In an ideal world, school districts would never have problems with employees and there would never be a reason for termination. The reality is that school districts often enter into settlement agreements with employees that, for one reason or another, cause their school districts to end the employment relationship. Absent truly rare circumstances, these settlement agreements contain release provisions that bar the employee from suing the school district. Usually, when the employee signs the settlement agreement and release, the parties go their separate ways and the dispute is put to rest. Every once in a while, however, the employee will regret their decision and attempt to sue the school district.
That’s exactly what happened in Hutchins v Holly Area Sch, unpublished per curiam opinion of the Court of Appeals, issued September 25, 2018 (Docket No. 339213). In Hutchins, Joseph Hutchins signed a settlement agreement and release with Holly Area Schools after the school district investigated allegations that Hutchins had used excessive force against a student. The settlement agreement provided that Hutchins would be paid his salary for a number of months and would receive health insurance contributions from the school district until the end of the school year.
The arrangement worked until, with the end date for salary payments drawing near, Hutchins sued the school district for wrongful discharge under the Whisteblower’s Protection Act, MCL 15.362 et seq. The school district made a motion for summary disposition based on the settlement agreement and release. It argued that, in order for an employee who signs a settlement agreement and release to sue a former employer, the employee must tender the monetary amount contained in the settlement agreement back to the employer (the “tender‑back rule”). Hutchins had not done that. However, Hutchins argued that he was unable to ascertain the amount owed back to the school district from his salary and health insurance. The trial court bought Hutchins’ argument, finding that the school district was required to tell Hutchins how much he owed before he could be expected to tender the amount back. Thus, it permitted Hutchins’ legal action to continue.
The Court of Appeals overturned the trial court’s decision. It noted that there are only two exceptions in Michigan to the tender‑back rule: where the defendant waives the plaintiff’s duty to adhere to the tender‑back rule, and where the plaintiff shows that the defendant lied to the plaintiff about what the settlement agreement said. Here, the court said, neither exception existed, and Michigan law does not allow for an exception where the employer does not communicate to the employee the exact amount owned. The court also observed that the information was readily available to the employee from the settlement agreement and tax forms. Thus, it concluded, summary disposition was appropriate, and Hutchins’ case was dismissed.
The case serves as a good reminder to school districts. In the event an employee tries to circumvent a settlement agreement and release, make sure the employee has paid back the settlement money and benefits. If they haven’t, their case is a non‑starter, and the school district can avoid expensive legal fees down the line.