Unreasonable-refusal-to-rehire claim barred by 10-year-old compromise agreement

Wisconsin employers are used to being able to settle and receive a release of claims for known and unknown events that have occurred only in the past. In a recent Labor & Industry Review Commission (LIRC) decision, a full and final compromise agreement entered into between the parties prevented the employee from maintaining an unreasonable-refusal-to-rehire claim against her employer when she was terminated 10 years later.

What is unreasonable refusal to rehire?

Many Wisconsin employers aren’t familiar with unreasonable-refusal-to-rehire claims. Such claims are brought under Section 102.35(3) of the Wisconsin statutes, which is in the chapter dealing with worker’s compensation claims. This section provides that an employer that refuses without reasonable cause to rehire an employee who suffered a work-related injury or illness, where suitable employment is available within her physical and mental limitations, is exclusively liable to pay her lost wages during the period of refusal, not exceeding one year’s wages.

According to this provision, it’s the employer, not its workers’ comp insurer, that is responsible for a claim, meaning its worker’s comp carrier isn’t responsible to defend the claim or to pay any wages awarded under it. Additionally, if an employee is returned to work but is subsequently discharged by the employer, the discharge is still considered a refusal to rehire the employee.