CALIFORNIA:  Workers’ comp settlements must be approved by WCAB

A California Appeals court recently set aside a signed settlement between an employer and employee because they failed to get the approval of the California Workers’ Compensation Appeals Board (WCAB) beforehand. Although the settlement agreement related to a disability discrimination claim, it included global language that the employer believed also settled the pending workers’ compensation claim. However, the court determined that the California Labor Code (5001 and 5002) actually requires the approval of the WCAB or a referee before the parties can compromise or release a claimant’s workers’ compensation claim (Steller v. Sears, Roebuck and Co., Cal App 4th, Oct. 2010). Thus, the portion of the settlement agreement that related to the workers’ compensation claim needed to be reviewed by the WCAB or referee before it could be enforced.

Tips: When settling a workers’ comp claim where the individual won’t be returning to work, employers often want to also obtain a release of all other employment claims. Typically this is done with a separate agreement that is signed at the same time. As this case illustrates, you need to get approval for the workers’ comp portion of your settlement agreement. One way to handle this is to make both agreements contingent on that approval. Contact your Vigilant staff representative for assistance.