Filing an Employment Lawsuit and a Workers' Compensation Claim

Employees may file an employment lawsuit for discrimination and a separate claim for workers’ compensation benefits. It is common in our practice that employees who have suffered disability discrimination or been subjected to a hostile environment that prevents them from continuing to work will be involved in two separate legal proceedings, one for the discrimination or harassment and the other for workers' compensation. Sometimes, one of the lawsuits will settle before the other is resolved. This question often comes up: Can you continue one claim after settling the other?

In New Jersey, the answer is "yes." In 2010, the New Jersey Appellate Division ruled (in Passaic Beth Israel Hospital v. Perez)  that a settlement of a discrimination and retaliation claim did not prevent the employee from continuing with his workers' compensation claim. The settlement agreement in the discrimination and retaliation claim did not specifically mention the workers' compensation claim or state that it was intended to be part of the settlement. The settlement agreement did state that the employee waived any rights against the employer -- as is typical in a settlement agreement. The employer argued that the language prohibited the employee from continuing with the workers' compensation claim. The New Jersey Appellate Division disagreed and found for the employee.

The Appellate Division's ruling emphasizes the importance of making sure the settlement agreement is clear about what everyone is agreeing to. If the settlement agreement is ambiguous, the employee or employer may inadvertently give up certain claims or rights that they did not intend to waive. To avoid these unintended results, both sides should make sure the contract is clear -- before they sign.  

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