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Settling a case? Make sure the agreement includes a ban on re-employment

by on
in Discrimination and Harassment,Employment Law,Human Resources

Sometimes, the best way to end a discrimination claim is to settle the case before it goes to court. But if you do settle, make sure you don’t create a bigger problem down the line.

That can happen if the employee applies later for an open position and is rejected. The person may file a retaliation claim, saying you’re getting even for losing the original lawsuit.

The easy solution: Make sure any settlement agreement includes a promise never to reapply for work with your organization, either as an employee or an independent contractor.

Recent case: Karen Jencks worked as a district manager for the insurance firm Modern Woodmen of America (MWA) until she was fired for alleged “productivity problems.” She filed an EEOC complaint, alleging sexual harassment, retaliation and racial discrimination.

MWA settled her case, and the settlement agreement included a waiver of any right to reinstatement.

Seven years later, Jencks received an MWA solicitation that asked her to apply as an insurance agent. The letter was part of a mass mailing to all insurance agents in the area. Perhaps sensing an opportunity, Jencks applied. MWA turned her down after it noticed her earlier settlement agreement.

Predictably, Jencks sued, charging retaliation. The court tossed out the case, saying the settlement agreement was a legitimate reason why MWA wouldn’t consider her application. (Jencks v. Modern Woodmen of America, No. 05-5130, 10th Cir., 2007)  

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