The compensation carrier or employer holds a lien on the injured worker's third-party recovery to the extent of benefits paid, and often a credit against future benefits from the remaining proceeds.
Most states reduce the lien proportionally for attorney's fees and costs incurred obtaining the recovery.
Alternative Names:
Comp Lien, Employer Lien
Why it Matters?
The lien determines what a third-party settlement actually delivers to the claimant, which makes it a central negotiating variable rather than an administrative detail. A large lien can consume most of a modest recovery, giving the claimant little incentive to settle unless the carrier compromises. Resolving the lien and any future credit before finalizing settlement prevents deals from collapsing at documentation.
Frequently Confused with
Related terms
Frequently asked questions
Is the lien reduced for attorney's fees?
What is a future credit?
