Workers Comp Or State Disability Insurance – When Does My Injured Employee Get What?

You’re a business owner and you’ve got an injured worker on the sidelines collecting workers comp benefits.

You’re on top of things, receiving regular updates on your worker’s status and feeling good about his or her recovery.  But then an interesting thing shows up on your desk one day: a State Disability Insurance (SDI) claim filed by that employee.

What is going on? (This is when I – the insurance agent – usually get a call from my client).

First let’s define these two coverages:

Workers Comp:  that expensive policy you’re required by the state to purchase that pays for injuries and illnesses sustained by your employees on the job.

State Disability Insurance:  state-sponsored insurance that pays when an employee suffers an injury or illness that is NOT caused by or related to work.

So then, why would an injured worker who is already receiving workers comp benefits file an SDI claim?

Great question!  Because an injured worker can receive payments from both workers comp and SDI at the same time in some situations.

What are those situations?

1. Workers comp payments are denied (and the claim is pending, so the door is not completely shut on that employee receiving workers comp)
2. Workers comp payments are delayed
3. Workers comp payments are less than what the injured workers could be receiving in SDI

Number three is interesting.  It actually creates an incentive for an injured employee to file an SDI claim after an injury, just in case.  There is no harm or penalty to the injured employee by filing it, so why would they not do it?

Business owners, human resource professionals, risk managers, entrepreneurs and anyone else thinking about employing others – be on the lookout for these.  As litigated workers comp claims continue to increase, lawyers will bring SDI into the picture more frequently, and you will have more SDI claims showing up on your desk.

The state of California has a wealth of resources on State Disability Insurance and how it applies in contrast to workers comp.  Here are a couple of links that can help you look more into the details:

http://www.edd.ca.gov/Disability/FAQ_DI_Workers_Compensation.htm

http://www.edd.ca.gov/Disability/FAQ_DI_Eligibility.htm

Bottom Line: Being informed will help you manage the negative surprises that come your way!