The Difference Between a Workers’ Compensation Claim and a Third-Party Action

Let’s face it, attorneys sometimes use too much “legal speak” or “legalese” when talking to clients.  Just the other day, a client sat across from me looking totally confused when I used the term “third-party action” in discussing his on-the-job injury.  So, I had to explain, and I thought I’d share that explanation here.

When you are injured either at work or while performing your work, whether through your own fault, your employer’s fault or the fault of another person not employed by your employer (what we call a “third-party”), you are entitled to workers’ compensation.  That includes compensation for lost wages and medical benefits.  Unfortunately, under the workers’ compensation laws of Alabama, you do not receive 100% of your lost wages.  You usually receive about two-thirds of your weekly wages, but even that amount is subject to a maximum cap.  You receive no compensation for physical injury, loss of enjoyment of life or pain and suffering.

If a third-party caused your injury, however, you may be able to pursue what is commonly referred to as a “third-party claim” or “third-party action,” that is, a claim against someone other than your employer.  The simplest example is this:  Let’s assume you are on a delivery for your employer.  You stop at a red light, and then the light turns green.  As you move through the intersection, another car runs the red light and hits your car broadside.   Other instances, particularly in the construction or industrial fields, exist.  For example, let’s say your employer hires an outside company to build a scaffolding so that you can paint the your employer’s building.  If the outside company negligently constructs the scaffolding, it might collapse, resulting in you suffering a fall.

If you suffer injuries in either of these examples, you are entitled to workers compensation because you were injured on the job (a delivery for your employer).  You can also make a claim against the driver of the other vehicle.  Why would you want to do that when you can get workers’ compensation?  Because, as I explained above, workers’ compensation does not cover 100% of your losses.

In a third-party claim or action, you can pursue claims for 100% of your lost wages, medical bills and expenses, damages for physical injury, loss of enjoyment of life (pain and suffering, also referred to as “mental anguish”), and, in some case, punitive damages.  Punitive damages, however, are rarely awarded, despite what you may read about it the news.  Punitive damages are only recoverable if you prove grossly negligent, reckless, or intentional conduct.  They are designed to punish the wrongdoer and deter him or her, and others, from committing similar wrongs.

So maybe now I haven’t spoken in too much legalese and you can see why your attorney may recommend that you pursue a third-party claim:  your workers’ compensation is extremely limited, and a third-party claim is much more likely to provide you with adequate compensation for your losses because you can recover several other types of damages.  If not, maybe they need to send me back to grammar school so I can unlearn all this technical jargon they teach us in law school and start speaking plain English again!