Does Severance Offset Workers’ Comp in Pennsylvania?

If you were injured at work, there may be legal ways that your employer can let you go from your job because you are now unable to perform work duties.  When this happens, you could potentially start receiving severance pay at the same time that they are paying your Workers’ Comp benefits.  Does that potentially mean lowering your Workers’ Comp payments?

Generally, if the same employer is paying your severance and your Workers’ Comp benefits, they can offset the Workers’ Comp benefits by the amount they pay you in severance.  This means that you cannot get paid twice, and they can essentially reduce how much they have to pay in Workers’ Comp.  At the end of the day, there are some areas of benefits that cannot be offset, and your severance pay might actually be more than what you receive in Workers’ Comp benefits anyway.  Moreover, once the severance runs out, the Workers’ Comp benefits might go back up to their full value.

For help with your Workers’ Comp claim, call Cardamone Law’s Certified Pennsylvania Workers’ Compensation Lawyers at (267) 651-7945.

Can Receiving a Severance Package Reduce My Workers’ Comp in Pennsylvania?

Under § 204(a) of the Workers’ Comp Act, Pennsylvania law allows employers to reduce what they pay in Workers’ Comp benefits if you are simultaneously receiving unemployment, a pension, severance, or “old age” benefits from Social Security.  Half of the “old age” benefits you start getting from Social Security after an injury can be credited against the amount your employer has to pay you for Workers’ Comp, but 100% of any unemployment, severance, or pension payments they make are credited.

Functionally, this means that you cannot double dip and receive both severance pay and Workers’ Comp at the same time from the same employer.  If you, for some reason, are getting Workers’ Comp and severance from different employers – e.g., if you were injured quite early on in your tenure at a new job or are reaching back with your Work Comp claim against an employer other than your most recent one – then this offset does not apply.

The offset also only applies to benefits you receive under § 108 or § 306 of the Workers’ Comp Act – which covers benefits for occupational diseases and wage-loss benefits while your injury keeps you from working.  These benefits do not offset any amounts received for § 306(c) benefits – the “specific loss” benefits that our Allentown, PA Workers’ Comp lawyers can help you seek for permanent injuries.  These benefits pay you for a lost body part, lost function in a body part, lost vision, lost hearing, or serious facial scars, and these benefits go untouched when it comes to severance offsets.

Will Severance Payments Cancel Out My Workers’ Comp Benefits in Pennsylvania?

Often, severance packages include extended health insurance/COBRA coverage and ongoing wages for a limited time after losing your job.  On the other hand, Workers’ Comp benefits pay for medical expenses and 2/3 of your lost wages while you cannot work.  In some cases where you can still do partial work, you might receive 2/3 of the difference between old and new wages instead.  This typically means that while you are receiving both severance pay and Workers’ Comp benefits, your severance pay might be higher than what you get for lost wages through Workers’ Comp, and it could totally cancel out any Workers’ Comp benefits – but only for a limited time.

If your severance payment is more than what you get for wage-loss benefits under Workers’ Comp, then it might reduce your Work Comp payment to $0.  However, your severance might account for 100% of lost wages instead of 2/3.  This could mean you actually receive more money while you have a severance than if you just got Workers’ Comp benefits.  Since specific loss benefits cannot be offset, you might even receive more money than when you were working.

However, severance pay is usually limited and will not last forever.  If your severance package runs out in a few weeks or months, you might not be healed from your work injuries by the time that pay runs out.  As such, you might draw on Workers’ Com benefits for months or years to come after your severance runs out.  At that point, the Work Comp benefits have to go back up to the full value since there is no more offset from severance.  Unless there is a separate offset that applies (e.g., Social Security), your employer will not be able to reduce Workers’ Comp payments any longer.

Should I Reject a Severance if I Want to Claim Workers’ Comp in Pennsylvania?

You may be at a crossroads where you have a non-disparagement agreement, non-compete agreement, or some other paperwork you have to sign before you can start receiving severance, and you might be considering a Workers’ Comp claim.  It will be up to you to make the final decision about what benefits to seek, but our lawyers can explain some things that might help.  You should always consult with a lawyer about the specifics of your case, but here are some general things to consider.

First, agreements that might block you from receiving Workers’ Comp are usually invalid, but it is important to read all the fine print in your severance agreement to make sure that it doesn’t jeopardize your right to Workers’ Comp.

Second, look at the amounts and benefits paid.  If you will be getting more in severance than you would through Workers’ Comp, you might want to take the severance deal because it will mean more money in your pocket.  It might also start being paid sooner than your Workers’ Comp benefits, giving you much-needed income while our lawyers file in court and fight to get your Work Comp benefits granted.  Similar considerations are in play if the severance agreement will give you health benefits; that’s one less expense to worry about for now.

Third, consider that if you are not working while you are on Workers’ Comp, you can continue to get these benefits long after your severance has expired.  Getting both benefits often doesn’t hurt, especially given the fact that severance will likely pay more and that Workers’ Comp will be there to pick up after your severance runs out.

Call Our Workers’ Comp Lawyers in Pennsylvania Today

For help with your potential case, call our Philadelphia Workers’ Compensation attorneys at (267) 651-7945 at Cardamone Law.