Last Updated: 9/6/2023
According to the United States Department of Labor there were 4.5 work injuries and illnesses in Iowa for every 100 full-time workers in 2012. Some of these work injuries resulted in injuries that prevent a worker from returning to work for the foreseeable future. In such cases, workers can recover workers’ compensation benefits, including disability and medical benefits.
Are fringe benefits included in a workers’ compensation settlement?
Fringe benefits are not included in workers’ compensation settlements. When an insurance company initially calculates the weekly cash benefit, it takes 80 percent of the employee's gross weekly earnings.
Employee’s gross weekly earnings does not include:
- irregular bonuses;
- compensation for expenses;
- retroactive pay;
- expense allowances; or
- employer contribution to welfare benefits.
While overtime pay is not included in the gross earnings, any overtime hours the employee worked are included in the gross weekly earnings as straight time pay instead of overtime pay in excess of straight time pay.
Also, workers may include extra benefits as part of wages other than cash (rent, for example) in their gross weekly earnings, though if the worker continues to receive the benefits while receiving workers’ comp, the value of the extra benefits are not included when calculating the benefits.
How exactly gross weekly earnings are calculated is dependent on how the worker is paid. If a worker is paid biweekly, for example, the insurer calculates 80 percent of one half of the biweekly gross earnings. Workers who are paid hourly must be paid 80 percent of the average weekly gross earnings for the last 13 weeks.
Workers’ Compensation Settlements
As fringe benefits such as those mentioned are not included when calculating weekly workers’ comp benefits, they are not included when reaching a settlement with the workers’ comp insurer. Workers might reach an Agreement for Settlement where they come to a settlement for a period of weeks the worker will be paid benefits and continue receiving medical benefits.
They may also reach a compromise settlement, which may be possible if the worker and the workers’ comp insurer do not agree regarding entitlement to benefits. A Compromise Settlement provides a lump sum agreement and the case is over without rights to collect further benefits.
Commutation settlements cover remaining future benefits: full or partial. Full commutation pays all remaining benefits, and ends rights to more benefits, including medical benefits. Partial commutation settlements provide a lump sum for only a portion of the remaining benefits and maintains future rights.
For the IWCC to approve a commutation settlement, the claimant has to show that there is a legitimate need for the settlement and that the settlement is in the claimant's best interest. Usually there is some sort of reduction in value of the claim in commutation settlements.
Walker, Billingsley & Bair in Des Moines can assist workers with their workers’ compensation settlement negotiations. Contact our office at (888) 435-9886 to speak with an attorney about your claim today.