Chapter 7 – Settlements

I. Scope

This chapter provides guidance on the following topics: (1) standard HIOSH settlement agreements; (2) HIOSH’s approval of settlement agreements negotiated between Complainant and Respondent where applicable; (3) terms that HIOSH believes are inappropriate in whistleblower settlement agreements because they are contrary to the public interest and the policies underlying the whistleblower protection statute enforced by HIOSH; and (4) enforcement of agreements. 

II. Settlement Policy

Voluntary resolution of disputes is often desirable, and investigators are encouraged to actively assist the parties in reaching an agreement, where appropriate. It is HIOSH policy to seek settlement of all cases determined to be meritorious prior to issuing a DNO. HIOSH will not enter into or approve a settlement agreement unless it determines that the settlement is knowing and voluntary, provides appropriate relief to Complainant, and is consistent with public policy, i.e., the settlement agreement is not repugnant to HRS § 396-8(e) and does not undermine the protection that the statute provides. 

As discussed below, Complainant and Respondent should be encouraged whenever possible to use the HIOSH standard settlement agreement. However, the parties may negotiate their own settlement agreement and submit it for HIOSH’s approval. Such settlement agreements are referred to as employer-employee settlement agreements in this manual. In most cases, a claim may be settled only with the consent of both Complainant and Respondent. 

Although Complainant may simultaneously pursue civil litigation, during which settlement may also be reached, the intent of the HIOSH whistleblower provision is to provide appropriate relief to Complainant while ensuring that other employees are protected when engaging in protected activity. Therefore, if HIOSH’s statutory authority is not recognized in the civil settlement (even if complainant withdraws their complaint in the private settlement), the investigation will continue, and a determination will be made based on the best available evidence.

HIOSH settlement policies include the use of disposition letters or 89-day letters, which help track the investigation process and reminds the parties of the option to settle the case instead of receiving formal findings. Additionally, the settlement process can benefit from the near completion of the investigation, potentially leading to more balanced and informed negotiations. However, parties may choose to settle before or even after the 90-day statutory timeframe for HIOSH to complete the investigation. 

III. Settlement Procedure

1. Requirements
   Requirements for settlement agreements are:
   1. The settlement agreement must be in writing and the settlement must be knowing and voluntary, provide appropriate relief to Complainant, and be consistent with public policy, i.e., the settlement agreement must not be repugnant to HRS § 396-8(e) and must not undermine the protection that the statute provides.
   2. Every HIOSH settlement agreement must be signed by the Administrator.
   3. In every employer-employee agreement, the settlement approval letter must be signed by the Administrator.
   4. Every settlement agreement must be signed by Respondent(s).
   5. Every settlement agreement must be signed by Complainant.
   6. Employer-employee settlements must be submitted to HIOSH for review and approval.
2. Adequacy of Settlements
   The standards outlined below are designed to ensure that settlement agreements in whistleblower cases meet HIOSH’s requirements. The appropriate remedy in each case should be explored and, if possible, documented. A Complainant may accept less than full restitution to resolve the case more quickly. Concessions by both Complainant and Respondent are inevitable to accomplish a mutually acceptable and voluntary resolution of the matter. 
   1. Knowing and Voluntary
      Complainant and Respondent must enter into the settlement agreement voluntarily, with an understanding of the terms of the settlement agreement and, if desired, an opportunity to consult with counsel or other representative prior to signing the settlement agreement. 
   2. Reinstatement & Monetary Remedies
      The settlement agreement must specify the remedies for Complainant, which may include reinstatement, back pay, front pay, damages, attorney fees, or other monetary relief. Alternatively, the settlement agreement may specify payment of a lump sum amount to Complainant or the payment of separate lump sum amounts to Complainant and Complainant’s counsel. It is recommended that the settlement agreement expressly state the allocation of payment between wages and other amounts.¹
3. Other Remedies
   A variety of non-monetary remedies may be appropriate to include in a settlement agreement to make the employee whole and/or to remedy the chilling effect of retaliation in the workplace. Common non-monetary remedies that HIOSH may seek in a settlement include the following, although additional non-monetary remedies may be appropriate as well: 
   1. The expungement of any warnings, reprimands, or derogatory references resulting from the protected activity that have been placed in Complainant’s personnel file or other records, and/or requiring the employer to change a Complainant’s personnel file to simply state that employment ended and to note the date employment ended rather than that Complainant was discharged; 
   2. The agreement of Respondent, and those acting on Respondent’s behalf, to provide at least a neutral reference (e.g., title, dates of employment, and pay rate) to potential employers of Complainant, to refrain from any mention of Complainant’s protected activity, and to refrain from saying or conveying to any third party anything that could be construed as damaging the name, character, or the employment prospects of Complainant. 
   3. Posting of a notice to employees stating that Respondent agrees to comply with HRS § 396-8(e) and/or posting of an informational poster or fact sheet about the statute. Postings should be readily available to all employees, e.g., posted on a bulletin board or distributed electronically. 
   4. Training of managers and employees regarding employees’ right to report potential violations of the law without fear of retaliation under HRS § 396-8(e).
4. Consistent with Public Interest
   As explained below (see Chapter 7.VI.E, Criteria for Reviewing Employer-Employee Settlement Agreements), HIOSH will not enter into or approve a settlement agreement that contains provisions that it believes are inconsistent with HRS § 396-8(e) or contrary to public policy. 
5. Tax Treatment of Amounts Recovered in Settlement
   Complainant and Respondent are responsible for ensuring that tax withholding and reporting of amounts received in a whistleblower settlement are done in accordance with applicable tax law². HIOSH is not responsible for advising the parties on the proper tax treatment or tax reporting of payments made to resolve whistleblower cases. 
   1. The investigator should inform parties that HIOSH cannot provide Complainants or Respondents with individual tax advice and that the parties are responsible for compliance with applicable tax law and may need to seek advice from their own tax advisers. 
      
   2. The investigator can talk with parties generally about the potential taxability of settlement amounts, including (1) the possibility of the employer withholding applicable taxes for settlement payments made for restitution or to come into compliance with the law (e.g., wages, compensatory damages) and (2) the parties’ responsibility to report and pay any applicable taxes on settlement amounts. 
      
   3. The investigator should try to ensure that the settlement agreement expressly states the allocation of payment that is made for restitution or to come into compliance with the law (e.g., wages, compensatory damages). This will help determine the taxability of settlement amounts later if it becomes an issue. 

IV. HIOSH Settlement Agreement

1. General Principles
   Whenever possible, the parties should be encouraged to use HIOSH’s standard settlement agreement containing the elements outlined below.
2. Specific Requirements
   A HIOSH settlement agreement:
   1. Must be in writing.
   2. Must stipulate that Respondent agrees to comply with HRS § 396-8(e). 
   3. Must document the agreed-upon relief. 
   4. Must be signed by Complainant, Respondent, and the Administrator (or designee).
   5. Should include whenever possible measures to address the chilling effect of the alleged retaliation in the workplace. Remedies to address the chilling effect of the alleged retaliation are particularly important in instances in which Complainant does not return to the workplace as a result of the settlement agreement. Appropriate remedial provisions to alleviate the chilling effect of retaliation in the workplace, such as postings and training of employees and managers are discussed further below (see next section, 7.IV.D). Model provisions can also be found in HIOSH’s standard settlement template. 
   6. Should include a single payment of all monetary relief due to Complainant whenever possible. If Respondent sends the payment directly to Complainant (e.g., as a direct deposit), the investigator will obtain a confirmation of payment (e.g., a deposit slip or copy of the check) from Complainant or Respondent. If Respondent sends the payment to HIOSH, the investigator will promptly note receipt of any check, copy the check for inclusion in the case file, and mail or otherwise deliver the check to Complainant. 
3. Use of Disposition Letter (89-day letter)
   Prior to the 90-day period for completing the investigation, the investigator will contact both the Complainant and the Respondent to inquire if they are interested in exploring a settlement. This proposal is made with the understanding that both parties have submitted all relevant evidence and are open to exploring alternatives to the continuance of the investigation. 
   1. If both parties agree and indicate their intent to discuss settlement, the investigator will meet with each party individually to address issues such as renumeration and reinstatement for Complainant. 
   2. The investigator will also emphasize that the agency is a party to the settlement, making it imperative to ensure the provisions of HRS § 396-8(e) are preserved and upheld for all workers. 
   3. If the parties are unable to reach as settlement within a defined period (typically a month), the investigator shall document all settlement efforts, including the final numbers proposed by each side. 
   4. The investigator shall then inform the parties that, despite good faith efforts on both sides to reach a settlement (with any unreasonable demands documented in the file), the agency will proceed to issue its findings along with information on appeal rights. 
   5. Such documentation shall be included in the case file for potential use in the event of an appeal and made available for the DAG to review, if applicable. 
   6. The terms of the settlement shall adhere to the standard HIOSH settlement guidelines for whistleblower/discrimination cases outlined below. 
4. Provisions of the Agreement
   In general, much of the language of the HIOSH settlement agreement should not be altered, but certain sections may be altered or removed to fit the circumstances of the complaint or the stage of the investigation. The following are the typical provisions in a HIOSH settlement agreement.
   1. POSTING OF NOTICE.A provision stating that Respondent will post a Notice to Employees that it has agreed to abide by the requirement of HRS § 396-8(e) pursuant to a settlement agreement. (Optional)
   2. COMPLIANCE WITH NOTICE. A provision stating that the respondent will comply with all of the terms and provisions of the Notice. (Optional)
   3. POSTING OF AN INFORMATIONAL POSTER.A provision requiring Respondent to post an appropriate poster, which may include the mandatory HIOSH Law poster, or any appropriate fact sheet that summarizes the rights and responsibilities under the HIOSH-enforced discrimination/whistleblower statute.³ (Optional)
   4. TRAINING.  A provision requiring training for managers and employees on employees’ rights to report actual or potential violations without fear of retaliation under HRS § 396-8(e).  (Optional)
   5. NON-ADMISSION.A provision stating that, by signing the agreement, Respondent does not admit or deny violating any law, standard, or regulation enforced by HIOSH. (Optional)
   6. REINSTATEMENT. This section may be omitted if reinstatement is not a possible remedy in the case. Otherwise, the settlement agreement should include one of the two options below: [If accepted: Complainant’s job title will be [insert title] and Complainant will start on [insert date].
      1. Respondent has offered reinstatement to the same or equivalent job, including restoration of seniority and benefits, that Complainant would have had but for the alleged retaliation. Complainant has [declined/accepted] reinstatement. 
      2. Respondent is not offering reinstatement, and/or Complainant is not seeking reinstatement. 
   7. MONIES.This section may be omitted if monetary relief is not a part of the settlement. The parties should choose one of the options for monetary relief in the standard settlement agreement to indicate either: 
      1. the payment of a specified amount of back pay; 
      2. the payment of a specified lump sum amount; or 
      3. a combination of a specified payment of back pay and a specified payment of a lump sum. 
         
         In unique circumstances, with supervisory approval, it may be appropriate for the parties and HIOSH to craft alternative provisions regarding the payment of money to Complainant. The settlement agreement should expressly identify the payments that are made for restitution or to come into compliance with the law (e.g., wages). See 26 U.S.C. § 162(f)(2)(A)(ii). 
   8. PERSONNEL RECORD. The settlement should include a provision expunging Respondent’s records of references to Complainant’s protected activities as well as any adverse actions taken against Complainant and requiring that Respondent provide Complainant with at least a neutral reference. The precise terms of this provision may vary depending on the facts of the case.
   9. ENFORCEABILITY. The settlement must state the following:
      
      Respondent’s violation of any terms of the settlement may prompt further investigation and the filing of an action by the Director in the appropriate district court under the statute. This Agreement shall be admissible in such an action. Respondent agrees to waive any and all defenses based on the passage of time and agrees that this Agreement constitutes the sole evidence required to prove such waiver. A violation of this settlement agreement is a breach of contract for which Complainant may seek redress in an appropriate court.
   10. CONFIDENTIALITY. Settlement agreements must not contain provisions that state or imply that HIOSH is a party to a confidentiality agreement. Complainant and Respondent may agree that each of them will keep the settlement agreement confidential and may ask HIOSH to regard the agreement as potentially containing confidential business information exempt from disclosure under UIPA. In those circumstances, the agreement should contain a statement such as the following: 
       
       Complainant and Respondent have agreed to keep the settlement confidential. The settlement agreement is part of HIOSH’s records in this case and is subject to disclosure under UIPA, unless an exemption applies. Complainant and Respondent have requested that HIOSH designate the agreement as containing potentially confidential information and request pre-disclosure notification of any UIPA request pursuant to Haw. Code R. 2-71-15
        
       The agreement must be maintained in the case file and should be clearly marked as potentially containing business confidential information exempt from disclosure under UIPA.⁴
   11. NON-WAIVER OF RIGHTS 
       The standard language reaffirming Complainant’s right to engage in activity protected under HIOSH’s whistleblower statute may be included in the agreement: 
        
       Nothing in this Agreement or in any separate agreement is intended to or shall prevent, impede, or interfere with Complainant’s non-waivable right, without prior notice to Respondent, to provide information to a government agency, participate in investigations, file a complaint, testify in proceedings regarding Respondent’s past or future conduct or engage in any future activities protected under HRS § 396-8(e) administered by HIOSH.
        
       In some cases, it may also be appropriate to add: 
        
       Nothing in this Agreement or in any separate agreement is intended to or shall prevent, impede, or interfere with Complainant’s filing of a future claim related to an exposure to a hazard, or an occupational injury, or an occupational illness, whose existence was unknown, or reasonably could not have been known, to Complainant on the date Complainant signed this agreement. 
5. Side Agreements
   In some instances, Complainant and Respondent in a whistleblower case may negotiate to resolve multiple claims arising from Complainant’s employment, including a claim under HRS § 396-8(e). In those instances, HIOSH prefers that the parties use the HIOSH settlement agreement to resolve the whistleblower claim pending before HIOSH. If the parties’ separate agreement contains terms relevant to settlement of the whistleblower case, the separate agreement must be submitted to HIOSH for approval (see Chapter 7.V., Employer-Employee Settlement Agreements) and the HIOSH standard settlement agreement may incorporate the relevant (approved) parts of the employer-employee agreement by reference. This is achieved by inserting the following paragraph in the HIOSH standard settlement agreement:
   
   Respondent and Complainant have signed a separate agreement encompassing matters not within the Hawaii Occupational Safety and Health Division’s (HIOSH’s) authority. HIOSH’s authority over that agreement is limited to the statute within its authority. Therefore, HIOSH approves and incorporates in this agreement only the terms of the other agreement pertaining to HRS § 396-8(e) under which the complaint was filed.   
   
   It may be necessary to modify the last sentence to identify the specific sections or paragraph numbers of the agreement that are under the Director’s authority. 
6. OIS-Whistleblower Recording
   All cases utilizing HIOSH settlement agreement, including those that also contain a side agreement as explained above, must be recorded in the OIS-Whistleblower as “Settled.” 

V. Employer-Employee Settlement Agreements

Employer-employee disputes may also be resolved between the principals themselves, to their mutual benefit, even in cases in which HIOSH does not take an active role in the settlement negotiations. Because voluntary resolution of disputes is desirable, HIOSH’s policy is to defer to adequate employer-employee settlements.

 In most circumstances, a HIOSH settlement agreement is optimal. As explained above, if the parties are amenable to signing one, the HIOSH settlement agreement may incorporate the relevant (approved) parts of an employer-employee agreement by reference.  See Chapter 7.IV.E., Side Agreements above.

1. Review Required
   Settlement agreements reached between the parties must be reviewed and approved by the Administrator (or designee) to ensure that the settlement agreement is knowing and voluntary, provides appropriate relief to Complainant, and is consistent with public policy, i.e., the settlement agreement must not be repugnant to HRS § 396-8(e) and not undermine the protection that the whistleblower statute provides. HIOSH’s authority over settlement agreements is limited to the Law within its authority. Therefore, HIOSH’s approval only relates to the terms of the agreement pertaining to HRS § 396- 8(e) under which the complaint was filed. Investigators should make every effort to explain this process to the parties early in the investigation to ensure that they understand HIOSH’s involvement in any resolution reached after a complaint has been initiated. 
   
   If the parties do not submit their agreement to HIOSH or will not submit an agreement that HIOSH can approve, HIOSH may dismiss the complaint. The dismissal will state that the parties settled the case independently, but that the settlement agreement was not submitted to HIOSH or that the settlement agreement did not meet HIOSH’s criteria for approval, as the case may be. The dismissal will not include factual findings.  Alternatively, if HIOSH’s investigation has already gathered sufficient evidence for HIOSH to conclude that a violation occurred, or in other appropriate circumstances, such as where there is a need to protect employees other than Complainant, HIOSH may issue merit findings or continue the investigation. The findings will note the failure to submit the settlement to HIOSH or HIOSH’s decision not to approve the settlement. The determination should be recorded in OIS-Whistleblower as either dismissed or merit, depending on HIOSH’s determination.
2. Required Language
   The settlement agreement must state the following: 
   
   Respondent’s violation of any terms of the settlement may prompt further investigation and the filing of a civil action by the Director in an appropriate state court under the statute. Respondent agrees to waive any and all defenses based on the passage of time and agrees that this Agreement constitutes the sole evidence required to prove such waiver. This Agreement shall be admissible in such an action. A violation of this settlement agreement is a breach of contract for which Complainant may seek redress in an appropriate court.  
   
   The approval letter for employer-employee settlement agreements must include the following statement: 
   
   The Hawaii Occupational Safety and Health Division’s authority over this agreement is limited to the statute it enforces. Therefore, the Hawaii Occupational Safety and Health Division approves only the terms of the agreement pertaining to HRS § 396-8(e). 
   
   This last sentence may identify the specific sections or paragraph numbers of the agreement that are relevant, that is, under HIOSH’s authority.  
   
   A copy of the reviewed agreement must be retained in the case file and the parties should be notified that HIOSH will disclose settlement agreements in accordance with the UIPA, unless one of the UIPA exemptions applies. 
3. Complaint Withdrawal Request
   If Complainant requests to withdraw the whistleblower complaint, the investigator should inquire whether the withdrawal is due to settlement. If the withdrawal is due to settlement, the investigator must inform the parties that the settlement agreement must be submitted for approval. Upon review, HIOSH may ask the parties to remove or modify unacceptable terms or provisions in the agreement. The investigator should also advise the parties that upon HIOSH’s approval of the settlement and the completion of the terms of the settlement, the complaint will be closed. If parties fail to submit the settlement agreement for approval, the investigator should follow the procedures in section V.A., Review Required (above).
4. OIS-Whistleblower Recording for Employer-Employee Settlements
   Any case in which HIOSH approves an employer-employee settlement agreement must be recorded in OIS-Whistleblower as “Settled –Other.”
   
   Investigators should make every effort to obtain signatures on the HIOSH standard agreement in cases where parties have signed an employer–employee settlement agreement. If a case involves both agreements (a HIOSH settlement and an employer-employee agreement), it should be recorded in OIS as “Settled.”
5. Criteria for Reviewing Employer-Employee Settlement Agreements
   To ensure that settlement agreements are entered into knowingly and voluntarily, provide appropriate relief to Complainant, and are consistent with public policy, HIOSH must review unredacted settlement agreements in light of the particular circumstances of the case. The criteria below provide examples rather than an all-inclusive list of the types of terms that HIOSH will not approve in a settlement agreement negotiated between Complainant and Respondent.  As previously noted, HIOSH prefers that parties use the HIOSH settlement agreement whenever possible, as that agreement does not contain terms that HIOSH cannot approve:
   1. PARTY TO A CONFIDENTIALITY AGREEMENT. HIOSH will not approve a provision that states or implies that HIOSH or the DLIR is party to a confidentiality agreement.  Complainant and Respondent may agree that each of them will keep the settlement agreement confidential and may ask HIOSH to regard the agreement as potentially containing confidential business information exempt from disclosure under UIPA. In those circumstances, the settlement or HIOSH’s approval letter will contain a statement such as the following:
      
      Complainant and Respondent have agreed to keep the settlement confidential. The parties are advised that the settlement agreement is part of HIOSH’s records in this case and is subject to disclosure under UIPA unless an exemption applies. The parties have requested that HIOSH designate the agreement as containing potentially confidential information and request predisclosure notification of any UIPA request pursuant to Haw. Code R. 2-71-15.
      
      The approval letter should be maintained in the case file with the settlement agreement and the settlement agreement should be clearly marked as potentially containing business confidential information exempt from disclosure under UIPA.
   2. GAG PROVISIONS. HIOSH will not approve a “gag” provision that prohibits, restricts, or otherwise discourages Complainant from participating in protected activity. Protected activity includes, but is not limited to, filing a complaint with a government agency, participating in an investigation, testifying in proceedings, or otherwise providing information to the government. Potential “gag” provisions often arise from broad confidentiality or non-disparagement clauses, which Complainants may interpret as restricting their ability to engage in protected activity. Other times, they are found in specific provisions, such as the following: 
      1. A provision that restricts Complainant’s ability to provide information to the government, participate in investigations, file a complaint, or testify in proceedings based on Respondent’s past or future conduct. For example, HIOSH will not approve a provision that restricts Complainant’s right to provide information to the government related to an occupational injury or exposure.
      2. A provision that requires Complainant to notify their employer before filing a complaint or communicating with the government regarding the employer’s past or future conduct.
      3. A provision that requires Complainant to affirm that they have not previously provided information to the government or engaged in other protected activity, or to disclaim any knowledge that the employer has violated the law. Such requirements may compromise statutory and regulatory mechanisms for allowing individuals to provide information confidentially to the government, and thereby discourage Complainants from engaging in protected activity. 
      4. A provision that requires Complainant to waive their right to receive a monetary award (sometimes referred to in settlement agreements as a “reward”) from a government-administered whistleblower award program for providing information to a government agency. HIOSH will also not approve a provision that requires Complainant to remit any portion of such an award to Respondent. For example, HIOSH will not approve a provision that requires Complainant to transfer award funds to Respondent to offset payments made to Complainant under the settlement agreement. 
         
         When these types of provisions are encountered, or settlements have broad confidentiality and non-disparagement clauses that apply “except as provided by law,” employees may not understand their rights under the settlement. Accordingly, HIOSH will ask parties to remove the offending provision(s) and/or add the following language prominently positioned within the settlement: 
         
         Nothing in this Agreement is intended to or shall prevent, impede or interfere with Complainant’s non-waivable right, without prior notice to Respondent, to provide information to a government agency, participate in investigations, file a complaint, testify in proceedings regarding Respondent’s past or future conduct, or engage in any future activities protected under the whistleblower statute administered by HIOSH, or to receive and fully retain a monetary award from a government-administered whistleblower award program (such as, but not limited to, the SEC or IRS whistleblower award programs) for providing information directly to a government agency.
         
         In some cases, it may also be appropriate to add: 
         
         Nothing in this Agreement is intended to or shall prevent, impede or interfere with Complainant’s filing a future claim related to an exposure, or an occupational injury, or an occupational illness, whose existence was unknown, or reasonably could not have been known, to Complainant on the date they signed this Agreement.
   3. LIQUIDATED DAMAGES. HIOSH occasionally encounters settlement agreements that require a breaching party to pay liquidated damages. HIOSH may refuse to approve a settlement agreement where the liquidated damages are clearly disproportionate to the anticipated loss to Respondent from a breach. HIOSH may also consider whether the potential liquidated damages would exceed the relief provided to Complainant, or whether, owing to Complainant’s position and/or wages, they would be unable to pay the proposed amount in the event of a breach.
   4. OVERLY BROAD TERMS.
      1. CLAIMS AND PARTIES RELEASED.  HIOSH will typically approve a settlement agreement that contains a general release of employment-related claims against Respondent with the understanding that OSHA’s approval is limited to the settlement of the claims under the whistleblower statute that it enforces. Because a general release cannot apply to future claims, HIOSH prefers that a general release explicitly state that Complainant is releasing only employment-related claims that Complainant knew of as of the date of the settlement agreement. In addition, HIOSH occasionally encounters settlement agreements that are extremely broad as to the parties released by the agreement or the claims released by the agreement, such as settlements containing terms that would release affiliates of Respondent unconnected to either Complainant’s employment with Respondent or the protected activity alleged in the complaint or claims unconnected to Complainant’s employment with Respondent. In order to ensure that Complainant’s consent to the settlement is knowing and voluntary, HIOSH may require that Respondent clearly list in the agreement the entities and/or individuals (e.g. the subsidiaries, affiliates, partners, directors, agents, attorneys, insurers, etc.) that are being released or provide more specific information regarding the claims that are being released. 
      2. TAX ISSUES.  HIOSH occasionally encounters settlement agreements that have broad language relating to tax issues, e.g., requiring Complainant to indemnify and/or hold Respondent harmless for all taxes except those for which Respondent is solely liable. In order to ensure that the settlement agreement is not so vague regarding Complainant’s potential liability that Complainant’s consent cannot be regarded as knowing and voluntary, when HIOSH encounters such a term, HIOSH will request that the parties (1) omit the term from their agreement, or (2) substitute a term that states that both parties are solely responsible for their own tax obligations on monies paid under the settlement agreement and/or (3) substitute a term that states that Complainant is solely liable for Complainant’s tax obligations and will hold Respondent harmless if Complainant fails to comply with any legal obligations to report and pay taxes on the amount that Complainant is receiving under the settlement agreement.
   5. CHOICE OF LAW.  Employer-employee settlement agreements sometimes contain a “choice of law” provision that states that the settlement is to be governed by the laws of a particular state. HIOSH may approve an agreement that contains this term as long as the choice of law provision states that it does not limit the applicability of federal law under the HIOSH whistleblower statute. Where HIOSH encounters a choice of law provision, it will request that the parties insert the following language:  
      
      This provision does not limit the applicability of federal law under HRS § 396-8(e).
      
      If the parties do not revise the agreement to include the language above, HIOSH’s approval letter should note that the settlement agreement contains a choice of law provision and that this provision does not limit the applicability of federal law under HRS § 396-8(e).
   6. WAIVER OF FUTURE EMPLOYMENT.  If the settlement agreement contains a waiver of future employment, the following factors must be considered and documented in the case file:
      1. The breadth of the waiver. Does the employment waiver effectively prevent Complainant from working in their chosen field and/or in the locality where they reside? Consideration should include whether Complainant’s skills are readily transferable to other employers or industries. Waivers that narrowly restrict future employment for a limited time to a single, discrete employer may be less problematic than broader waivers. Thus, an agreement limiting Complainant’s future employment to a single employer is less problematic than a waiver that would prohibit Complainant from working for any companies with which Respondent does business. 
      2. Fairness. The investigator must ask Complainant, “Do you feel that, by entering this agreement, your ability to work in your field is restricted?” If the answer is yes, then the following question must be asked, “Do you feel that the monetary payment fairly compensates you for that?”  Complainant also should be asked whether they believe that there are any other concessions made by Respondent in the settlement that, taken together with the monetary payment, fairly compensates for the waiver of employment. The case file must document Complainant’s replies and any discussion thereof. 
      3. The amount of the remuneration. Does Complainant receive adequate consideration in exchange for the waiver of future employment.
      4. The strength of the complainant’s case. How strong is Complainant’s retaliation case, and what are the corresponding risks of litigation? The stronger the case and the more likely a finding of merit, the less acceptable a waiver, unless it is very well remunerated. Consultation with DAG may be advisable. 
      5. Complainant’s consent. HIOSH must ensure that Complainant’s consent to the waiver is knowing and voluntary. The case file must document Complainant’s replies and any discussion thereof.
      6. Comprehension and acceptance of the waiver. If Complainant is not represented, the investigator must ask Complainant they understand the waiver and if they accepted it voluntarily. Particular attention should be paid to whether or not there is other inducement – either positive or negative – that is not specified in the agreement itself, for example, threats made to persuade Complainant to agree, or additional monies or forgiveness of debt promised as an additional incentive. 
      7. Other relevant factors. Any other relevant factors in the particular case also must be considered. For example, does Complainant intend to leave their profession, to relocate, to pursue other employment opportunities, or to retire? Have they already found other employment that is not affected by the waiver? In such circumstances, Complainant may reasonably choose to forgo the option of reemployment in exchange for a monetary settlement. 

VI. Bilateral Agreements

A bilateral settlement is one between a government agency, such as the U.S. Department of Labor (DOL), signed by the Regional Administrator (or designee) and Respondent—without Complainant’s consent—to resolve a complaint filed under a whistleblower statute. Unlike federal OSHA, HIOSH cannot enter into a bilateral settlement. Specifically, under HRS § 396-8(e)(8), this section states that a Complainant may pursue their rights through civil action in court regardless of any investigation or action taken by HIOSH. A bilateral settlement agreement between HIOSH and a Respondent, signed by the Administrator without the Complainant’s consent, may be prohibited because it could undermine the Complainant’s right to seek legal recourse.

Legally, HIOSH must ensure that its enforcement actions do not conflict with or impede Complainant’s ability to pursue their claims in court. This protection is crucial to uphold the integrity of both administrative and judicial processes. Therefore, while HIOSH can resolve complaints through its own mechanisms, it must do so in a manner that respects the Complainant’s rights. Entering into a bilateral settlement without the Complainant’s consent could be viewed as conflicting with their ability to litigate.

HIOSH’s inability to enter into bilateral agreements without Complainant’s consent is rooted in the legal principle of ensuring that Complainants maintain their right to a private cause of action, as provided under the statute.

VII. Enforcement of Settlements

If there is a breach of a settlement agreement that HIOSH has entered into or approved, depending on the status of HIOSH’s investigation or any subsequent proceedings at the time the settlement was reached, HIOSH staff may either reopen the whistleblower investigation or refer the matter to DAG to pursue court-ordered enforcement. The additional work is a continuation of the original case. HIOSH does not open a new case to deal with the breach of a settlement agreement.

If there is a breach of a settlement agreement, the supervisor generally should consult with DAG. HIOSH may also inform the parties that violation of a settlement agreement is a breach of contract for which Complainant may seek redress in an appropriate court. HIOSH staff will, after appropriate consultation with DAG, evaluate the case to determine how to proceed.  

1. If the case settled before the merits of the complaint could be determined, the case may be reopened and investigated. 
2. If the case had already been determined to have merit before the settlement was reached, the case may be referred to DAG for review.
3. If the case was settled after the case had been determined to have merit and the settlement agreement was approved, then HIOSH generally will refer the case to DAG to obtain further relief from the court.
4. If a Respondent fails to fully comply with a settlement agreement, a letter must be sent to the Respondent informing him or her that the settlement became a final order of the Director upon the Administrator’s approval of the agreement and that the terms of the agreement will be enforced in the applicable state circuit court. The case shall then be referred to the DAG for litigation and the Complainant shall be so informed. 

---

1. Failure to expressly identify the payments that are made for restitution or to come into compliance with the law (e.g., wages, compensatory damages) may affect the tax treatment of such payments.  See 26 U.S.C. § 162(f)(2)(A)(ii). ↩︎
2. For a basic discussion of the income and employment tax consequences and proper reporting of employment-related settlements and judgments, the parties may wish to refer to IRS Counsel Memorandum, Income and Employment Tax Consequences and Proper Reporting of Employment-Related Judgments and Settlements (Oct. 22, 2008), available at:  https://www.irs.gov/pub/lanoa/pmta2009-035.pdf.  Further additional information is also available on the IRS’s website: https://www.irs.gov/government-entities/tax-implications-of-settlements-andjudgments.  The parties may also wish to refer to OSHA’s Taxability of Settlements Desk Aid (Sept. 30, 2015), available at https://www.whistleblowers.gov/memo/2015-09-30.  However, OSHA notes that these guidance documents may change in the future.  ↩︎
3. The HIOSH Law poster, which provides information about Section 8(e) and other rights under the HIOSH Law, is mandatory. HRS § 396-6(f). ↩︎
4. HRS § 92F-13 lists exceptions to public disclosure, which may include cases where the disclosure would frustrate a legitimate government function or involve clearly unwarranted invasions of personal privacy. ↩︎