Third Quarter 2018
By: Tracy Thompson
Question: In an otherwise compensable workers’ compensation case, is an employer permitted to use salary continuation and can payments of it serve as a credit against TTD obligations?
Short Answer: It is ultimately within the discretion of the Workers’ Compensation Board of Indiana to deduct salary continuation payments from the employer’s liability. However, case law suggests that salary continuation is permitted and the Board will credit salary continuation against workers’ compensation benefits to avoid double compensation to the employee.
Yes, an employer can use salary continuation and payments can serve as a credit against TTD obligations. However, there must not be any payments due and payable to the employee and the Board has discretion in deducting salary continuation payments from the employer’s liability.
Discussion: Under §22-3-3-23 of the Indiana Workers’ Compensation Act, “Payments made by the employer to the injured employee during a period of disability which were not due and payable when made, may, subject to approval of the workers’ compensation board, be deducted from the amount to be paid as compensation.” Indiana Courts have held that to deny the employer credit for wage continuation payments, an employee “not only will recover twice for the same injury, but will receive from the employer more money for the period of disability than could have been earned if there had been no injury.” Freel v. Foster Forbes Glass Co. 449 N.E.2d 1148 (Ind. Ct. App. 1983).
An employer can use salary continuation and payments can serve as a credit against TTD. “Double dipping” is not permitted. However, the Board still has ultimate discretion in making the determination of crediting the employer with those payments. The key is that there were no payments “due and payable” at the time the wage continuation payments were made. In other words, the claimant cannot be otherwise entitled to the payments being made due to the employee (i.e., charging a PTO balance). The Board will not grant the employer credit against TTD obligations if the employer was providing the employee with compensation that he or she would be entitled to based on benefits other than the Workers’ Compensation Act.