January 25, 2023
by Megan Vaniman

Proposed Oregon bill to disallow no-rehire provisions in workers’ compensation settlements

AFL-CIO (a conglomerate of union groups) has proposed legislation to prohibit no re-hire/reemployment/reinstatement clauses in workers’ compensation settlements. Specifically, the proposed legislation would only allow a carrier/employer to enter into a no-rehire agreement if the injured worker (or worker who has filed a workers’ compensation claim) specifically requests the provision. So what does this all mean?

Carrier/employers often enter into what is known as a global settlement to include a Claim Disposition Agreement (CDA), a Disputed Claim Settlement (DCS), and an employment release. Combined the CDA/DCS resolve the workers’ ongoing entitlement to benefits under the compensable claim. Whereas the employment release seeks to terminate the relationship between the employer and employee and resolve any potential claims arising from the employment relationship. If the claim is denied, the carrier/employer will enter into a DCS and employment release. Often times the employment release will contain what is known as a “no re-hire clause” that allows the employer to reject any future application of employment from the worker. In other words, the employer has no obligation to re-hire the worker.

The proposed legislation would prohibit the carrier/employer from entering into an agreement that includes a no-rehire/reinstatement/reemployment clause unless specifically first requested by the worker. This may be a deal breaker from some employers who do not want to enter into the risk of the employee returning to employment. However, on a practical matter, if this legislation is passed, it may no be a large barrier to effective global settlements.

A few years ago, Oregon passed the Workplace Fairness Act. Briefly, the WFA prohibits employers from entering non-disparagement, non-disclosure, and no-rehire provisions in settlement agreements when there has been allegations of harassment or discrimination. The WFA requires that the worker request these provisions. What we have learned from the WFA, is that most attorneys representing claimants or plaintiffs understand that these types of provisions are necessary for successful settlement of claims. Therefore, attorneys at SBH have been navigating these requirements for a few years now and have been able to obtain agreements that ensure employer’s interests are preserved in the settlement agreements.

Of course, for now, the legislation is simply proposed. Therefore, settlements may continue with no-rehire provisions so long as they do not violate the WFA. There are many steps before the legislation becomes law. SBH will be following the proposed bill to ensure that employers and insurers interests are preserved. Should the proposed legislation become law, SBH will be here to ensure settlement agreements continue forward in the best interest of our client. If you have any questions about this proposed legislation or your workers’ compensation settlements, please do not hesitate to contact me at 503-595-6107 or .

Posted by Megan Vaniman.