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 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
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.
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.