Workers’ Compensation Settlements: How Much is Enough?

For many injured workers navigating the workers’ compensation system, when they receive an

offer of settlement from their employer’s insurance company their first question is “How much is a

fair settlement?” The most correct answer usually is “it depends.” While understandably

frustrating, the reason that the answer cannot be a specific dollar amount is that many

considerations are taken into account to arrive at a settlement amount. Once examined more

closely, these can provide somewhat of a road map of what takes place in a typical workers’

compensation case. Using this road map, someone who is familiar with the workers’ compensation

system may be able determine if a settlement is fair or not; that is, if the case truly is typical.

How the No Fault System Affects Workers’ Compensation Settlements

Workers’ Compensation Settlements

Workers’ Compensation Settlements

Workers’ compensation law is a no-fault insurance system that provides compensation to workers

for work-related injuries. What this means is that the system is designed to help parties avoid

costly litigation over who was at fault for a workplace injury. In the place of litigation, a set of laws

was created to help govern how much a particular injury is worth – i.e. a worker gives up the right

to sue his or her employer in civil court and an employer obtains insurance to pay for the costs of

medical care for any worker who is injured while performing duties on its behalf.

Considerations for  Workres’ Compensation Settlements

Pre-Injury Earnings

The amount of money a worker collected on a weekly basis prior to becoming injured is key to

determining the amount of benefits they should collect post-injury. That is because the post-injury

weekly benefit amount is determined by examining the employee’s average weekly wage prior to

the injury. Once this determination is made, an injured worker then has more information about

how much the injury is “worth.”

Length of Time Required for Treatment

Depending on the seriousness of the injury, there is generally a set time frame within which the

injured worker will receive treatment and then return to work once they have reached maximum

improvement. An injured worker’s designated physician should be able to monitor the worker’s

medical improvement and inform him or her when it is likely that he or she can return to work.

This duration, multiplied by the average weekly wage, can help an injured worker or an attorney

calculate how much treatment for the injury will cost over time. This amount may then be used to

determine whether a settlement offer is fair.

Ongoing Impairment

One other factor to consider is whether an injury is so severe that an injured worker is either

permanently disabled or at risk of requiring further medical treatment at a later date. Whether an

employer’s insurance will be required to pay for long-term or future treatment can also indicate the

value of a particular injury.

The workers’ compensation system was designed to save judicial resources by an agreement on

both sides that workplace injuries are compensable at specific rates, regardless of fault. Before

agreeing to settle a workers’ compensation claim, an injured worker should make sure that the

settlement offer reflects a fair amount for the injury suffered, because they may not have the option

of reopening their case at a later date.