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Worried about workers’ compensation benefits due to company insolvency

What Happens to My Workers’ Compensation Benefits if My Employer Shuts Down?

A company shutdown can be jarring and disruptive for any employee, but most are free to file for unemployment compensation and begin a new job search.

The prospect of an employer going out of business may be particularly alarming for an injured worker who is receiving medical treatment through worker compensation or is dependent on workers compensation benefits to pay the bills.

The good news is that for most Ohio employees, a company closing will have no impact on workers’ compensation benefits at all.

Two Workers Compensation Insurance Models

While most Ohio companies are insured for workers’ compensation through the state fund, some are self-insured. The potential impact of a company going out of business differs depending on whether the company pays into the fund or is responsible for direct payment of benefits to an injured worker.

Workers Compensation Benefits through the State Fund

About 2/3 of Ohio employers participate in the state workers’ compensation fund, administered by the Bureau of Workers’ Compensation (BWC). The employer pays into the fund while the company is in business and has active employees, and any benefits payable to or on behalf of injured workers are paid out of the fund.

For injured workers receiving benefits through the fund, or who have claims pending with the BWC, the company closing its doors will have no impact on workers’ compensation benefits.

Self-Insured Employers

About 1/3 of Ohio employers are self-insured for workers’ compensation. This means that rather than paying into the state fund and insuring itself against liability to employees who are injured on the job, the employer takes on responsibility for paying benefits to injured employees and covering medical expenses associated with on-the-job injuries.

While this scenario may feel a bit more unsettling for the injured worker, benefits usually aren’t affected. Whether the company is remaining in business and shutting down a particular location or is winding down its business entirely, it remains responsible for any liabilities incurred during its operations. Benefits may be at risk if the company is insolvent—doesn’t have enough assets to cover its debts. However, a company must demonstrate financial stability in order to receive permission to self-insure, so this situation should rarely arise.

Light Duty Assignments

Many injured workers are temporarily unable to return to their prior positions due to medical restrictions.

Often, these employees are offered light-duty assignments within the company, allowing them to continue to earn income during the period of partial disability. If there is a pay difference, workers’ compensation benefits will make up part of the difference.

If an employer is no longer able to offer a restricted duty assignment because the company is shutting down, eliminating a location or relocating, the employee will be in the same situation as any other injured worker whose employer is unable to offer restricted duty during his or her recovery. In short, he or she will once again become eligible for temporary disability payments.

A Workers’ Compensation Attorney Can Be the Best Source of Information

If you have concerns about your workers’ compensation benefits, whether your employer is going out of business or you’re simply having difficulty securing the medical care you need or receiving benefits to compensate for time off work, talk to a local workers’ comp lawyer as soon as possible.

The information presented in this post is not legal advice and does not form a lawyer/client relationship. Laws and circumstances can differ and change.
Please contact us for a personal review of your situation

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