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What Do You Need To Know About Workers’ Comp Lump-Sum Settlements Under California Law?

Workers' Comp Lump-Sum | Spiro K Pistiolas Law Firm

When an employee experiences a work-related injury and receives Workers’ Comp Lump-Sum benefits, they will likely need to take time off from work. They may experience a drop in their standard of living. The worker’s compensation benefits are meant to help them cope with the immediate challenges and long-term consequences of the injury.

Workers’ compensation benefits are typically paid out over an extended period, but they can also be given as a lump-sum settlement in certain circumstances. When this happens, the worker has to decide whether to take the settlement as is or negotiate for something better. Read on to learn more about what you need to know about workers’ comp lump-sum payments under California law.

What Is a Lump-Sum Workers’ Comp Settlement in California?  

A lump-sum workers’ comp settlement in California is a one-time payment of the total amount of workers’ compensation benefits due to an injured worker. In contrast, most workers’ compensation benefits are paid on a periodic (regular) basis, for example, weekly, biweekly, or monthly. When a lump-sum workers’ compensation settlement is granted, it’s usually because the injured worker’s circumstances have changed.

These changes could be related to recovery from the injury, permanent disability, and inability to work in the usual occupation, or change in family circumstances. Or, it could be due to a combination of factors. For example, the injured worker may be in a better financial position than when they first applied for workers’ compensation benefits.

When Can Employees Receive Lump Sum Payments?  

Before a worker is eligible to receive a lump sum, they must have reached maximum medical improvement (MMI). MMI is the point at which the doctor determines that no further medical improvement is expected due to the injury. In other words, the worker has fully recovered due to their injury. If the worker has reached MMI and experiences a change in circumstances, they may be eligible for a lump-sum payment.

For example, their income may have increased, or their dependent may have grown older, making them ineligible for the same benefits they received while incapacitated. Alternatively, they could have decreased earnings because they are now unable to work in the same occupation.

How Does The Calculation For A Lump Sum Settlement Work?  

The calculation for a lump sum after workers’ comp settlement in California is a complex process that depends on several factors, including the type of injury, the length of time the employee received benefits, and the amount of the weekly honors. For example, if the employee is receiving weekly benefits of $500 and the lump sum is $20,000, the calculation would be: ($500 x 52 weeks) + $20,000 = $78,000. Other factors could be included in the calculation, such as the cost of medical treatment, loss of earning capacity, and permanent disability.

Pros and Cons of a Lump Sum Settlement  

Pros: The injured worker will receive a larger lump-sum payment than they would have if they had continued receiving periodic benefits over a long period. Another advantage is that they will no longer be subject to the administrative rules governing when and how benefits are paid.

Cons: The injured worker must be prepared to give up all future benefits. And, because a more significant payment will be reflected on their income tax return, they may be subject to higher taxes.

How to Negotiate for a Lump Sum Workers’ Comp Settlement California?  

If you receive lump-sum workers’ compensation benefits and would prefer to receive a larger lump-sum payment, you should consult with a workers’ comp attorney. Suppose you represent an injured worker who has agreed to a lump-sum settlement but would prefer to receive periodic benefits instead. In that case, you should consider the following tips for negotiating a better deal.

  • Know your rights – The laws applicable to workers’ compensation claims are complex and vary from state to state. Before you begin negotiations, ensure you understand the claim’s legal basis and the number of benefits the injured worker is entitled to receive.
  • Get the facts – It’s essential to know the current financial situation of the injured worker as well as their future financial prospects. Ask about sources of income, expenses, and other financial obligations such as a child or spousal support.
  • Know the employer’s position – Employers are generally required to have workers’ compensation insurance to cover injuries sustained by employees while on the job. Employers have a robust financial incentive to settle claims quickly and with as little money as possible. You will have a better chance of securing a better deal if you know what the employer is willing to offer.
Final Words: Know your rights  

You should know your rights if you receive workers’ comp settlement in California. It would help if you also understood the laws that govern workers’ compensation claims and how these benefits are calculated. If you receive a smaller workers’ comp lump-sum settlement than you think you are entitled to, don’t hesitate to consult us at Pistiolas Law. You can leave an email or ring us at 844-414-1768.

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