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The difference between workers’ comp and third-party claims

On Behalf of | Oct 23, 2023 | Workers' Compensation |

According to the U.S. Department of Labor, the number of workers’ compensation claims filed in California as of 10/15/2023 was 14,160. Each of these claims represents an injured worker. However, this figure may not present the whole picture as some workers may make third-party claims.

Workers’ compensation and third-party claims seek to provide financial support to injured workers, but they differ significantly in their nature and purpose.

Workers’ compensation basics

Employees initiate workers’ compensation claims when they sustain work-related injuries or illnesses. These claims ensure that employees receive compensation for medical expenses and lost wages without having to prove employer fault. The system allows injured workers to obtain benefits even if their actions contributed to the accident. The central focus of a workers’ comp claim is the relationship between the employee and their employer.

In a workers’ compensation claim, employees typically receive a fixed percentage of their salary as compensation. This process is straightforward, ensuring prompt financial assistance. However, the trade-off is a limit on the total compensation amount. Plus, it excludes compensation for pain and suffering.

Third-party claims basics

Workers make third-party claims against parties other than the employer when their negligence or wrongful actions contributed to the employee’s injury. These parties can include manufacturers, subcontractors or individuals unrelated to the employer-employee relationship. In such cases, the injured worker can file a separate claim against these third parties to seek additional compensation. The critical distinction here is that third-party claims introduce external factors that extend beyond the traditional scope of workers’ compensation.

These claims can result in higher compensation amounts. They allow victims to recover money for pain and suffering, emotional distress and even punitive damages in cases of severe negligence. However, third-party claims can be more complex and time-consuming. They require the injured worker to prove the third party’s liability in court.

The primary distinction between workers’ compensation claims and third-party claims lies in their focus. Workers’ compensation is an internal system, while third-party claims are external. Each type has its advantages and drawbacks. The choice of claim depends on the specific circumstances of the injury.