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Settlement with back pay? Get your attorney involved

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in Discrimination and Harassment,Human Resources

Are you settling a discrimination case with termination and a back or front pay agreement? Be sure to work with counsel to find the most effective way to apply the payment. Done properly, a back pay or front pay lump sum may mean the employee can’t collect unemployment compensation payments.

Recent case: Gail settled a claim for sex discrimination in which she agreed to take $6,000 to settle the case and leave the job. She then applied for unemployment compensation benefits, but the hearing officer considered the payment income since it was paid after her employment ended. She appealed, but the court said it was properly applied in the period it was paid post-employment. The actual settlement agreement didn’t specify that it was for past discrimination and was merely compensating her for what she hadn’t been paid earlier. (Kern v. Minneapolis Institute of Arts, No. A15-0109, Court of Appeals of Minnesota, 2015)

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