Over the past week, we’ve received a number of calls from our workers’ compensation claimants who were on light duty and have been recently laid off. The question is the same: I was on light duty and was laid off. Should I get TTD or apply for unemployment? The answer, unfortunately, is that it depends on your specific situation.
Injured workers who are treating for their injuries and unable to return to the work they were performing at the time of the injury are entitled to weekly checks called Temporary Total Disability (TTD) benefits which are paid at 2/3 of their average weekly wage (AWW) until they either (1) reach maximum medical improvement (MMI) or (2) have improved to the point that they can return to their customary employment. Many times, although an injured worker continues to be under restrictions and treat for an injury, the employer offers to accommodate their restrictions and brings them back to a light duty position. While on light duty, TTD benefits stop and regular wages are paid.
Recently, due to COVID-19, many employers have been forced to lay off employees as businesses close temporarily or permanently. Those who have been laid off can file a claim for unemployment benefits to receive a portion of their wages while they are out of work. Unemployment insurance requirements in Kentucky have been temporarily changed due to the large amount of forced business closures. These changes give tremendous benefits to claimants. For example, the one week waiting period to apply for unemployment benefits has been temporarily suspended for individuals applying for unemployment due to COVID-19. Further, since Kentuckians who have been laid off due to COVID-19 have a reasonable assurance of going back to work, the job search requirement is waived. This means that individuals who have bene laid off will have quicker and easier access to the unemployment benefits they need to pay their bills and obligations.
Injured employees whose restrictions were being accommodated by their employer until the time of layoff may be entitled to both TTD benefits and unemployment benefits. Which leads to a natural question: How should an injured employee decide whether to request TTD benefits be reinstated or apply for unemployment? Employees who have an active workers’ compensation claim in which TTD would normally be owed should consider these factors:
- How much money will you receive? TTD benefits are paid at 2/3 of the injured workers’ pre-injury average weekly wage up to a maximum amount depending on the year of injury. Unemployment benefits are paid at 1.1923% of total base period wages (first four of the last five complete calendar quarters) up to a maximum of $552 per week. Under the newly-passed CARES Act (Coronavirus Aid, Relief and Economic Security Act), those receiving unemployment are eligible for an additional $600 per week of benefits through July 31, 2020. Once the additional federal assistance is exhausted, unemployed individuals will continue to receive their normal benefit amount paid by the state. Keep in mind, unemployment benefits are considered taxable income while TTD benefits are tax free.* You should consult your tax professional about how taxes could affect your decision.
Bottom line: many workers’ compensation claimants may qualify for unemployment benefits that will exceed TTD benefits until July 31, 2020.
- How long do you expect to be off work? Unemployment benefits paid due to COVID-19 will continue until you are rehired or for 39 weeks. If you expect to continue to be off work after July 31, 2020, keep in mind your unemployment benefits will be reduced to the state administered amount without the additional $600 from the federal government. At that time, should it be more economical for you to receive TTD benefits, it may be difficult to reinstate your TTD payments without an order from an Administrative Law Judge.
Bottom line: If you’re going to be off work well beyond July 31, 2020, it may not ultimately be worth choosing unemployment over TTD benefits.
- How will it affect my workers’ compensation claim? Pursuant to KRS 342.730(5), the workers’ compensation carrier is entitled to a credit for unemployment insurance benefits paid for by unemployment during the period of temporary total disability. The credit is based on the after-tax amount received by the employee claiming unemployment benefits. This means that you will likely be ineligible for TTD benefits during the periods you received unemployment.
Bottom line: Your employer gets a credit for any unemployment benefits received against any TTD you might be owed. You have a duty to inform the unemployment office about any income (including TTD) that you receive.
For more information on unemployment benefits or to apply online, visit https://kcc.ky.gov/. To discuss your case with an attorney, contact Justice Injury Law at 502-584-5455 .
* Justice Injury Law does not provide tax advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on, for tax advice. You should consult your own tax advisor before relying on the information provided herein.