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Employment Laws

Who has a Stake in your Worker’s Comp Award or Settlement?

It is often assumed that since the provision of worker’s compensation is designed to benefit the employee, a worker’s compensation claim will be cut and dry. However, it must be noted that employees who file worker’s compensation claims for an on-the-job injury or work-related illnesses may have to go through appeals, settlement negotiations, and a lot of time before actually and finally resolving the case. Once they go through the whole process and are awarded benefits or a settlement, they may be shocked to realize that not all the money they have received is theirs. This article will discuss who has a stake in your worker’s compensation settlement or award.

Once you have received your worker’s compensation award or settlement, it is important to note that, unfortunately, not all the money received is yours. There are a number of people or entities entitled to it. Some of the persons or entities that have a stake in your worker’s compensation award or settlement include the following:

  • Attorneys – in most states, worker’s compensation attorneys charge a contingency fee. This is a form of payment to the lawyer at a specific percentage of your award or settlement; however, no money is paid if you do not win your case. In addition to the contingency fee, you will also need to reimburse payments made by your lawyer for expenses in the course of your case. This may include fees for copying medical records, hiring expert witnesses, and hiring court reporters. Generally, lawyers will deduct these costs before attorney fees are calculated.
  • Unpaid medical bills– if a worker’s compensation claim was denied and you win on appeal, the judge may order the insurance company to pay your medical bills this added to the award. If you paid your own medical bills, then you will keep the money marked for such costs. However, if your doctors agreed to postpone payment until you received the award, this money pays outstanding bills. In most cases, the settlement includes a lump-sum set aside for medical bills.
  • Permanent disability advances– in California, insurance companies are generally required to start making permanent disability payments within 14 days of the last payment for temporary disability, according to the California Labor Code. Permanent disability advances will be deducted from your settlement or award if received.
  • Unpaid child support – any overdue child support that you owe will be taken from part or all your worker’s compensation award or settlement to pay what you owe.
  • Taxes – in general, no state or federal taxes are paid on your settlement or award. However, there is an exception to this rule if you are also receiving benefits through Social Security Disability Insurance (SSDI). If the total of your worker’s compensation award and SSDI benefits are high enough, your benefits may be offset, and you may have to pay taxes on the offset amount. In addition, your settlement or award may directly affect whether you qualify for tax credits as they may be seen as income.

To learn more about the worker’s compensation process, awards and settlements, contact a labor employment attorney today.