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Wisconsin legislature nixes Governor’s proposed litigation settlement mechanism, significant changes to Wisconsin employment laws remain

April 12, 2017

settlement agreementGovernor Scott Walker’s budget bill, 2017 Assembly Bill 64, proposed the creation of new statutory provisions that would penalize parties who fail to settle discrimination, bone marrow leave, and Wisconsin Family and Medical Leave Act claims. The changes could have had significant consequences for Wisconsin employment litigants. A summary of the proposal is included below.

Proponents of the legislation stated that the changes would help deter meritless claims and expedite the resolution of Wisconsin Department of Workforce Development (DWD) complaints. Opponents of the bill believed that the changes would discourage claimants who are subject to unlawful discrimination from pursuing their claims.

On April 6, 2017, the Wisconsin Legislative Fiscal Bureau removed the settlement mechanism from the budget stating that it was unclear how the proposal was budget related. This means that the proposal will be removed and have to be considered and passed as a stand-alone bill.

As we shared in a previous post, the proposed budget includes additional significant changes to Wisconsin’s labor and employment landscape. The governor is proposing elimination of Wisconsin’s Labor & Industry Review Commission, the appeal body that oversees the Equal Rights Division’s handling of employment discrimination, worker’s compensation and unemployment claims. Those provisions remain in the bill.

Proposed Settlement Mechanism Overview

As written, claimants would have been required to pay their employer’s costs, including attorney’s fees, if they declined the employer’s offer of settlement and did not obtain a “more favorable” award from the DWD. The costs are calculated from the date of the employer’s settlement offer. Similarly, if the employer declines a claimant’s offer to settle and the claimant receives a “more favorable” award, the employer must pay interest on the amount awarded to the claimant as a penalty. The statutory scheme defines what will constitute a “more favorable” award.

Settlement offers would have needed to satisfy several requirements to be eligible for the proposed remedies. Settlement offers would have automatically expired after 10 days or the date of the hearing, whichever date came first, leaving little time to consider and accept the proposal.

In addition, a claimant would not have been allowed to recover his own attorney’s fees or costs, unless the DWD ordered that the claimant be reinstated or awarded the claimant monetary relief or another “substantive or tangible benefit.” This would mean the claimant could have been required to pay his own attorney’s fees, even if the DWD determined that the employer discriminated against the claimant.

In Wisconsin, claimants are not entitled to damages for pain and suffering. If the claimant immediately finds a job with the same level of benefits and pay, the claimant’s monetary damages would be minimal or non-existent, potentially leaving the claimant with out-of-pocket costs of litigating the claims.

Stay tuned to find out whether the Wisconsin legislature will pass these measures as part of the 2017-2019 budget.

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