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Lump Sum Benefits in Boston Workers’ Compensation Cases

In Baker v. Workers Compensation Appeals Board, a case from the California Court of Appeal, claimant was initially injured while working as a construction laborer. While this case deals with a lump sum payment of benefits and his disability rating, this would be a good time to discuss a major issue that often comes up in cases in Boston in which construction workers are injured.

Employee v. Independent Contractor

Boston workers' CompensationIn order to collect workers’ compensation benefits, you must be an employee, and you must have suffered an on-the-job injury or suffered from a work-related illness. However, as we have said in various other posts on this Boston workers’ compensation blog, while you can get workers’ compensation for an illness that is due to your occupation, the vast majority of workers’ compensation cases involve accidents that occur on the job. This is not to say that there are never any workers’ compensation benefits paid for work-related illness.One occupation that still exists in the Boston area that deals with harsh chemicals might surprise many readers, as it is working in a nail salon.  The chemicals used often have harsh vapors and can cause serious respiratory illness and other types of illness. This is also true of hair salons, where the dyes and other hair chemicals can contain hazardous materials.

As for this issue of employee vs independent contractor, as our Boston workers’ compensation attorneys can explain, when you hire a contractor to do a job renovating your house, or a large land developer hires a contractor to a build a 50-story building, in both cases we are dealing with an actual contractor.  Yes, we typically use the term contractor to mean anyone who does construction, but the term comes from the fact that you are essentially or literally signing a contract with someone to perform a specific job, but the contractor is not your employee.

Let’s look at a basic home improvement project to make things simpler.  If you decide you want to hire a contractor to remodel your unfinished basement, you will likely go over the specifications you want and chose the look and the color, but you will not have to tell the contractor how to do his or her job.  You will not have to provide any tools or laborers, and if you were to fire the contractor, he might have an issue with that, but he would not be unemployed, because you were likely one of many jobs he has to do.  All of this examined in its totality shows that he or she is not your employee.

However, if that same contractor hires a laborer to work for him, that person must come to work at a certain time and leave at a certain time.  The laborer is likely paid by the hour and is given specific instructions on how to do each job.  The laborer is not an independent contractor just because he or she works for a contractor.  In this situation, he or she is actually an employee. The reason this is an issue is because, if that worker is injured on the job, he or she may be told that they are not entitled to workers’ compensation benefits, because they were not a statutory employee, but rather an independent contractor.  While this could be true in some cases, in the clear majority of cases, the worker is an employee.  However, it should be noted that the employer is actually an independent contractor and would not be entitled to workers’ compensation benefits if he or she was injured at work and must rely on his or own personal health insurance in most cases.

In Baker, this construction laborer was injured and was given a disability rating of temporary disability benefits on two separate occasions. He then tried to get his benefits converted to permanent disability benefits. In this jurisdiction and in the Commonwealth of Massachusetts, you must first apply for temporary disability (in Massachusetts we use the term incapacity instead of disability) benefits, and then you can apply to have those benefits converted to permanent disability benefits. However, as was the case here, the workers’ compensation insurance company may try to fight the conversion of your disability rating to a permanent one.  Under this rating, the benefits go up, and there is no termination of benefits until you reach retirement age or can return to work.

When the workers’ compensation insurance company contested, the parties entered into settlement negotiations and eventually settled the case. The settlement agreement provided that claimant would receive a lump sum award of benefits instead of his employer having to pay permanent disability benefits each week for years to come. His benefits were included in the lump sum, which is a one-time payment, but the amount that had already been advanced by the insurance company was subtracted from the lump sum.

When he agreed to this settlement, he planned to apply for additional payments under a state program that is designed to compensate for subsequent injuries.  However, he was asking for those payments to be retroactively paid for a pre-existing condition as well as complications of this new injury. The court ultimately ruled that he was not entitled to those payments retroactively, because those payments were not due until after the date he was determined to have a permanent disability.  While this may seem rather complicated, it is not based upon a statute that affects cases in our jurisdiction, but there are certain things are much more on point to this current discussion.

One thing to keep in mind is that when you accept a lump sum single payment in lieu of weekly benefits, the amount you are to be paid will typically be less than the total sum you would pay if you waited to get benefits each week or month.  However, there is an advantage to both parties by doing it this way.  The advantage to the company is that they will have to pay less than they would have to pay over time.  For a company, they are essentially buying out your claim for a fraction of every dollar. This is not pennies on the dollar, but it is a savings, and that is often good business. On the other hand, the claimant is getting a large sum of money up front, and that is going to help in the immediate future.  The claimant or his or her family may not have years to wait around for the money so getting less, but still a fair amount, now may be preferable, depending on your situation.

If you or someone you love has been injured a Boston work accident, call for a free and confidential appointment at 1-888-367-2900.

Additional Resources:

Baker v. Workers Compensation Appeals Board, July 28, 2017, California Court of Appeal

More Blog Entries:
Report: Three Workers Burned in Natural Gas Explosion, Feb. 18, 2017, Boston Workers’ Compensation Lawyer Blog