Joseph Lurie Labor and Employment Law Blog on Lawyers.com

In my experience as a Philadelphia workers' comp lawyer  I have found that often workers do not have enough information about the benefits to which they are entitled.  If you are receiving workers’ compensation benefits you might also be receiving other benefits, like: severance pay, unemployment benefits or a pension.  While workers’ compensation benefits are not taxable – these other three benefits are.   And, under the Workers’ Compensation law, an employer or insurance carrier is entitled to receive a credit/offset against your workers’ compensation benefits for any pension, severance or unemployment payment you receive. 

The employer almost always takes this credit based on the gross amount (in other words, the amount you receive BEFORE taxes are deducted).  However, a recent court ruling indicates the employer is not allowed to offset against the gross amount. 

Instead, the court held that the employer/carrier is only entitled to a credit for the net benefits you receive from a pension (that is, the amount you receive AFTER taxes have been deducted).  We believe this case might also apply to unemployment and severance pay. 

So, let’s assume, for example, that you receive workers’ compensation at the rate of $400.00 a week.  And, you are entitled to a pension where you receive $100.00 a week. After taxes are taken out from your pension, you receive $80.00.  The employer is entitled to take a credit against your compensation only for the after-tax $80.00 a week, not the pre-tax $100.00.

If the insurance carrier gives you notice it intends to take a credit against the gross amount of unemployment, severance or pension benefits you receive – you should notify them right away that you are aware of your rights and you object to such an offset.  You should tell the employer you will agree only to an offset of the net benefits being paid.  Also, you are entitled to demand from the employer/insurance company reimbursement for any credit it has taken on severance, pension or unemployment benefits where the calculations were based on the gross amount of payments made – instead of the net amount.

More information on Philadelphia workers' compensation can be found on the Galfand Berger website. Request a copy of our free book, Workers Rights to Workers’ Compensation, and find other resources written by our  injury attorneys and auto accident lawyers in Philadelphia.

Joseph Lurie
Galfand Berger, LLP
1818 Market Street, Suite 2300
Philadelphia, PA 19103
Tel: 1-877-228-1528
Fax: 215-564-2262