California Update: Civil Court Can’t Approve Settlement of Workers’ Comp & Discrimination Claims



Posted: Tuesday, January 25, 2011

by Crystal O'Brien
MMC Inc.

In Steller v. Sears, Roebuck and Co., (10/14/2010), Division Six of the California Court of Appeal held that despite the parties’ knowing intentions to dismiss pending workers’ compensation and civil claims, counsel for the parties’ could not release all claims by seeking court approval of a global (civil court) settlement agreement.  In other words, the plaintiff’s workers’ compensation claims could not be dismissed without first the parties seeking approval of the workers’ compensation appeals board.

In California, Labor Code section 5001 protects an employee’s right to bring workers’ compensation claims regardless of an employee’s release of claims that may be associated with severance agreements and civil claims.  Thus in this matter, plaintiff Wendy Steller initiated a claim for disability discrimination while treating for a workers’ compensation  claim.  Generally, these claims allege that the employer is not treating the employee fairly and preserving rights pursuant to labor laws.  Thus the employer in this matter Sears reached a decision with plaintiff’s lawyer to settle all claims with a cash settlement with the assistance of the workers’ compensation insurance carrier.  Counsel drafted the documents, submitted to the civil court the settlement.  Thereafter, confusion as to whether the global settlement indeed included a settlement of the workers’ compensation claims ensued.

The appellate court concluded in review of the underlying proceedings that the lump sum settlement included all claims --- civil and those covered under the workers’ compensation system.  While the workers’ compensation appeals board (a separate judiciary system) had to approve the settlement that the civil court found lawful, the plaintiff’s claims would be fully released and no further rights to pursue claims covered by the global settlement could be pursued.

This decision is helpful in that it helps to clarify the limits of informal settlement of workplace disputes.  Simply, employers must work within the confines of the workers’ compensation system to resolve pending workers’ compensation claims.  This caveat extends to even exotic or more creative efforts to resolve all claims that are governed by administrative courts and/or civil courts.  To read more, please click here.
Crystal M. O'Brien, Esq. serves as MMC's Employment Law Manager/Corporate Counsel. After receiving a double-degree in psychology and sociology from Oberlin College in 1988, Ms. O'Brien earned a workers' compensation insurance claims adjusting license in 1991. She completed post-graduate studies in Human Resources Management at Portland State University's Graduate School of Urban & Public Affairs from 1996-1998 and earned a Juris Doctorate and Certificate in Dispute Resolution from Willamette University College of Law in 2001. Immediately following law school, Ms. O'Brien served as a judicial clerk to the Honorable Faith Ireland (ret.) of the Washington State Supreme Court. She is licensed to practice law in California Washington as well as before U.S. District Courts in each state. Collectively, Ms. O'Brien has 19 years of litigation experience.

To view her complete bio click here.

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