Workers' Comp vs. a Third-Party Injury Claim in Illinois: What's the Difference?

In Illinois, workers' compensation is a no-fault claim against your employer's insurance, while a third-party claim is a negligence lawsuit against someone other than your employer who caused your injury. You can often pursue both for the same work injury. Section 5(b) of the Illinois Workers' Compensation Act (820 ILCS 305/5(b)) allows the lawsuit, and your employer is repaid from what you recover.

Here is a common example. You drive a delivery van for a Chicago company, and on Western Avenue a driver looking at his phone slams into the back of your van. Your boss says, "File for workers' comp." Your friend says, "Sue the guy who hit you." Both are right. This guide explains how the two claims differ, how they fit together, and what to watch out for before you settle anything. If your injury happened on the job, start with our workers' compensation page.

What Workers' Compensation Is

Workers' comp is a no-fault system. Under the Illinois Workers' Compensation Act, 820 ILCS 305, you can get benefits for a job-related injury no matter who caused it, as Illinois Legal Aid explains. You do not have to prove your boss did anything wrong. Even if a mistake of your own played a part in the injury, fault does not decide a comp claim the way it does in a lawsuit.

The benefits usually include:

• Medical care that is reasonably needed to treat the injury
• Temporary total disability pay, generally two-thirds of your average weekly wage while a doctor keeps you off work
• Payments for permanent loss or loss of use, such as a lasting injury to an arm or leg
• Lifetime benefits in the most serious cases, and death benefits for families

The tradeoff is simple. Benefits are more certain, but they follow set formulas, and you generally cannot sue your employer for more.

Why You Usually Cannot Sue Your Employer

Section 5(a) of the Act is called the exclusive remedy rule. In general, an employee covered by the Act has no common-law or statutory right to recover damages from the employer for a work injury. That includes the employer's insurer and certain safety-service groups it owns. If workers' comp covers you, the comp claim is normally your path against the company that employs you.

What a Third-Party Claim Is

A third-party claim is a regular personal injury lawsuit against someone other than your employer whose carelessness helped cause your injury. Section 5(b) of the Act allows it. The statute says "legal proceedings may be taken against such other person to recover damages," even though your employer is paying you comp.

Who could that be? It depends on the facts. A driver who hit you while you were working is the most common example. Others may include:

• A company that made a defective machine, tool, or safety device
• A property owner whose unsafe site hurt you while you were there for work
• A subcontractor or another company on a shared job site
• A trucking company in a crash that happened on a delivery run

Because this is a negligence claim, you do have to prove fault. Our guide on how to prove negligence explains what that takes. The claim is not tied to the benefit formulas in the Act, so it can reach losses that workers' comp does not. Our article on how lawyers value a settlement shows how those losses get counted.

Workers' Comp vs. a Third-Party Claim at a Glance

• Who you claim against: Workers' comp goes through your employer's insurance. A third-party claim is against the outside person or company that caused the harm.
• Fault: Comp is no-fault. A third-party claim requires proof of negligence or another legal wrong.
• What you can recover: Comp follows the Act's benefit rules. A third-party case is measured like other injury cases.
• Where it goes: Comp claims go through the Illinois Workers' Compensation Commission. A third-party case is a lawsuit in court.

Different Claims, Different Deadlines

Deadlines are where people get hurt. Under section 6 of the Act, you must give your employer notice of the accident "as soon as practicable, but not later than 45 days after the accident." A mistake in the notice does not bar your claim unless the employer shows it was unduly prejudiced.

The deadline to file for comp is also separate. Generally, an application must be filed within three years after the accident if no compensation was paid, or within two years after the last payment, whichever is later.

A third-party lawsuit is different again. Illinois generally gives you two years from the injury under 735 ILCS 5/13-202. That can be shorter than your comp deadline, so do not assume the longer one applies to both. Our guide on Illinois filing deadlines covers why waiting hurts.

Can You Collect Both?

Yes, in many cases, but the Act has rules to stop you from being paid twice for the same loss. If you recover from the third party through a settlement or judgment, your employer is repaid from that money for the comp it paid or will pay. The statute also lets the employer claim a lien on the award, judgment, or fund.

Here is a detail that helps you. The employer has to pay its pro rata share of the costs of the third-party case out of that repayment. If your lawyer substantially produced the recovery, the employer also pays your attorney 25 percent of the gross reimbursement, unless the parties agree otherwise.

The Settlement Trap

This is the part that surprises people. Under section 5(b), no release or satisfaction of a judgment in a third-party case is valid without the written consent of both the employer and the employee, unless the employer is fully indemnified or protected by court order. You also have to notify your employer of your lawsuit.

That means signing a settlement with the other driver's insurer on your own could cause trouble with your comp rights. Talk to a lawyer before you sign anything. If you wait too long, there is another risk: if you do not sue at least three months before the deadline, the statute lets the employer file in your name or its own.

Could Your Employer Get Pulled In?

Sometimes. When you sue a third party, that defendant may try to bring in your employer to share the blame. In Kotecki v. Cyclops Welding Corp., 146 Ill. 2d 155 (1991), the Illinois Supreme Court held that an employer sued for contribution cannot be liable beyond its workers' compensation liability. This is a technical issue, but it shows why third-party cases need a careful lawyer.

What to Do After a Work Injury

1. Tell your employer about the injury as soon as you can, in writing if possible.
2. Get medical care and tell the doctor the injury happened at work.
3. Photograph the scene, the equipment, and your injuries. Our list of helpful evidence shows what to save.
4. Get names of coworkers and witnesses.
5. Do not give a recorded statement to another party's insurer or sign a release before getting legal advice.

Talk to a Lawyer Early

Handling a comp claim and a lawsuit together takes planning. The attorneys at Panio Law Offices handle workers' compensation and injury claims for clients across Chicago and the south suburbs. Contact the firm for a free consultation, and find out whether your injury may support more than one claim.

This article was written and reviewed by Christopher Panio, an Illinois personal injury attorney licensed since 2005 and founder of Panio Law Offices in Chicago and Homewood.

Frequently Asked Questions

Can I file workers' comp and sue someone else for the same injury in Illinois?

Often, yes. Section 5(b) of the Workers' Compensation Act lets an injured worker bring a claim against a third party, meaning someone other than the employer, who caused the injury. Your employer may be repaid from what you recover.

Can I sue my employer for a work injury?

Generally not if you are covered by workers' comp. The Act's exclusive remedy rule limits your claim against the employer and its insurer to workers' compensation benefits.

What is the deadline to report a work injury to my employer?

The Act says to give notice as soon as practicable, but no later than 45 days after the accident. Do not wait that long. Report it right away.

Does my employer get paid back from my third-party settlement?

Yes. The employer is repaid from the recovery for compensation it paid or will pay, and it can claim a lien. The employer also pays its share of the costs and, in many cases, 25 percent of the reimbursement toward your attorney's fees.

Can I settle with the other driver's insurance company on my own?

That is risky. Under section 5(b), a release in a third-party case generally needs written consent from both you and your employer. Talk to a lawyer before signing anything.

Who counts as a third party after a work injury in Illinois?

Anyone other than your employer or a coworker whose negligence contributed to the injury. Common examples are another driver, a property owner, a subcontractor on a shared job site, or the maker of a defective machine or tool.