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“(They) Say you want a (Settlement) We all want to Change the World.” Vons v.Vaca: The effect of general civil releases on workers compensation claims.

In Vons v. Vaca (2020) 85 Cal.Comp.Cases 1036, the Appeals Board once again sacrificed a settlement to the authoritarian derivations of the Workers’ Compensation Appeals Board. IN Vons v. Vaca, supra, the issue of whether applicant’s Labor Code §132a (hereinafter “132a”) claim was made invalid by a civil settlement.

Applicant filed a workers’ compensation claim for his injuries and a 132a claim at the WCAB. In addition, Applicant filed a civil discrimination claim against the employer in the Superior Court of California. The 132a claim and the civil claim were based on the same factual grounds and cause of action. Subsequently, Applicant settled his civil claims with the employer and entered into a “Confidential Settlement Agreement and General Release” (“Release”). Generally, the Release settled all claims arising from applicant’s employment or termination and applicant agreed to “withdraw any and all pending charges or complaints of discrimination filed against any of the defendants in the Action with any governmental agency that are open at the time of Plaintiff’s execution of this Agreement.”  (Emphasis added.)

Applicant went on to pursue the 132a claim and defendant offered the civil settlement agreement as evidence that the 132a claim was previously settled.

Trial was held over this issue. The WCJ found that applicant’s 132a claim was not subject of a valid settlement agreement and determined that the WCAB must approve the terms of a 132a claim for the release to have a legal effect. Thus, applicant could pursue the 132a claim. Defendant’s filed a Petition for Reconsideration.

Defendant contended the Labor Code only requires WCAB approval of releases of liability for compensation set forth in Division 4 and not releases of rights fixed by 132a, which is set forth in Division 1. Since a 132a claim is a penalty provision and not technically a claim for benefits, the defense argued that the civil settlement’s releases did not require WCAB approval.

The WCAB rejected defendant’s argument and found that per Labor Code § 5001 and Labor Code § 5002, all releases of liability must be approved by the WCAB. The WCAB held that “although Labor Code § 132a claims are not claims for workers’ compensation benefits per Division 4, they concern rights incidental to such claims and, therefore, are subject to settlement approval requirements set forth in Labor Code §§ 5000–5006 of Division 4, that Labor Code § 5000(a) expressly prohibits releases that purport to exempt employers from liability for workers’ compensation benefits without limiting parties’ legal ability to settle their disputes in the manner provided by Division 4, and that under Division 4, all releases of liability, including those encompassing Labor Code § 132a claims, must be submitted to and approved by the WCAB.”

Practice Pointers

Parties may still settle both the workers’ compensation claims and civil claims together:

If the workers’ compensation claim and related civil claim are being settled at the WCAB, then the parties must include a separate document with language expressing the parties’ intent to settle the civil claim. (See, Claxton v. Waters, (2004) 34 Cal. 4th 367).

The civil claim(s) contemplated as part of the workers’ compensation settlement must be referenced in clear and non-technical language; overbroad and vague language will not be sufficient to release the claims. Proper formatting (such as bolding and underlining) should also be utilized. (See, Camacho v. Target Corp. (2018) 83 CalCompCases 1014).

If the civil claim and the workers’ compensation claim are being settled in Superior Court, then settlement of the workers’ compensation claim is conditional on WCAB approval. (See, Steller v. Sears Roebuck (2010) 189 Cal.App.4th 175, 180)

The bottom line is that all settlements that effect the worker’s compensation case have must be approved by the Worker’s Compensation Appeals Board. The authoritarian power of the Board once again defeats and supersedes the power of the parties to settle a case.

By Catherine M. McLaughlin, Esq., Associate Attorney, San Diego Office March 2021