A wage differential is a substitute for the traditional settlement that happens in most Illinois workers’ compensation cases. If you end up with permanent medical restrictions that your employer can’t accommodate, you then need to look for a job within your restrictions. If you can only find a job that causes you a significant wage loss, you might be entitled to a wage differential payment. In that case you can received 2/3 of the difference of what you would be making NOW (not accident date, but now) in your old job versus what you can make in a new job.
So let’s say you were a union carpenter and now thanks to a back fusion have lifting restrictions of no more than 25 pounds. That’s a restriction you can’t do in that job. You would currently be making $90,000.00 a year if you were healthy, but now you can only find a job making $60,000.00 a year. That’s a $30,000 difference so you could be entitled to 2/3 of the difference of that (20k). For injuries after September 1, 2011 when a new law was put in to place, you are entitled to that payment until you are 67 or five years, whichever is greater.
So if you are 52 years old, you’d be owed 15 years of benefits or $300,000.00. The insurance company isn’t going to give you that in a lump sum because that’s right now their worst case scenario over 15 years. Any settlement conversation would start with what 300k is worth in today’s money. That’s called present cash value. We actually have a calculator that helps figure this stuff out.
The insurance company wants to pay as little as possible and will often start around 50-60% of what the present cash value is of your injury. So 150k today invested properly over 15 years might turn in to 300k. They’d probably offer you around $90,000.00 as a starting point. Our argument would be that them paying off 7-10 years of benefits is still a total savings for them.
There’s another strategy though that to me makes more sense in a lot of cases and it has two parts. 1. If you are an older worker, I’d argue that you aren’t a wage differential candidate, but instead that there is no stable job market for you, especially if you have limited education and have done the same work for 30 years or so. In that case you might be what’s called an “odd lot permanent total” which doesn’t have a time limit as to how long you can get those benefits so it increases the total value of your case. 2. We’d get your case ready for trial. Even if you only get a wage differential benefit, that yearly payout is better than a low ball settlement. And once you win the trial and get paid for a couple of years, eventually some accountant is going to audit your file and realize they’d be better off giving you a lump sum.
So what can happen is that you can get the wage differential payment for 2-3 years, pocket that money and then still negotiate a lump sum for a fair amount when that accountant just wants your case off their books. And if you’ve proven that you are an “odd lot permanent total” then your case that might have been worth 200k can suddenly be worth 500k.
It’s worth taking a shot at the trial because it can only increase your leverage. I think that it’s the lazy lawyers who won’t even consider this and because of them, some insurance companies are laughing their way to the bank with all of their savings. In a case like this, you and your lawyer need to do whatever you can to maximize your result. So while they wouldn’t give you $300,000 cash right away when they think their worst case scenario is a wage differential, they might if they know their worst case scenario is actually $500-600k.
If you take anything away from this, know that this is a long process if done right and any lawyer who tells you your case is worth close to what the max amount is without going through a fight is lying to you so you’ll sign up with them.
This is a long and perhaps confusing post, but hopefully it’s clear that these aren’t straight forward situations and having a real strategy and being willing to go to trial can put a huge amount more money in your pocket when all is said and done. If you want to discuss a wage differential or anything else related to Illinois work comp, contact us at any time. It’s always free and we help with cases everywhere in IL thanks to our state wide network of experienced attorneys.