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How Are Workers’ Compensation Claims Settled in New Jersey?

Employers and their insurance providers often see workers’ compensation claims, and the process of making benefit payments, as an ongoing burden. For these parties, it is valuable and preferable if the situation is finalized swiftly and efficiently through a contractual arrangement with you, the injured employee.

Therefore, it is very likely that in the course of reporting your work-related injury and seeking workers’ compensation benefits (even if you haven’t filed a formal claim with the Department of Labor), your employer or an insurance provider has made an offer to settle. When this offer is extended, most likely it will come from the insurance company, you have two options under New Jersey law for settling your case.

Accepting a Lump Sum Settlement

The New Jersey Statutes Annotated (N.J.S.A.) 34:15-20 provides a mechanism for employers, through or with the insurance company, to make a one-time payment to an injured employee. Often, because of the citation for these one-off payments, those familiar with New Jersey workers’ compensation will call this form of settlement a Section 20 settlement.

Approximately 30% of workers’ compensation cases in the State of New Jersey are resolved through the Section 20 mechanism, but employees often enter the contractual agreement for these settlements without fully understanding the pros and cons of doing so. The upside of resolving a workers’ compensation situation through Section 20 is the lump sum becomes immediately available to the employee to use for past, present, and future medical costs. This can be incredibly attractive for all parties involved.

However, injured employees should be aware that this one-time payment is likely lower than what they would receive through other mechanisms. That is the discount of providing all funds at once. As well, the amount in this lump sum is an estimate of the overall disability benefits and medical costs for an injury; it is impossible to be exact. Therefore, the employee is gambling that future costs will not surpass the one-time payment.

As well, Section 20 can only be utilized in specific instances. There must be a dispute between the injured employee and employer over jurisdiction for a workers’ compensation claim, liability, source or cause of the injury, or dependency.

An Order Approving Settlement

The other form of settlement is an Order Approving Settlement, which accounts for the other 70% of cases that settle their claims. This mechanism is more widely used because it does not have the same restrictions on needing a genuine dispute over jurisdiction, liability, cause of injury, or dependency and it is a more amenable settlement between the parties. All that is required for this form of settlement is that the work-related injury had a substantial impact on your working life.

An Order Approving Settlement is drafted the parties, typically at the instance and lead of the representatives of the insurance company, and filed for approval with the Judge of Compensation at the New Jersey Division of Workers’ Compensation. While the parties will agree to certain terms of this Order, the financial award is largely based on percentages of disability attributed to specific parts of the body. Therefore, there is more certainty and system behind the amount of settlement.

Were You Made an Offer of Settlement?

If your employer or an insurance provider has offered to settle your workers’ compensation case, you should speak with a NJ workers’ compensation lawyer before signing any contractual document. A NJ workers’ compensation lawyer, such as Albert J. Talone, Esq., can ensure that the Section 20 or Order Approving Settlement is appropriate and fair for your case. To speak with our experienced legal team call (856) 234-4023.




The information in this blog post (“Post”) is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this Post should be construed as legal advice from The Law Office of Albert J. Talone or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. 

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The Law Office Of Albert J. Talone is committed to providing for those with Workers Compensation cases throughout New Jersey.
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New Jersey
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