In some cases, you can go back to work after receiving a workers’ compensation settlement in a lump sum. This tends to only happen if you return to work in a lesser capacity. That settlement would cover the wages you stand to lose due to your disability. Stipulation and award settlements are more likely to see you return to work.
How workers’ comp claims settle
It is important to understand how and when workers’ compensation claims settle.
Claims in the workers’ compensation system can be settled in 2 ways:
- compromise and release, also known as a lump sum settlement, or
- stipulation and award.
In either case, the settlement is meant to cover your future losses. These include:
- future disability benefits, which cover a portion of your wage loss, and
- medical benefits for the care that you are likely to need.
Because of this, workers’ comp claims generally only settle after you have reached maximum medical improvement (MMI). This is the point at which further medical care will not improve your condition. Depending on the workplace injury, this may be months or years after the accident.
This is why returning to your job is not guaranteed after a settlement. If you settle your case, that means you have a disability and wage loss. This generally only happens if you cannot do your former job.
After a lump sum workers’ comp settlement
In a compromise and release settlement, you receive all of your future workers’ comp benefits paid out in a lump sum. This can be in a single lump sum payment or in a structured settlement that spreads the payout over time. In exchange, you agree to release the workers’ comp insurer from further liability and close your case.
You may be allowed to return to work after receiving a lump sum settlement. However, your employer’s workers’ comp insurer may not allow it. They may claim that, if you stay, suffer another work-related injury, and your prior injury is aggravated, you would get medical care that the settlement already covered. It is not uncommon for them to require you to leave your job in order to receive the settlement.
If you do return to work after a compromise and release settlement, it is often to light duty or a role that pays less. The settlement would cover a portion of that wage loss.
After a stipulation and award settlement
A stipulation and award settlement is an ongoing agreement with the workers’ compensation insurance company. They agree to cover all of your future medical expenses related to the injury as they accrue.
Because there is no final settlement for your future benefits, you are more likely to be allowed to return to work.
When would I go back to work
It would depend on how well you recover from the workplace injury. It will be up to your doctor to clear you to return to work. He or she may clear you to return to work in full or partial capacity.
If you suffer serious injuries and do not make a full recovery, then you would be entitled to permanent disability benefits. These cover your future wage loss due to your disability or impairment. They would be paid out when the case settles. This generally happens after you reach MMI and it becomes clear what you can and cannot do at work. You would receive:
- permanent partial disability payments if you can work, but not to your former capacity, or
- permanent total disability payments if you cannot work at all.
Many job injuries are minor. If you make a full recovery, then you would only receive temporary disability benefits. Because there are no permanent benefits, your workers’ comp case will likely close without a settlement. You would return to work and would stop receiving workers’ compensation.
It is important to not return to work too soon. If you return to work in full capacity, you would stop receiving workers’ compensation benefits. You also face an increased risk of getting hurt again. You may even struggle to perform your job duties and end up getting fired.
“The worst thing that can happen is for you to lose your job and your benefits. You would still have a disability and medical bills, but now no income. Unfortunately, many employers pressure hurt workers to return before they are able. Listen to your doctor, instead. Only do what your doctor clears you to do.” – workers’ compensation lawyer Neil Shouse
What a workers’ compensation settlement covers
The workers’ compensation settlement covers your future disability benefits and medical care. It does not include your temporary benefits. These are the temporary disability benefits that you received to cover your wage loss during your recovery, and the costs of the health care that you have already received.
In 2020, $27.7 billion was paid out to injured workers for medical treatment and another $31.2 billion was paid to cover wage losses from workplace accidents in the U.S.
Legal Citations:
[1] Depending on the state’s workers’ compensation laws, the wage loss payments cover two-thirds of the injured employee’s income up to a certain limit.[2]
[1] National Academy of Social Insurance, “Workers’ Compensation: Benefits, Costs, and Coverage,” (November, 2022).
