Employer Assurances Can Nullify Broad Release: The “Knowing-and-Voluntary” Standard Re-Defined in Schuyler v. Sun Life Assurance Company of Canada

Introduction

On 14 August 2025 the United States Court of Appeals for the Second Circuit delivered a deeply divided opinion in Schuyler v. Sun Life Assurance Company of Canada (No. 23-498). The panel vacated a district‐court judgment that had barred an ERISA disability suit on the basis of a separation agreement. The majority, per Judge Robinson, held that even a facially unambiguous release of “all ERISA claims” fails if, in totality of the circumstances, the employee did not knowingly and voluntarily relinquish those claims. Here, undisputed pre-execution assurances from the employer’s counsel that the agreement “would have absolutely no effect” on the employee’s long-term-disability (LTD) claim were decisive. Chief Judge Livingston dissented, accusing the majority of upending contract certainty.

The dispute pitted Plaintiff-appellant Kristen Schuyler, a former Benco Dental Supply Company sales representative with a pending LTD claim, against Sun Life Assurance Company of Canada, Benco’s disability insurer and ERISA plan fiduciary. After Sun Life twice denied benefits, Schuyler sued under ERISA §§502(a)(1)(B) & (a)(3). Sun Life argued the suit was barred by a release embedded in Schuyler’s separation agreement with Benco; the district court agreed. The Second Circuit’s reversal establishes an important clarification: Employer representations external to the contract can render an otherwise valid ERISA waiver unenforceable if they undermine the employee’s subjective understanding.

Summary of the Judgment

The court refused to decide whether the release’s wording objectively encompassed Sun Life; it focused instead on the waiver’s subjective validity.
Applying and elaborating the six-factor test from Laniok v. Advisory Committee of Brainerd Mfg. and Bormann v. AT&T, the majority held that Schuyler’s waiver was not “knowing and voluntary.”
Key circumstance: Benco’s lawyer twice assured Schuyler in writing that Sun Life was “a separate and independent third party” and that the agreement would have “absolutely no effect” on her ability to appeal the LTD denial.
Because the waiver was unenforceable, the panel vacated summary judgment and remanded for consideration of the merits of Schuyler’s ERISA claims.
Dissent: Chief Judge Livingston contended that all six Laniok factors favored Sun Life; the majority, she argued, improperly elevated Schuyler’s “self-serving” interpretation over the contract’s text and integration clause.

Analysis

1. Precedents Cited and Their Influence

Laniok v. Advisory Comm. of Brainerd Mfg. Co. Pension Plan, 935 F.2d 1360 (2d Cir. 1991)
Introduced the six-factor “totality of the circumstances” framework for evaluating ERISA waivers. Schuyler re-emphasises that the list is illustrative, not exhaustive, and shows that one powerful circumstance can outweigh others.
Bormann v. AT&T Communications, Inc., 875 F.2d 399 (2d Cir. 1989)
Origin of the heightened scrutiny for waivers of statutory rights (initially ADEA, later imported to ERISA). The court again treats ERISA rights as “especially protected.”
Sharkey v. Ultramar Energy Ltd., 70 F.3d 226 (2d Cir. 1995) & Finz v. Schlesinger, 957 F.2d 78 (2d Cir. 1992)
Earlier decisions recognizing that waivers of ERISA claims must be closely examined; the majority uses them to justify looking beyond contract formalities.
District-court and out-of-circuit cases on whether releases reach insurers (Liyan He v. Cigna; Goepfert v. Trustmark; Radford Trust) are canvassed to illustrate the lack of uniformity and the resulting ambiguity that underpinned the majority’s view that Schuyler could reasonably rely on Benco’s assurances.

2. The Court’s Legal Reasoning

Focus on Subjective Understanding.
The majority treats the “knowing and voluntary” inquiry as distinct from ordinary contract interpretation. Even if the release might ultimately be construed to cover Sun Life, the critical question is whether Schuyler understood it to do so.
Employer Assurances = Decisive Circumstance.
By providing unequivocal written statements that the agreement would not affect Schuyler’s LTD claim, Benco effectively negated the employee’s knowledge that she was waiving her claim. Because those statements were undisputed, the majority deemed waiver invalid “as a matter of law.”
Re-weighting the Laniok Factors.
The majority acknowledged Schuyler’s education, time to review, legal counsel, and contract clarity, but found them overwhelmed by the employer’s contrary assurances. It thus illustrates that the factors are not mechanical; factor 4 (clarity) lost force because the term “related or affiliated entities” had plausible alternative readings.
Separation of Contract Interpretation and Waiver Validity.
The court expressly did not decide whether Sun Life is, in fact, a “related / affiliated entity” released by the agreement. That issue may arise on remand. The point: even a release that does cover the insurer can still be unenforceable if obtained without a knowing and voluntary relinquishment.
Strict Scrutiny of ERISA Rights.
Echoing earlier appellate precedent, the opinion reiterates that Congress intended ERISA benefits to be zealously protected; therefore, waivers are “subject to particularly close judicial scrutiny.”

3. Potential Impact

Heightened Drafting Risk for Employers & Insurers.
Employers must ensure that any separation agreement expressly identifies the benefit plan, the insurer, the plan fiduciaries, and the precise ERISA claims being released. Generic references to “related or affiliated entities” are now perilous in the Second Circuit.
Communications Are Evidence.
HR representatives and counsel should assume that every oral or written representation during negotiations may be scrutinised later. Boiler-plate integration or merger clauses may not save a release if contradictory assurances exist.
Employee Leverage.
Employees who relied on employer representations may now more readily challenge releases. The decision strengthens employees’ bargaining position and encourages candid, documented disclosure.
Judicial Workload.
By focussing on subjective understanding, courts will see more fact-intensive disputes survive summary judgment, at least where emails or conversations muddy the waters.
Circuit Split Possible.
Other circuits (e.g., 5th, 7th, 11th) have enforced broad waivers notwithstanding informal statements. Schuyler may therefore trigger petitions for Supreme Court review to harmonise standards.

Complex Concepts Simplified

ERISA (Employee Retirement Income Security Act of 1974). A federal statute regulating private-sector employee benefit plans (pensions, health, disability). Section 502 lets participants sue for benefits.
LTD Plan. Long-Term Disability plan: provides wage-replacement when an employee is unable to work for an extended period.
Release / Waiver. A contract provision where one party agrees to give up (release) legal claims against another party.
Knowing and Voluntary Standard. Courts will enforce a waiver only if the employee understood the rights surrendered and made the choice freely (no duress, deception, or misunderstanding). The six Laniok factors are tools for that assessment.
Totality of the Circumstances. A holistic evaluation; the court does not mechanically tick boxes but weighs all relevant facts—education, clarity, timing, advice, negotiations, consideration—plus any unique circumstance (here, employer assurances).
Related or Affiliated Entity. A term often used in releases to cover corporate parents, subsidiaries, or entities with some relationship to the employer. Schuyler shows this phrase may be too vague absent definition.

Conclusion

Schuyler v. Sun Life represents a significant refinement of the Second Circuit’s “knowing and voluntary” analysis for ERISA waivers. Even a broadly drafted, facially unambiguous release can fail if undisputed extrinsic communications reasonably led the employee to believe her statutory rights were preserved. Employers must now align their contractual language with their oral and written representations, and insurers cannot rely on employer-employee releases without confirming that the employee clearly understood the implications. Going forward, the case will serve as a cautionary precedent on the perils of form releases and casual assurances, reinforcing federal courts’ commitment to protecting ERISA rights.