Workers’ Compensation, Unemployment, & State Disability Insurance Payments
Can employees collect workers’ compensation at the same time as unemployment or state disability insurance payments?
The short answer is no.
In Wisconsin, workers’ compensation, unemployment benefits, and disability insurance are distinct forms of support, each designed to address specific situations. Workers’ compensation provides financial and medical benefits to employees who suffer work-related injuries or illnesses. These benefits may include coverage for medical expenses, wage loss, and rehabilitation services. Workers’ compensation is typically designed to replace a portion of lost wages while the employee is unable to work due to the injury. “Unemployment” in Wisconsin refers to unemployment insurance benefits, a state-run program administered by the Department of Workforce Development (DWD) designed to provide temporary financial assistance to eligible workers who have lost their jobs through no fault of their own. These payments aim to help individuals cover basic living expenses while they search for new employment. Unlike some states, Wisconsin does not offer a state disability insurance program. Although Wisconsin does not have State Disability Insurance, many people look to Federally Funded Social Security Disability Insurance (SSDI). Notably in the majority of states, workers’ compensation benefits reduce SSDI benefits. In Wisconsin, the contrary is the norm; SSDI benefits reduce workers’ compensation benefits.
As seen with the relationship between SSDI and workers’ compensation, we generally expect that these three types of benefits create offsets. Thus, in Wisconsin, you generally cannot collect both workers’ compensation and unemployment benefits at the same time. This is because each assistance is for a distinct purpose. Unemployment benefits are for individuals who are willing and able to work but are unable to get a job. Workers’ compensation, generally known as “time loss” compensation, is for people who are unable to work because of work injuries or occupational diseases. Thus, these benefits are usually offset on a one-to-one basis. This offset occurs because both payments are seen as sources of lost wages for those who need them. By way of example, when a person’s workers’ compensation claim is accepted and they are awarded weekly benefits, those benefits are handled as wages by the DWD and usually offset any unemployment benefits issued. In most cases, the weekly workers’ compensation award, which is equal to two-thirds of regular income, exceeds the unemployment benefit, which is 40% of the average weekly wage, up to a maximum of $370 per week. For reference, the minimum weekly benefit for unemployment is $54.
A direct example of this offset taking place could be seen when a person’s workers’ compensation claim is denied. If their claim is then appealed, it can result in a settlement that considers the workers’ compensation benefit that would have been paid if the claim had not originally been denied. In these circumstances, if the DWD learns about a workers’ compensation settlement amount for a period of time the person was simultaneously receiving unemployment benefits, the DWD may pursue repayment of the unemployment benefits paid before the workers’ compensation settlement. Thus, when comparing the three types of payments we generally expect that an offset will occur, and any evidence of the contrary should be reviewed.
This article, slightly modified to note recent updates, was featured online in the Wisconsin Employment Law Letter and published by BLR®—Business & Legal Resources. Reproduced here with the permission of BLR®—Business & Legal Resources.
