If an employer offers to settle a claim with a release conditioned on the employee resigning, and the employee has a 15 percent permanent disability, which approach is appropriate?

• A. Advise the employer it is okay
• B. Advise the employer it is against public policy
• C. Prepare a stipulated Findings and Award for 15 percent
• D. Compromise and Release the claim with wording that the extra money is for the resignation

Answer: (B)

Conditioning a workers’ compensation settlement on the employee resigning is against public policy. California public policy protects workers from being pressured to leave their jobs in order to receive benefits, so a release that only comes if the employee quits is an improper coercive tactic. The fact that the employee has a 15 percent permanent disability does not justify or validate forcing resignation as part of a settlement.

If a settlement is pursued, it should be done through a legitimate Compromise and Release or a stipulation that fairly resolves the claim without tying the agreement to the employee’s job status. The employee’s impairment rating may influence the settlement terms, but it cannot be used as leverage to compel resignation. A separate separation agreement could be handled outside the workers’ compensation process, if appropriate, without conditioning the claim’s resolution on resignation.