MARY DOTZ, Complainant

JOHNSONVILLE SAUSAGE LLC, Respondent

An administrative law judge (ALJ) for the Equal Rights Division of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.

The commission has considered the petition and the positions of the parties, and it has reviewed the file submitted to the ALJ. Based on its review, the commission agrees with the decision of the ALJ, and it adopts the findings and conclusion in that decision as its own.

The decision of the administrative law judge (copy attached) is affirmed.

Dated and mailed November 30, 2015

dotzmar_rsd . doc : 107 : 5  717  748.2

BY THE COMMISSION:

/s/ Laurie R. McCallum, Chairperson

/s/ C. William Jordahl, Commissioner

/s/ David B. Falstad, Commissioner

The complainant alleged that the respondent discharged her from employment because of disability, in violation of the Wisconsin Fair Employment Act (WFEA). The Equal Rights Officer assigned to investigate the matter made no determination about the merits of her complaint, but instead dismissed it on the grounds that she had signed a valid waiver and release of claims arising out of her employment. Department rules provide for this kind of disposition:

(3) Dismissal of complaint prior to completion of investigation.

(a) The department may dismiss a complaint prior to completion of an investigation under the following circumstances:
    ...
    2. The complainant signed a valid waiver and release of claims arising out of the complainant's employment with the respondent that would preclude the department from finding that the respondent has violated the act.

Wis. Admin. Code § DWD 218.06(3)(a)2.

The complainant appealed, and an ALJ affirmed the dismissal on two grounds: first, the complainant had not tendered back to the respondent the $28,480 she received in consideration for signing the release; and second, the complainant, by signing the release, had knowingly and voluntarily waived her right to pursue her discrimination complaint against the respondent.

The complainant filed a petition for commission review. Regarding her failure to tender back to the respondent the consideration she received for signing the release, she argued that she should not have to do so, citing Oubre v. Entergy Operations, Inc., 522 U.S. 422, 118 S.Ct 838, 139 L.Ed.2d 849 (1998). She also noted, however, that she presently was not capable of returning the money to the respondent, and proposed to reimburse the money after being granted the monetary relief she wanted from her discrimination complaint.

Regarding the validity of the release agreement, the complainant objected to the ALJ's failure to address the effect of the complainant's illness on whether she knowingly and voluntarily signed the release. She also argued that she had only eight and one-half days to consider whether to sign the agreement, which she asserted was not enough time; stated that she was not represented by an attorney; and objected to the ALJ's consideration of her two years of college and her employment experience in analyzing whether she knowingly and voluntarily signed the agreement.

Return of consideration

The complainant's argument that she need not pay back the consideration because of the U.S. Supreme Court's decision in Oubre v. Entergy Operations, Inc., supra, is misplaced. Oubre held that a release agreement that fails to provide a specific set of minimum requirements set out in the federal Older Workers Benefit Protection Act (OWBPA) is unenforceable insofar as it purports to release a claim under the federal Age Discrimination in Employment Act (ADEA), and that an individual who signed such a defective release may pursue a claim under the ADEA without first returning the consideration he or she received in the release.

One of the requirements of a release imposed by the OWBPA is that it allow the individual at least 21 days to consider the agreement. The complainant asserts that she was not actually given 21 days to consider the respondent's agreement (even though it is undisputed that the agreement literally does give her 21 days), and therefore she should not be required to pay back the consideration in order to pursue her discrimination claim. The main problem with this argument is that Oubre deals only with an individual's right to maintain an action under the federal ADEA. The complainant is not seeking to pursue such a claim here; she seeks to pursue a disability discrimination claim under the state WFEA. The WFEA has no provisions comparable to the provisions of the OWBPA. The question of the complainant's need to return the consideration she received in the release agreement as a condition of trying to set it aside is a matter of contract law.

Generally, under contract law, if a party signs an agreement releasing another from certain claims, then wants to set that release aside and make a claim against the other which had been released by the agreement, the party must tender back the consideration he or she received in the release agreement as a condition to attempting to set aside the release. Charron v. Northwestern Fuel Co., 149 Wis. 240, 134 N.W. 1048 (1912); Doyle v. Teasdale, 263 Wis. 328, 57 N.W.2d 381 (1953). The commission has recited this general rule consistently. Giese & Field v. Wausau Insurance Companies, ERD Case No. 8600691 (LIRC Oct. 25, 1988); Grahl v. Mercury Marine, ERD Case No. 8902050 (LIRC Dec. 4, 1992); Lunch v. Zalk Joseph's Fabricators, Inc., ERD Case No. 9401181 (LIRC July 17, 1996); Meltz v. City of Appleton, ERD Case No. CR200001526 (LIRC Dec. 27, 2001); Wesley v. TMP Worldwide, Inc., ERD Case No. 200201566 (LIRC Feb. 7, 2003); Semandel v. Briggs & Stratton Corp., ERD Case No. CR200403135 (LIRC Feb. 24, 2005); Musial v. AECOM Government Services, Inc., ERD Case No. CR201203059 (LIRC July 21, 2014). Some commission decisions have suggested that a complainant's offer to return the consideration might be sufficient to initiate an action to set aside a release agreement (Grahl; Giese & Field; Semandel), but as the commission noted in Giese & Field, it is important that the complainant return the consideration, or at least give some security for its return,(1) independent of the complainant's success in proving discrimination:

[T]here is no guarantee that the Complainants will prevail in a hearing on the merits on their claim. If they cannot now return the consideration they have received for signing the agreement, how will they be able to return the consideration if they do not prevail on their claim? As noted by the ALJ, should the Complainants lose this would likely only result in the Respondent having to commence collateral proceedings to recover said consideration.

The problem with the complainant's proposal to reimburse the $28,480 in this case is that it only operates if she prevails in her underlying claim against the respondent. It does not satisfy the requirement of tendering back, and therefore the complainant has not met the pre-condition for challenging the validity of the release agreement. The commission therefore affirms the ALJ's dismissal of the complaint based on the complainant's failure to tender back the $28,480 she received for signing the agreement.

Knowing and voluntary release

The ALJ also dismissed the complaint on the grounds that the complainant knowingly and voluntarily signed a valid release agreement preventing her from pursuing her disability claim under the WFEA. The question of whether an individual has knowingly and voluntarily signed a release agreement is determined according to the totality of the circumstances. Seven factors have been identified as helpful in assessing those circumstances. Grahl, supra.(2)

The commission concludes that the complainant's signature on the agreement, entitled Release and Separation Agreement, was knowing and voluntary, based on information that was not disputed by the complainant. The complainant did not dispute that the agreement stated that she had 21 days from her receipt of the agreement to sign it, and that for seven days after signing it she had the right to cancel it. She did not dispute that she signed the agreement 11 days after having possession of it. She acknowledged that she received $28,480 in consideration for signing it, and made no assertion that she would have been entitled to this money if she had not signed it. She did not dispute that in exchange for receiving the consideration, she released the respondent from "any and all claims arising from her employment relationship with the respondent," and she did not argue that she thought the possibility of a disability discrimination complaint was unaffected by that language. She did not dispute that the agreement advised her to consult with an attorney prior to signing it, and she acknowledged that before she signed it she had a half-hour consultation with an attorney.

The complainant argued that she did not actually have 21 days to consider signing the agreement, even though the agreement stated that she did. Her argument is based on a document that the respondent gave her on Friday, May 19, 2011 which indicated that the complainant was going to be placed on paid leave as of Monday, May 23rd, to have time to consider whether she wanted to continue working for the respondent. The document informed the complainant to appear for work on Tuesday, May 24th if she did not wish to resign. But if she chose to resign, the document asked her to call the respondent on May 24th, and stated that she would then be eligible to sign the Release and Separation Agreement (a copy of which was provided to her on May 19th). As it turned out, the complainant asked for more time to decide whether she wanted to resign, and she was given until May 27th. The complainant then met with a representative of the respondent on May 27th, and asked that the phrase "voluntary separation" be changed to "separation." The respondent agreed to do so, and the complainant signed the revised agreement on June 1, 2011, eleven days after she received it.

Although the respondent asked the complainant only to decide whether or not to resign by May 24th, and did not expressly alter the 21 days the complainant had to sign the release agreement, it is understandable that the complainant may have believed the respondent expected the resignation and the signing of the release to be essentially simultaneous events, since the agreement itself addresses the timing of her resignation. The complainant's understandable belief about what the respondent expected, however, does not convert her signing of the release agreement into an involuntary act. The complainant demonstrated that she did not consider the respondent's expectations to be non-negotiable--she requested and received an extension to consider whether to resign, during which her employment was protected by being on unpaid leave; and she requested and obtained a change in the wording of the agreement. She also, as noted above, got the advice of an attorney. These facts indicate that the complainant did not perceive herself to be powerless with respect to the question of whether to sign the release agreement.

The complainant argued that it was beyond her to make a knowing and voluntary choice to sign the agreement because she had just completed chemotherapy and was struggling with side effects. She attached a general list of side effects from a web site, but did not provide any information from a competent source about specific side effects that she was experiencing during the time in question.

The complainant's regret about signing the agreement seems to be based on her current belief that she would be better off applying for and receiving benefits under the respondent's long-term disability insurance policy than accepting the $28,480. Whether her belief about that is true is a matter beyond the information available to the commission. She did not apply for long-term disability insurance while still employed, and there is no copy of the policy or benefits in the file. It is noted, however, that the complainant's expressed belief that she would have been eligible for long-term disability payments for life does not square with the commission's understanding of a typical long-term disability insurance policy. Typically, disability benefits are time-limited; also, it is typical that a policy will require the beneficiary to apply for social security disability, and if the beneficiary were found eligible, social security disability payments would offset payments under the policy. In any case, the complainant's misconception that she should have been able to apply for the respondent's long-term disability insurance even after her employment ended, to the extent it played into her decision to sign the release and separation agreement, was not shown to be related to the side effects of chemotherapy.

The commission therefore affirms the ALJ's alternate determination of dismissal on the grounds that the complainant knowingly and voluntarily signed a valid release preventing her from pursuing her disability discrimination complaint.

cc: Attorney Peter Albrecht

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(1)( Back ) The commission in Giese & Field affirmed the ALJ's order that the complainants place into escrow the consideration they received from signing the release.

(2)( Back ) Those factors, taken primarily from EEOC v. American Express Publishing Corp., 681 F.Supp. 216 (S.D.N.Y. 1988) are: 1) the complainant's education and business experience; 2) the amount of time the complainant had possession of or access to the agreement before signing it; 3) the role the complainant had in deciding the terms of the agreement; 4) the clarity of the agreement; 5) whether the complainant was represented by or consulted with an attorney; 6) whether the consideration given in exchange for the release exceeds the benefits to which the complainant was already entitled; and 7) whether the complainant was encouraged to consult an attorney, and whether the complainant should have known his or her rights upon execution of the release. Grahl noted that these factors are not mandatory, and that the true test is the totality of circumstances. 

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