Settling Discrimination Complaints in Wisconsin

January 17, 2018

A recent decision from the Wisconsin Labor and Industry Review Commission has placed a cloud over the settlement of discrimination complaints in Wisconsin.  The cloud may not be very dark, but it is a matter that needs to be considered by employers when they pursue an effort to settle a discrimination complaint brought by an employee.

In the recent decision of Xu v. Epic Systems, Inc., the Labor and Industry Review Commission (LIRC) held that an employee may not waive the filing of a discrimination complaint against his/her employer under the Wisconsin Fair Employment Act and an employer can pursue a claim under the Wisconsin Fair Employment Act even though the employee has agreed to release all claims against the company.  Before you shutter in amazement, this ruling is actually consistent with rulings at the federal level and means that any settlement of a discrimination complaint cannot prohibit the employee from pursuing a claim of discrimination or talking to the enforcement agency, although the settlement agreement can clearly indicate that the employee is not entitled to recover any type of damages (monetary or otherwise) and cannot be reinstated to employment if successful in a ruling from the Equal Rights Division.

I realize this does not make any sense; however, it is a quirk of both the federal and state law.  An employee cannot waive their right to bring a claim under the Wisconsin Fair Employment Act, but the employee can waive any right to recover money such as back wages or front pay and can waive the right to reinstatement to employment even though the Equal Rights Division would rule in favor of the employee.  This concept stems from federal court cases where it has been held that any settlement with the Equal Employment Opportunity Commission cannot include a provision that prohibits the employee from pursuing a claim or bringing information to the EEOC because the EEOC is charged with enforcing discrimination laws against employers.  So we’re not saying that you should not settle discrimination complaints but rather we’re saying that you have to put a specific provision in the Settlement Agreement that clearly indicates the employee may not pursue a claim for monetary damages or reinstatement to employment.  This will likely discourage most employees from pursuing a claim although some employees want to have some sort of negative ruling against the company just to “save face.”

Employers need to understand that the ability to settle and completely eliminate the potential of a lawsuit before the Equal Rights Division is hampered by these rulings although there is still good reason to consider settlement of discrimination cases especially when there is little value to the claim being brought.

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