Lump sum payments in workers’ compensation cases have been a long debated issue. Employers believe that they are unnecessary expenses and that they only encourage injured workers to stay unemployed, while employee advocates contend that lump sum payments are important in helping injured workers maintain a reasonable standard of living if they cannot work.
The Workers’ Compensation Research Institute (WCRI) conducted a study to examine the issue and found that lump sum settlements actually encouraged injured workers to return to work. Bogdan Savych, a public policy analyst for the Institute, explained that the study was important in discovering whether such payments assist injured workers in closing a chapter in their lives, or discourage a return to the workplace.
WCRI examined more than 2,000 injured workers who were injured in 2004 and received lump sum payments and monitored their employment status through 2008. In 78 percent of the cases surveyed, the lump sum did not change the injured employee’s work status. They either remained employed or unemployed.
Researchers found that more older workers left their employment after receiving a lump sum, primarily because they were not able to make the same amount of money after their injury. However, they ultimately found that more injured workers returned to work after receiving such a settlement.
At their core, lump sum settlements are meant to be a way of avoiding protracted legal action to obtain continuing benefits, as an injured worker waives his or her right to future claims by accepting the settlement. Depending on the injury and the employee’s ability to work, a lump sum payment may be appropriate, regardless of the notions surrounding them.
If you have questions about lump sum settlements, an experienced workers’ compensation attorney can advise you.
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