Workers’ Comp Settlement Didn’t Preclude Harassment Suit

By Joanne Deschenaux July 9, 2018
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A former employee who settled his workers' compensation case with his employer could later sue the employer for harassment and discrimination based on the same workplace conduct that led to the compensation award, the California Court of Appeal ruled. The language contained in the settlement agreement was not specific enough to preclude the new claims, the court said.

The plaintiff, who began working as a cashier at Target in August 2012, complained to his supervisor and to the human resources department about repeated verbal harassment from his co-workers based on the fact that he is gay. According to the plaintiff, his co-workers would ridicule, mimic and mock him, sometimes in the presence of customers.

The plaintiff claimed that rather than respond to his complaints by taking corrective action, Target retaliated against him by denying him a promotion and allowing the hostile work conditions to continue. He also claimed that he felt forced to resign because the situation became intolerable. Thus, he quit on Sept. 30, 2014.

In August 2014, prior to resigning, the plaintiff filed a claim for workers' compensation benefits, based on workplace injuries that he said he suffered as a result of the harassment. He asserted head and neck pain, as well as digestive and psychological problems.

In March 2015, the plaintiff settled his workers' compensation case with Target. He executed the mandatory preprinted compromise and release (C&R) form that is used in all workers' compensation cases, along with an addendum that included additional terms. He received $12,000 in exchange for executing the settlement document.

In August 2015, the plaintiff filed a lawsuit against Target, alleging sexual-orientation discrimination and harassment causing a hostile work environment, among other claims, based on the same facts that supported the workers' compensation settlement.

In September 2016, Target moved for summary judgment, seeking to have the lawsuit dismissed before trial. The trial court granted the motion and dismissed the suit, concluding that the C&R and addendum executed by the parties in the workers' compensation case constituted a general release of all potential claims that the plaintiff might have had as a result of the harassment he experienced at Target. The plaintiff appealed.

Workers' Compensation System

The California workers' compensation law applies to employee injuries arising out of and in the course of employment. Generally, workers' compensation is the exclusive remedy for such injuries. However, the court noted, discrimination and harassment based on race, national origin, gender or sexual orientation is not a normal incident of employment, and therefore, a claim for damages under the Fair Employment and Housing Act would not be barred by the exclusive remedy provisions of the workers' compensation act. Such claims, the court said, could be the subject of both workers' compensation proceedings and discrimination or harassment lawsuits.

Therefore, the court continued, California courts will carefully review workers' compensation settlement agreements to determine whether the parties also intended to settle claims that fall outside of the workers' compensation system. Only when the parties have referred to such claims in clear and nontechnical language will a court find that the parties intended to settle such lawsuits as well, the court said.

The court found no such language in either the C&R nor the addendum to the agreement. All language either referred specifically to the compensation claims or referred generally to "all injuries." At no point did the agreement mention other claims that might arise from the workplace events that provided the basis for the compensation claim, the court found.

[SHRM members-only HR Q&A: What is the California Fair Employment and Housing Act and what does it cover?]

The court reversed the trial court's order dismissing the plaintiff's harassment lawsuit, ruling that the case could proceed to trial.

Camacho v. Target Corp., Calif. Ct. App., No. D073280 (June 8, 2018).

Professional Pointer: When an employer settles a workers' compensation claim, it often has the employee sign a form that releases "all claims and causes of action." As this case shows, without more specific language, that type of release will likely not prevent a California employee from bringing a harassment or discrimination suit based on the same underlying conduct.  

Joanne Deschenaux, J.D., is a freelance writer in Annapolis, Md.

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