A Settlement Agreement Is a Contract — and Minn. Stat. § 572.35 Can Make a Mediated One Nonbinding on Its Face

The one statute that can make a signed settlement nonbinding

Most of what governs a settlement agreement is contract law. Minnesota says so by statute, in the same sentence that then attaches a condition most people have never heard of. Minn. Stat. § 572.35, subd. 1:

The effect of a mediated settlement agreement shall be determined under principles of law applicable to contract. A mediated settlement agreement is not binding unless:

(1) it contains a provision stating that it is binding and a provision stating substantially that the parties were advised in writing that (a) the mediator has no duty to protect their interests or provide them with information about their legal rights; (b) signing a mediated settlement agreement may adversely affect their legal rights; and (c) they should consult an attorney before signing a mediated settlement agreement if they are uncertain of their rights; or

(2) the parties were otherwise advised of the conditions in clause (1).

That is a default rule running against enforceability. The instrument it applies to is defined. Minn. Stat. § 572.33, subd. 4: “‘Mediated settlement agreement’ means a written agreement setting out the terms of a partial or complete settlement of a controversy identified in an agreement to mediate, signed by the parties, and dated.” And “agreement to mediate,” in subd. 3, is itself a defined document — written, identifying the controversy, stating the parties will seek to resolve it through mediation, providing for termination on written notice delivered by certified mail or personally, “signed by the parties and mediator and is dated.”

So § 572.35 reaches a settlement that came out of a mediation conducted under a § 572.33, subd. 3, agreement to mediate. The chapter’s scope section, Minn. Stat. § 572.40, excludes a list from §§ 572.31 to 572.36 — “proceedings relating to the determination of criminal liability or proceedings brought under chapters 518, 518A, 518B, and 518C, or proceedings relating to guardianship, conservatorship, or civil commitment.” An employment dispute is not on that list.

Minn. Stat. § 572.36 supplies the exit:

In any action, a court of competent jurisdiction shall set aside or reform a mediated settlement agreement if appropriate under the principles of law applicable to contracts, or if there was evident partiality, corruption, or misconduct by a mediator prejudicing the rights of a party. That the relief could not or would not be granted by a court of law or equity is not ground for setting aside or reforming the mediated settlement agreement unless it violates public policy.

The employment settlement that somebody else has to approve

Most of the claims on this site settle on the parties’ signatures. One statute on this list requires somebody else to sign off, and it does so in two named situations.

Minn. Stat. § 176.521, subd. 1(a), on a workers’ compensation claim:

An agreement between an employee or an employee’s dependent and the employer or insurer to settle any claim for compensation under this chapter is valid where it has been executed in writing and signed by the parties and intervenors in the matter, and, where one or more of the parties is not represented by an attorney, the commissioner or a compensation judge has approved the settlement and made an award thereon.

Subd. 2 governs approval and puts the burden on the settling parties: “Settlements shall be approved only if the terms conform with this chapter,” and “[t]he parties to the agreement of settlement have the burden of proving that the settlement is reasonable, fair, and in conformity with this chapter.” Where both sides have counsel, the subdivision supplies a conclusive presumption of reasonableness — with one carve-out, and it is the one that comes up: the presumption does not apply “when the settlement purports to be a full, final, and complete settlement of an employee’s right to medical compensation under this chapter or rehabilitation under section 176.102. A settlement which purports to do so must be approved by the commissioner or a compensation judge.” The presumption is also unavailable “in cases involving an employee or dependent with a guardian or conservator.”

Nothing comparable appears in the Human Rights Act, the Whistleblower Act, or the chapter 181 pay sections. A retaliation claim under Minn. Stat. § 176.82 is not a claim “for compensation under this chapter,” and the two travel in different forums — which is the subject of courts, agencies, and who decides what.

The windows: fifteen days, seven days, and “a reasonable period of time”

Three provisions put time between a signature and finality, each attached to a different claim. Two of them are worked through in detail elsewhere on this site; what matters here is that they attach to the instrument, not to the negotiation.

• Minnesota Human Rights Act claims. Minn. Stat. § 363A.31, subd. 2, gives 15 calendar days to rescind a waiver or release of chapter 363A rights reaching past or concurrent acts, requires that the waiving party “be informed in writing of the right to rescind,” and prescribes the delivery mechanics — “except that a waiver or release given in settlement of a claim filed with the department or with another administrative agency or judicial body is valid and final upon execution.” Subdivision 1 separately voids any waiver purporting to reach “claims arising out of acts or practices which occur after the execution of the waiver or release.” Both are on the severance-release page.
• Age claims, outside litigation. 29 U.S.C. § 626(f)(1)(G) requires that the agreement provide “that for a period of at least 7 days following the execution of such agreement, the individual may revoke the agreement, and the agreement shall not become effective or enforceable until the revocation period has expired.” The consideration periods — 21 days, or 45 for a group program — are in § 626(f)(1)(F). The OWBPA page walks all eight requirements.
• Age claims, settling a charge or a lawsuit. This is the list people miss. 29 U.S.C. § 626(f)(2) applies to “[a] waiver in settlement of a charge filed with the Equal Employment Opportunity Commission, or an action filed in court by the individual or the individual’s representative, alleging age discrimination of a kind prohibited under section 623 or 633a of this title,” and provides that such a waiver “may not be considered knowing and voluntary unless at a minimum — (A) subparagraphs (A) through (E) of paragraph (1) have been met; and (B) the individual is given a reasonable period of time within which to consider the settlement agreement.” Subparagraphs (F), (G), and (H) of paragraph (1) — the 21 days, the 45 days, the 7-day revocation, and the group disclosure — are not on that list. In their place is “a reasonable period of time,” which is not a number.

In every one of these, 29 U.S.C. § 626(f)(3) puts the burden where the drafting happened: “the party asserting the validity of a waiver shall have the burden of proving in a court of competent jurisdiction that a waiver was knowing and voluntary pursuant to paragraph (1) or (2).”

What the agreement is not allowed to do

It cannot waive unemployment rights, and it cannot buy the employer’s silence at the agency. Minn. Stat. § 268.192, subd. 1: “Any agreement by an individual to waive, release, or commute rights to unemployment benefits or any other rights under the Minnesota Unemployment Insurance Law is void.” The same subdivision bars an employer from requiring or accepting “any waiver of any right or in any manner obstruct[ing] or imped[ing] an application or continued request for unemployment benefits,” and makes each offense a misdemeanor. Subdivision 1a reaches the trade directly: an employer may not make an agreement that, in exchange for agreeing not to contest benefits “including agreeing not to provide information to the department,” the employee will quit, take a leave of absence, leave temporarily or permanently, or “withdraw a grievance or appeal of a termination.” “An agreement that violates this subdivision has no effect under this chapter.”

Severance money still shifts the weeks it is paid for. Minn. Stat. § 268.085, subd. 3b(a), applies to “separation pay, severance pay, bonus pay, or any other payments paid by an employer because of, upon, or after separation from employment,” where the payment is “considered wages under section 268.035, subdivision 29” or “subject to the Federal Insurance Contributions Act (FICA) tax.” Paragraph (b) forecloses the common misreading: “The date the payment is actually made or received, or that an applicant must agree to a release of claims, does not affect the application of this paragraph.” Paragraph (c) names what the subdivision does not reach: “earnings under subdivision 5, back pay under subdivision 6, or vacation pay, sick pay, or personal time off pay under subdivision 3.” The week-by-week arithmetic is on the severance-release page.

One drafting note the Revisor’s text settles. Chapter 268 contains no definition of “severance pay.” Minn. Stat. § 268.035, subd. 29(a), defines “Wages” and includes “severance payments” in the list; § 268.035, subd. 21b, is the definition of “Preponderance of the evidence.” Anything that reads § 268.035, subd. 21b, as a severance definition has the wrong subdivision.

It cannot relabel a harassment settlement as pay. Minn. Stat. § 181.141, enacted in 2023, is one sentence:

In a sexual harassment or abuse settlement between an employer and an employee, when there is a financial settlement provided, the financial settlement cannot be provided as wages or severance pay to the employee regardless of whether the settlement includes a nondisclosure agreement.

The section governs how the money is characterized. It does not cap the amount and it does not prohibit a nondisclosure agreement — the closing clause assumes one may be present.

If it governs confidential information, it has to carry the trade-secret immunity notice. 18 U.S.C. § 1833(b)(1) provides that an individual “shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret” made “in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney” and “solely for the purpose of reporting or investigating a suspected violation of law,” or made “in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.” Paragraph (2) lets an individual who sues for retaliation disclose the trade secret to their own attorney and use it in the proceeding, if filings containing it are under seal and it is not otherwise disclosed except by court order.

The notice duty is paragraph (3)(A): “An employer shall provide notice of the immunity set forth in this subsection in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.” A cross-reference to a policy document satisfies it under (3)(B). The consequence of omitting it is in (3)(C): the employer “may not be awarded exemplary damages or attorney fees under subparagraph (C) or (D) of section 1836(b)(3) in an action against an employee to whom notice was not provided.” Under (3)(D), the paragraph “shall apply to contracts and agreements that are entered into or updated after the date of enactment of this subsection.” What that means for a confidentiality clause generally is on the NDA page.

It cannot buy your silence at the EEOC on an age claim. 29 U.S.C. § 626(f)(4):

No waiver agreement may affect the Commission’s rights and responsibilities to enforce this chapter. No waiver may be used to justify interfering with the protected right of an employee to file a charge or participate in an investigation or proceeding conducted by the Commission.

That provision addresses the Age Discrimination in Employment Act. It is not a general statement about every claim or every agency.

What the Whistleblower Act says about being settled away: nothing. In Minn. Stat. §§ 181.931 through 181.935 as the Revisor posts them, the words “waive,” “waiver,” “release,” “settlement,” and “nondisclosure” appear zero times. The word “agreement” appears once, in § 181.932, subd. 4 — “This section does not diminish or impair the rights of a person under any collective bargaining agreement” — and “confidential” or “confidentiality” twice, both in subd. 5: “This section does not permit disclosures that would violate federal or state law or diminish or impair the rights of any person to the continued protection of confidentiality of communications provided by common law.” There is no counterpart in the Act to § 363A.31’s limitation on waiver and no counterpart to § 268.192’s voiding provision. This page reports that silence and does not fill it; no case is cited on what a release does to a § 181.932 claim, because no search of the case law was run — see the closing note.

Taxes, quoted and left there

26 U.S.C. § 104(a)(2) excludes from gross income:

the amount of any damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal physical injuries or physical sickness;

The flush sentences at the end of § 104(a) are the qualification that decides most employment settlements:

For purposes of paragraph (2), emotional distress shall not be treated as a physical injury or physical sickness. The preceding sentence shall not apply to an amount of damages not in excess of the amount paid for medical care (described in subparagraph (A) or (B) of section 213(d)(1)) attributable to emotional distress.

That is the whole of what this page says about taxes. It quotes the exclusion and its limit. It does not characterize any payment, allocate any settlement, or address withholding.

Currency

Revisor History lines, read on September 11, 2026: § 572.31 ends 1984 c 646 s 1; § 572.33 ends 1986 c 398 art 17 s 3,4; § 572.35 ends 1999 c 190 s 1; § 572.36 ends 1984 c 646 s 4; § 572.40 ends 1984 c 646 s 7; § 176.521 ends 2017 c 94 art 5 s 3; § 268.192 ends 2012 c 201 art 2 s 7; § 268.085 ends 2023 c 55 art 1 s 30; § 181.141 ends 2023 c 64 art 1 s 11; § 181.932 ends 2025 c 39 art 2 s 57; § 363A.31 ends 1Sp2021 c 11 art 3 s 16.

Table 2, queried per exact section: § 572.31, § 572.33, § 572.36, and § 572.40 each return No Records Found; § 572.35 returns one record, subd. 1, amended in the 1999 Regular Session; § 176.521 returns two records, the most recent subd. 2b, new in 2017; § 268.192 returns no record more recent than 2012; § 268.085 returns no record more recent than the 2023 Regular Session, and subd. 3b has not been amended since it was created in 2019; § 268.035 returns no record more recent than the 2024 Regular Session (subd. 20), and neither subd. 29 nor subd. 21b has been amended since 2016 and 2015 respectively; § 181.141 returns one record, new in the 2023 Regular Session; § 363A.31 returns one record, from the 2021 first special session. Of the Minnesota sections quoted on this page, only § 181.932 carries a 2025 or 2026 session record, and none carries a 2026 record.

One 2025 note. § 181.932’s History line ends at 2025 c 39 art 2 s 57, and Table 2 for that exact section returns six records, five of them to subdivision 1 — including the 2025 row — and one to subdivision 2, from 1999. Read in markup, Laws 2025, ch. 39, art. 2, § 57, amends subdivision 1 and carries struck or inserted text in clause (6) only; clauses (1) through (5) appear without markup. Subdivisions 4 and 5, quoted above, are outside what that section amended.

What this page does not do

This page describes what statutes reach a settlement agreement. It does not read one, does not say whether a particular document satisfies Minn. Stat. § 572.35, subd. 1, and does not say what a particular release covers — and two of the questions raised here are open on the sources retrieved: what a private release does to a Whistleblower Act claim, and what “a reasonable period of time” means under 29 U.S.C. § 626(f)(2)(B). No case is cited on this page. The tools this site uses to retrieve Minnesota decisions were unavailable when these sources were checked, no search of the case law was run, and nothing here is offered as a report of what any court has held. What a release bought and what it could not reach is on the severance-release page; the eight federal requirements for an age-claim waiver are on the OWBPA page; what a confidentiality clause may and may not restrict is on the NDA page; and what the document at the exit meeting is doing in the first place is the exit meeting.