It’s one of the most common questions we hear from injured workers in New York: if you were hurt in a car accident while working — for example, as a rideshare driver, delivery driver, or while driving for your job — you may have both a workers’ compensation claim and a separate injury claim against the driver who hit you. When the third-party claim settles before the workers’ comp case is finished, clients often ask the same thing: can I actually take that money now, or do I have to wait?
Understanding the Two Claims
When you’re injured in a motor vehicle accident while working, New York law generally allows you to pursue two separate paths: a workers’ compensation claim against your employer’s insurance carrier, and a third-party personal injury claim against the at-fault driver’s insurance company. These two cases move on separate tracks, with separate timelines, separate insurers, and separate rules.
The Workers’ Compensation Lien (WCL Section 29)
New York’s Workers’ Compensation Law Section 29 gives your workers’ comp carrier a lien on any third-party settlement or verdict. In plain terms, this means the comp carrier is entitled to be reimbursed out of your third-party recovery for the benefits it has already paid you. There is an important exception where the accident was a motor vehicle accident, because Section 29(1-a) removes the lien from benefits paid in lieu of no-fault — which is where the $50,000 figure people have heard about actually comes from.
This is where a critical step comes in: if your third-party settlement isn’t large enough to fully cover the comp carrier’s lien, the law requires you to get either the carrier’s written consent or a court/Board-approved compromise order before finalizing that settlement. Skipping this step is a serious mistake — it can result in the loss of all future workers’ compensation benefits, not just the disputed amount.
So Can You Take the Money Now?
Once the lien has been properly satisfied — either paid in full, or the carrier has consented, or the Board has approved a compromise — you are generally free to receive and use your third-party settlement funds. Your workers’ compensation case does not need to be fully resolved first. These are legally separate matters, and finishing one is not a prerequisite for accessing money you’re entitled to from the other, as long as the lien requirements have been properly handled.
What to Watch Out For
- The offset. Once the lien and related costs are deducted, any money left over from your third-party settlement can give the workers’ comp carrier a credit against future benefits — sometimes called a comp “holiday.” This means weekly benefit payments may pause until that credit is used up.
- Ongoing negotiations. If your case involves a pending permanency determination or an open Section 32 settlement negotiation, timing can matter strategically — not because you’re legally blocked from taking the third-party funds, but because how and when pieces resolve can affect your overall negotiating position.
- Getting the lien amount right. The lien amount should reflect the actual, correct total of benefits paid to date — not an estimate. This is one of the most commonly disputed figures in these cases, and it’s worth having it verified before treating the lien as resolved.
Where both cases are ready to close at the same time, they are often handled as one package rather than two separate events. Our guide to resolving a comp case and an injury lawsuit together in a global settlement walks through the consents, the lien and the sequence.
Talk to an Attorney Before You Finalize Anything
Coordinating a third-party settlement with an open workers’ compensation case involves real legal deadlines and real financial consequences if handled incorrectly. If you’re facing financial pressure and weighing whether to move forward, it’s worth getting a clear answer specific to your situation before you sign anything.
The Law Offices of Frank J. Dito, Jr. represents injured workers throughout Staten Island and Brooklyn in workers’ compensation and personal injury matters, including cases involving both a workers’ comp claim and a third-party accident claim. Contact us today at 718.701.2776 for a free consultation.
This post is for informational purposes only and does not constitute legal advice. Every case is different — contact our office to discuss the specific facts of your situation.
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