Why is a Voluntary Resignation Required to Settle My Workers Comp Case?

If I Settle My Workers Comp Claim, Do I Have to Quit My Job?

You Cannot be Fired For Filing a Workers Compensation Claim or Receiving Benefits. But Your Employer and Its Insurance Company Can Ask You to Voluntarily Resign as a Part of the Settlement Agreement.

You have spent the last few weeks negotiating with the workers comp adjuster, trying to resolve your claim. But now that the two of you are just a few thousand dollars apart and a resolution seems likely, the adjuster says you will have to resign your job if you accept a settlement.

Is demanding a resignation legal?

This is a question that often comes up in workers compensation. And the answer is yes.

The purpose of this article is to explain why many employers and insurance carriers require a voluntary resignation as part of a workers compensation settlement. And what you should consider before quitting your job to settle your case.

Keep reading to learn more. Then call me if you have any questions about your case: 804-251-1620 or 757-810-5614. I have helped hundreds of injured employees negotiate Virginia workers compensation settlements and lifetime medical buyouts, And I can help you decide if you should voluntarily resign to settle your claim.

What is a Resignation?

Your employment with a company can end in one of three different ways:

1. Your company terminates your employment because it thinks you did something wrong. For example, you violate the company’s attendance policy or treat a customer inappropriately. This is called a “for cause” termination or “fired.”

In Virginia your employer can fire you for any reason, or no reason at all. With two exceptions.

First, your employer cannot fire you for a reason that violates public policy. That is why it is unlawful to fire an employee for filing a workers comp claim. Second, your employer may need a specific reason to terminate your employment if you have an employment contract, written or oral.

2. Your company terminates your employment because it does not have enough work for you to do. This is called “laid off.”

3. You quit your job. This is known as a resignation or retirement.

A resignation means you are quitting your job and leaving the company voluntarily. That is the focus of this article.

Does Workers Compensation Law Require Me to Resign My Job as Part of a Settlement?

No.

There is no specific workers compensation rule or law that requires you to resign your job when you settle your workers comp claim.

Can I Settle My Workers Comp Claim Without Quitting My Job?

Yes.

Some of you may hope to return to your regular job after recovering from the work injury.

While others of you have already returned to work – either full duty or light duty – and want to settle your claim without quitting your job.

You can settle your workers comp case without resigning. But only if the employer and insurer agree you can keep your job as part of the settlement.

If There is No Specific Rule or Regulation, How Can My Employer Force Me to Quit My Job if I Want to Settle?

A resignation may not seem voluntary if your employer is forcing you to quit as part of a workers comp settlement.

The reason that it is considered a voluntary and not a forced resignation because you can choose not to settle your claim. All settlements are voluntary, which is why your employer can demand that you quit your job to receive a lump sum payment to close your case.

How Common is it for Employers and Insurance Carriers to Require a Resignation as Part of a Workers Comp Settlement?

Very common.

The employer or insurance company asks the injured worker to resign as part of settlement in about 75 to 80 percent of the claims I handle.

Many big employers, such as Walmart, Amazon, Target, Kroger, Home Depot, United Airlines, Wegmans, and American Airlines, often refuse to settle a workers comp claim unless the employee quits or retires.

Who Wants Me to Quit: My Employer or Its Insurance Carrier?

Many of my clients are surprised that their employer is requiring a resignation to settle the workers comp claim. They have worked for the employer for years and have a good relationship with their boss and co-workers. They hope to recover enough physically to return to the only job they have known for years – or had hoped to keep for years.

There is an explanation for why the employer is requiring a voluntary resignation. And it has nothing to do with the employer.

Usually the insurance carrier or third party claims administrator, such as Sedgwick or Gallagher Bassett, requires the voluntary resignation as a part of settlement, not the employer.

That is because the insurer and TPA are the companies actually paying your workers compensation benefits and managing the claim. And the ones who would have to pay additional workers comp benefits if you are re-injured on the job after settling your case.

Sometimes, however, the employer itself pushes for the resignation as part of settlement. I discuss this in more detail below.

Why Do Employers and Insurance Companies Often Require Resignations as Part of Workers Compensation Settlements?

It is unlikely that the insurance company will give a reason for why it is requiring a resignation. But as a former insurance defense attorney, I can tell you that some of the most common reasons include:

• The insurance company does not want to have to pay you twice because of re-injury. Let’s say you are allowed to return to work after receiving a $100,000.00 settlement for your back injury. If you return to work for the same employer and re-injure your back three months later, not only would you have the settlement from your first claim, you could also file a workers comp claim for the re-injury. Under the workers compensation law, the employer and its insurance carrier must pay additional cash and medical benefits if you suffer a new injury that aggravates, accelerates, or flares a pre-existing condition such as degenerative disc disease or arthritis. I have seen this happen in many herniated disc, neck injury, and spinal fusion cases.

• The employer and insurer want to discourage your co-workers from filing workers comp claims. Some employers and insurance companies think that employees will file more workers comp claims if they know they can return to work after receiving a settlement. By making it known that you will have to quit your job to get a settlement, the employer and insurer hope to reduce the number of claims filed and their costs. This is a workers comp claim deterrence strategy. And while I understand its purpose, it results in many claims staying open longer than they should and the loss of many good employees.

• The employer does not want you to work there anymore. And a voluntary resignation as part of settlement gives them a way to terminate your employment lawfully. Usually this happens when an employee had a history of write-ups and discipline before the injury.

Can I Reapply for My Job if I Resign as Part of a Workers Comp Settlement? Watch Out For an Agreement Not to Reapply.

Maybe.

Some workers compensation settlements only require you to resign your job. This affects your current status with your employer, not your future status.

But other settlements require you to sign an Agreement Not to Reapply in the Future, or a separate document that includes “no rehire” language. That means you can never go back to the employer after settling your claim.

Can I Sue My Employer for Labor and Employment Law Violations if I Voluntarily Resign as Part of Settlement?

Maybe.

That depends on whether you are required to sign an Employment Release as part of settling your workers comp claim.

What is an Employment Release?

An Employment Release is a binding legal contract between an employee and employer.

By signing the Employment Release, you give up any and all employment claims you may have outside the scope of your workers compensation claim. That includes waiving any claim against your employer for:

• Breach of contract

• Discrimination based on race, color, religion, sex, or national origin

• Emotional distress

• Intentional infliction of emotional harm

• Payment of back wages, including overtime

• Retaliation for filing a workers comp claim

• Sexual harassment

• Unemployment compensation benefits. Though you can negotiate the contract to state that the employer promises not to contest or dispute your right to unemployment benefits after you resign.

• Violation of the Americans with Disabilities Act (ADA)

• Violation of the Family and Medical Leave Act (FMLA)

The Workers Compensation Commission does not have jurisdiction over labor and employment law claims.Therefore you should not submit the Employment Release and Resignation to the Commission when asking for approval of your settlement. The settlement documents must, however, state that there is an ancillary agreement, and list the various ancillary agreements.

What Should I Do if I Have to Sign an Employment Release to Settle My Workers Comp Case?

There are several things I recommend doing if the employer or its insurer not only require a voluntary resignation but also an Employment Release and Agreement Not to Reapply as part of your workers compensation settlement.

First, speak with an employment lawyer to find out if you have any valid labor or employment law claims. You may have a legal cause of action for discrimination or wrongful termination that has a value greater than the proposed work injury settlement.

Second, negotiate additional release terms that will make it easier for you to find a new job. Examples include: reference letters from your supervisors; non-disparagement agreements, which penalize the employer for speaking poorly about you to other employers or persons in your industry; and payment of health insurance premiums for an extended period post-settlement. Do not be surprised, however, if the employer wants you to agree not to disparage it, or to sign a confidentiality or non-disclosure agreement.

Third, ask for more money to resign and to release all employment-related claims. The payment of money is necessary to make the Employment Release binding. This is called “consideration.” And your employer must pay the money for the release, not its workers compensation insurance company. Your employer will likely offer a low amount to sign the release, such as an additional $100 on top of the settlement amount. Some even take the position that the prospect of settling your workers comp case is consideration for the Employment Release. No matter the employer’s initial position, ask for more. If you have potential employment law claims you can negotiate much more.

Fourth, ask the employer and insurer to allocate the additional resignation and release money to the workers comp settlement. Monies paid under a workers compensation settlement are not considered taxable income. But monies paid under the Employment Release are. I recommend allocating as much of the total amount as possible toward the settlement and away from the release so that you net more.

The decision to resign your job and to release all employment related claims is a major one. So take your time. Under federal law you have 7 days to withdraw your consent to the Employment Release. If you have second thoughts about giving up your job and potential employment law claims, you can back out during this period.

What Can I Do If My Employer Won’t Settle My Workers Comp Claim Unless I Quit?

If your employer requires a voluntary resignation but you refuse to give one, your only option is to make sure you get all the workers comp benefits you are entitled to.

For example, reaching maximum medical improvement (MMI) is one of the stages in a workers comp case where it makes sense to evaluate the claim for settlement. If settlement is not possible because of the resignation issue, make sure you obtain a permanent impairment rating for your work injury and file a change in condition claim seeking permanent partial disability (PPD) benefits after reaching MMI.

Get Help Evaluating Your Options When a Workers Compensation Settlement Require Resignation and Release of Employment Claims

It does not seem fair, but your employer or its insurer can ask you to voluntarily resign as part of a workers compensation settlement agreement.

Whether you accept this proposal depends on many factors:

• How much is the insurance carrier offering to settle? The more money offered, the easier the decision to resign and release all claims.

• Do you want to stay at your job? If your employer mistreated you during the work injury process, you may have no desire to return. On the other hand, you may want an opportunity to return if you were hurt while working for a long-time employer that has treated you well.

• Will you be able to return to your job? If not, there is no risk to resigning and agreeing not to reapply.

• Are you able to perform your job with modifications? If so, your employer may have an obligation to offer a job under the ADA. This gives you leverage in negotiations.

• Will you be able to return to any type of employment?

• How long will it take you to find a new job with your restrictions? If you have a limited education and live in a rural area with few employment opportunities, I would hesitate to sign an agreement not to reapply if you are confident your recovery will progress to the point you can return to work.

• How much money will your employer pay in exchange for your resignation, in addition to the settlement funds?

Before agreeing to resign, release all employment-related claims, or agree not to reapply, talk with an experienced workers compensation attorney about your options.

If you live or work in Virginia, I can help: 804-251-1620 or 757-810-5614.