In Leonetti v. MacDermid, Inc., the Supreme Court of Connecticut recently affirmed a decision by the state's Workers' Compensation Review Board refusing to approve a separation agreement that included an employee's release of his workers' compensation claims because the release was not supported by consideration. Pursuant to Connecticut statute, an employee's release of a workers' compensation claim is not binding unless it is approved by the Workers' Compensation Commission.
Stephen Leonetti worked for MacDermid, Inc. for 28 years until
he was discharged in November 2009. Five years earlier, in June
2004, Leonetti had sustained a lower back injury in the course of
his employment that left him with a ten percent permanent partial
disability, and will likely require surgery in the future. Leonetti
filed a workers' compensation claim related to this injury, and
the parties did not dispute that it was a compensable injury.
When MacDermid informed Leonetti that his employment was being
terminated, it presented him with a severance agreement. The
agreement offered to pay Leonetti the equivalent of one week of pay
for each year of service to the company. It also required Leonetti
to release MacDermid from all claims, including workers'
compensation claims.
Leonetti objected to releasing his workers' compensation
claim. MacDermid, however, refused to revise the agreement.
Ultimately, Leonetti signed the agreement and received a severance
payment of $70,228.51. Several months later, the Workers'
Compensation Commissioner held a formal hearing to determine the
enforceability of the release of Leonetti's workers'
compensation claim.
The commissioner found that, because the payment made to Leonetti
was based on the length of his employment and did not include any
money for his workers' compensation claim, there was no
consideration to support his release of that claim. Accordingly,
the commissioner refused to approve the agreement. On appeal, the
Workers' Compensation Review Board affirmed the
commissioner's decision. MacDermid further appealed to the
Connecticut Appellate Court, and the case was transferred to the
Supreme Court.
The Supreme Court ruled that, regardless of whether the
parties' agreement was enforceable at common law, no
stipulation in a workers' compensation case is binding until it
is approved by the Workers' Compensation Commission.
"Thus, the agreement signed by the parties had no effect on
[Leonetti's] workers' compensation claim unless and until
the commissioner approved the agreement." Because the
agreement was not approved by the commissioner, Leonetti's
release of his workers' compensation claim was
unenforceable.
Connecticut employers should take note of this decision when
drafting separation agreements and calculating severance pay for
employees with outstanding workers' compensation claims. While
it is not a guarantee, allocating a particular amount as
consideration for the release of any workers' compensation
claims may make such releases more likely to receive the necessary
approval of the Workers' Compensation Commissioner.
Originally published on the Employer's Law Blog
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