Nebraska’s lack of a robust law on bad faith in workers’ compensation give employers the power to insist on forced resignations as a condition of receiving a settlement in a workers’ compensation case. While some employees are happy to resign and other employees may have good reason to accept these arrangements known as “global settlements”, they often force difficult choices on injured workers in Nebraska.

Nebraska’s comparatively weak laws on workers’ compensation bad faith give insurers/employers/claims administrators leverage at many points in a workers’ compensation case.

But I think one under-discussed aspect of weak bad faith laws is the prevalence of “global settlements” in Nebraska. In Nebraska workers’ compensation the term “global settlement” means a settlement of not just the workers compensation claim, but all claims against the employer.

If the employee is still employed with the defendant in the workers’ compensation, global settlement means that an employee needs to resign and sign a severance agreement in order to settle their workers compensation case.

Early in my career, one insurance defense lawyer told me that their client insisted on global releases because they “didn’t want their employees driving to the plant in an Escalade after they settled their case.”

In my mind, forcing an employee to give up their job is a bad faith practice. But since the Nebraska Workers Compensation Court had limited jurisdiction, I doubt whether the court could govern the practice. Since demands to resign are made as part of settlement negotiations, I suspect a civil court would view them as privileged communications and not evidence of retaliation. In short, I think employers/insurers/claims administrators are exploiting a gap in the law created by Nebraska’s weak bad faith laws.

But sometimes employees are willing to accept global settlements for various reasons.

Sometimes this insistence on a release of all claims to settle a workers’ compensation case is an easy decision for an employee. The employee may have a new job, they may be too injured to go back to work, maybe they were planning on retiring or maybe the employer is just lousy. Regardless sometimes employees are more than happy to resign.

But for the employee who is still employed and relies on their employer for health insurance, an employer/insurers insistence on resigning to settle their workers compensation case is a harder decision. Particularly for an employee who is being accommodated for their injury, it often makes sense to go to court rather than resign in exchange for what amounts to a small severance in addition to what their workers compensation case is worth. But the decision to go to trial only makes sense if an employee doesn’t have a reason to compromise their workers’ compensation case. That’s not always the case, so global settlement offers force more difficult decisions.

The insistence on a “global settlement” also complicates further complicated situations where an employer is retaliating against an injured employee short of termination or demotion. These forms of retaliation often take the forms of unreasonable accommodation for the work injury. In order to settle their workers compensation claim, the employee would have to settle that claim.

Sometimes it makes sense to enter into a global settlement if you have a viable discrimination case. Workers’ compensation settlements aren’t taxable while employment law settlements are taxable. Usually, you can shift most of the value of the employment law settlement into the tax- free workers compensation settlement in a “global settlement” arrangement.

But in order to value an employment law case you need to do discovery and you also need some leverage over the employer — which usually takes a fair amount of discovery. I believe there is meaningful overlap between what is discoverable in a workers’ compensation and employment law case – particularly when it comes to temporary disability and accommodation of work injuries.

Further, because of how exhaustion of remedies requirements work in discrimination claims and the fact the Nebraska workers compensation court tends to move faster than state and federal trial courts, a workers’ compensation case will typically be ready for trial much sooner than an employment law case. In practical terms an employer may not be prepared to settle an employment law case until after a summary judgment ruling. That ruling could come down well after a trial in a workers’ compensation case.

So again, the employee has reason to try their workers compensation case if an employer insists on settling all claims through a global release. Again this can be a risky proposition for an employee if the employee would have good reason to settle the workers compensation case regardless of whether they had an employment law case.