Introduction
Offers of settlement
Comment
If enacted, pending legislation in Wisconsin could significantly alter the calculus for employers facing discrimination charges at the administrative level. The 2017 Assembly Bill 64 (Republican Governor Scott Walker's budget bill) contains a new mechanism that parties can use to leverage settlements at the administrative level. In cases where a settlement offer is declined, the proposed legislation provides for cost and fee or interest shifting, depending on whether the complainant receives a more favourable award than that included in the settlement offer.(1)
Historically, Wisconsin has its roots in the progressive movement. Since taking office in 2011, Walker has worked to enact legislation that is notably more pro-business and less employee friendly – Wisconsin's infamous Act 10 legislation comes to mind. The legislation proposed as part of Walker's new budget bill follows the same trend. This shift in Wisconsin may be a sign of what other Republican governors or Republican legislatures may do in future.
The proposed legislation would allow the parties to a complaint under the Wisconsin Fair Employment Act, the Wisconsin Family and Medical Leave Law or the Organ and Bone Marrow Donation Law to make settlement offers to resolve claims at the administrative level. At present, workers who are victims of discrimination can file complaints at the administrative level with the Equal Rights Division of the Department of Workforce Development. Workers who prevail at the administrative level may be awarded attorneys' fees and costs, in addition to other remedies. The proposed legislation would significantly affect whether attorneys' fees and costs are awarded in certain cases.
Under the proposed legislation, a complainant could gain pre-judgment interest from the date of his or her offer of settlement, if the offer was not accepted and the complainant obtained a more favourable award.(2) A respondent could gain post-settlement offer costs and fees, including attorneys' fees, if its offer of settlement was not accepted and the complainant failed to obtain a more favourable award.(3) A 'more favourable award' is defined as:
- an order that includes an order of reinstatement or some other substantive or tangible benefit besides a mere finding that the law was violated, which was not provided for in the settlement; or
- an order that includes a monetary award to the complainant that – exclusive of the complainant's pre-offer costs and post-offer costs – exceeds the compensation provided for in the settlement offer made under this section.(4)
These offers of settlement would be permitted from 10 days after the complaint was filed until 10 days before a hearing on the merits. Offers would need to be in writing.
If enacted, the proposed legislation would significantly alter the litigation strategy for employers that wind up before the Equal Rights Division for alleged violations of the Wisconsin Fair Employment Act, the Wisconsin Family and Medical Leave Law or the Organ and Bone Marrow Donation Law. Employers would likely be encouraged to make prompt and reasonable settlement offers. Faced with a prompt and reasonable settlement offer, the complainant would need to consider the risk of having to pay the respondent's post-settlement offer fees and costs if he or she did not obtain a more favourable award. That risk may be too much for some complainants to bear. While the proposed legislation seems to put another arrow in an employer's quiver, those opposed to the bill believe that it would force settlements – even when employees have strong cases – due to the risk of paying the other sides' fees.
At this time, Assembly Bill 64 remains with the Joint Committee on Finance. However, the Joint Committee on Finance recently determined that the new mechanism described above should be removed from the Budget Bill and proposed as stand-alone legislation. As such, it was removed from Walker's Budget Bill and is being drafted as an individual bill for introduction into the legislature.
For further information please contact Jordan Rohlfing at DeWitt Ross & Stevens SC by telephone (+1 608 255 8891) or email ([email protected]). The DeWitt Ross & Stevens SC website can be accessed at www.dewittross.com.
Endnotes