Voluntary Resignation Enforceability

FROM MY BAR AT HOME:

“You’re right. Those hats are utterly terrible,” I said into my phone to my dear old friend, Jessica. “I can’t believe he chose them over you.”

Jessica was sobbing because she had just broken up with her boyfriend, Roger. For the past year they have enjoyed a sweet and caring relationship, but recently she could no longer turn a blind eye to something that was driving her absolutely crazy, and not in a fun way. Many of us have tried out questionable fashion choices over the past few months, out of the judging eyes of others.¹

Roger was no exception. He had taken on awful hats. At first it was just a corduroy fedora, but then he became very fond of a neon yellow newsboy cap. Next was the oversized baseball cap with silver metal studs. There were constant additions to the collection. Hats with feathers. Hats with brims that were much too large. Hats with brims that were much too small. Hats made out of denim. Each one was somehow less attractive than the one before it.

It was when he became committed to a Davey Crockett inspired creation, tail and all, that she decided she had had enough. She presented an ultimatum – Either the hats go, or I do. Roger. Chose. The Hats!²

Poor Jessica was beside herself, especially because Valentine’s Day was coming up and Roger had reserved an outdoor table on the patio of Jessica’s favorite fine dining establishment, which had only just reopened for outdoor service. There was no way she would be able to find anything nearly as nice on such short notice. There wasn’t even enough time to find a new date that she would want to let into her pandemic pod.

“I never should have made him choose,” she cried, “At least not until I got to eat an entire plate of gourmet-level pasta. Now I’ll be eating overcooked spaghetti in my pajamas all alone instead of bucatini with uni and lobster butter!”

I told her to buck up and recommended one of my favorite Italian restaurants that offered delivery as a suitable alternative. After we got off the phone I sat down to work, thinking about the common ultimatums presented in my own wonderful world of workers’ compensation. They are not breakup based but still relate to the ending of a relationship – a resignation requested as part of a settlement.

As you know, loyal Home Bar patrons, in our system there are two basic ways to settle a case — Stipulation with Request for Award, which typically leaves future medical care open, or a Compromise and Release, which can (but does not always) resolve all issues in the claim.

A Compromise and Release of all issues includes funds for resolution of future medical treatment costs. As a result, most employers do not wish to continue to employ the same person as doing so runs the risk that the employee may suffer a similar injury to the same part of body, resulting in a new obligation to pay for the medical treatment they presumably already paid for in the last settlement. For this reason, it is not uncommon for employers to condition a settlement on a voluntary resignation.

This is largely viewed as a permissible and uncontroversial practice. It has been found not to be a discriminatory or retaliatory action covered by California Labor Code §132a to require a resignation as part of a settlement. In Housman v. Workers Compensation Appeals Bd., 1999 Cal. Wrk. Comp. LEXIS 5563, the California Court of Appeal found that there was no violation of Labor Code §132a when a settlement was conditioned on a resignation because the employer had no duty to offer the applicant a Compromise and Release agreement. There have been some changes to the law and some cases from the past few years that, much like an ugly hat on an otherwise hot date, might make what is being proposed less attractive to the applicant.³

For example, in a recent unpublished 4th District California Court of Appeal case, Kennedy v. MUFG Union Bank, 85 Cal. Comp. Cases 116, it was held in part that because of a voluntary resignation as part of a workers’ compensation settlement, summary judgment was appropriate in the applicant’s civil claim for wrongful termination. In that case, the applicant had brought a host of civil allegations against their employer, including an allegation that they had been wrongfully terminated.⁴

However, the applicant signed a resignation as part of the settlement of their workers’ compensation claim. The applicant testified at their deposition that it was their understanding that they remained an employee until such time as they executed the resignation for the settlement. Since the applicant was not terminated but rather voluntarily resigned, there could be no wrongful termination claim.

In a similar case, Razon v. Southern California Permanente Medical Group (SCPMG), 2020 Cal. App. Unpub. LEXIS 7998, the applicant’s FEHA claim was barred by a broad release included in the resignation signed by the applicant as part of their workers’ compensation settlement. In that case, the applicant had FEHA claims in existence at the time they settled their workers’ compensation claim via Compromise and Release.⁵

The resignation included language specifying that the applicant would agree to release “Kaiser from any and all claims, known or unknown, which may exist… and waives any claim to monetary damages that may arise from claims specifically to include, but not limited to, all losses, liabilities, damages, and causes of action arising directly or indirectly out of the employer-employee relationship.”

The resignation then went on to list a specific number of claims which would be resolved by the executed resignation, but notably did not include FEHA claims. The applicant argued that this should not preclude them from pursuing their FEHA claim since it was not specifically identified as being released by the resignation, but the Court of Appeal disagreed. They cited the 2004 California Supreme Court decision of Claxton v. Waters, 34 Cal.4th 367, specifically stating:

It is unclear from the appellate decisions if the resignations were included in the documents submitted to the Workers’ Compensation Judge (WCJ) for approval. In practice, resignations typically are not filed along with the settlement and so in both Kennedy and Razon, the applicant’s rights to pursue certain civil claims were precluded by a document that was likely not considered or approved by a judge. Nevertheless, the documents were able to achieve defendants’ goal of limiting further liability.

DISCLAIMER:

All characters at my home bar are fictional and the storyline is simply a product of my dynamic imagination.

These cases demonstrate the reach that resignations for the purpose of a workers’ compensation settlement can have on other litigation outside of our little corner of the legal world. While they represent successes on behalf of the defendants in each claim, they can make future settlements more challenging for defendants if applicant’s attorney is concerned about impacting a separate civil claim.

A practical consideration in how aggressive a defendant may wish to be in seeking a resignation to facilitate a settlement is whether or not re-injury to the particular body part is likely, and what the future medical care for that type of condition would even be. If the applicant was bitten by a rare bug, suffered an allergic reaction and the future medical care consisted of some monitoring of that situation going forward, the employer may be willing to undertake the risk of the applicant potentially returning to work given the limited nature of the future medical care.

Joe Truce, formerly a managing shareholder at our firm and creator of George the Bartender, would draw our attention to California Evidence Code §452(d), which provides that judicial notice may be taken of “records of (1) any court of this state or (2) any court of record of the United States or of any state of the United States.”

We are still at home. Still making our own doubles and becoming more creative as the days pass. I miss the world. I miss my friends. I miss my colleagues. I even miss arguing at the Board, but we can get through this if we just keep trying, as best we can. We made it this far, we just have to keep going as a hopeful ending is now in sight.