circuit also based its determination on the “structure” of the release.  Elsewhere in the document, the agreement recited that its purpose was to resolve the work injury claim, and that it was a release of the employee’s workers compensation claims.  Given this language, the Third Circuit reasoned, the release paragraph could not be read as a general release.  Accordingly, the Third Circuit held that Zuber did not waive his FMLA and common law claims.

The issue of the impact of Compromise and Release Agreements in the context of later wrongful termination claims is a common one.  The Third Circuit’s opinion, read with the opinions in Hoggard and Canfield, suggests that courts will meticulously review the agreement under general contract principles to determine whether there was a waiver of broader employment law claims.  The interesting thing about the Zuber opinion is that both the district court and the Third Circuit engaged in this meticulous review of the language and came up with a different answer. 

Likely, this results from the procedural posture of workers compensation claims.  Those claims proceed on a completely separate track than any statutory or common law termination claims, and the issues are narrow:  wage loss and medical expenses as a result of a work injury. Further, the workers compensation settlement is sometimes reached while the wrongful termination suit is pending.  An unintended result to a challenge to a Compromise and Release Agreement (for example, a finding that a release is limited where one party intended it as general) might result from the procedural posture of both cases, error, or lack of precision in drafting.  Courts will have to unravel imprecise language without reference to that context. 

The Zuber opinion highlights the importance of clarity and consistency in a release.  The issue of whether or not a release is a “general” release should be discussed, agreed to, and recited in the release.   In the context of settling workers’ compensation claims, this might require discussing with the client any common law or statutory employment claims, and, for the employer, a discussion regarding the possibility of future claims.  The opinion in Zuber reflects that it will be difficult to predict what a court will do with particular language in the agreement.  

Patricia Collins is a Partner with Antheil Maslow & MacMinn, LLP, based in Doylestown, PA. Her practice focuses primarily on commercial litigation, employment and health care law. To learn more about the firm or Patricia Collins, visit www.ammlaw.com.  

Harvey Weinstein’s conduct is irresponsible, atrocious and potentially criminal, but that’s not the point of this blog.  Instead, I would like to take the opportunity presented by Weinstein’s case (and the many others in the news this year) to talk about reporting and remediating workplace harassment. 

Weinstein is the next in a line of prominent men accused of decades of harassment.  It appears that at places like Fox and Miramax, and now Amazon, harassment by the boss was a feature of workplace culture.  How did responsible employers allow this to continue?  Did the women not complain?  Did the employer bury the accusation?  Didn’t anyone know?  There is some evidence that the answer to all of these questions is yes:  the women felt that they could not complain, the employer buried the accusations with financial settlements, and many knew and did not raise any red flags out of fear or intimidation. 

The other common theme in these cases is the kind of harassment that took place:  abuse of position, arrogance about complaints, “quid pro quo” promises, and intimidation. 

Employers should consider their policies and practices to ensure a workplace free from this conduct.  Serial harassers poison the culture of the workplace and hurt the bottom line.  A recent article in the Wall Street Journalnoted the impact on the workplace of “rude” employees.    Imagine the impact of intimidating, harassing executives who abuse their power?  If employers have a serial harasser in a leadership position, it is time to face the music and address the behavior.

Employees should have an easy means of complaining.  Policies should allow employees to “go around” the harassing superior in order to make the complaint, and the harasser should not be included in decision making regarding the complaint.  Employers should avoid overly formal complaint procedures or reliance on form over substance.  Employers should conduct professional, confidential investigations, and farm the investigation out to a third party if necessary. 

It is important to note that settlements are not a license to keep a harasser employed.  The employer still has knowledge of the harasser’s bad behavior, and steps should be taken to avoid repeated incidents.  Those steps might include termination of important employees. 

A common theme in these high-profile cases is that the conduct started (and thus the culture was created) in a “different time” when these workplace protections were not in place.  That’s absurd.  Title VII became law in 1964, and employers should pride themselves on operating a modern workplace, compliant with laws that have been on the books for decades. 

So, how modern is your workplace?  Do you have a serial harasser?  Are you burying complaints to protect an executive?  Do your employees have a safe, easy way to make complaints to an independent person?  AMM can help employer develop a common sense policy that protects your business and your employees.