Workers’ compensation awards and settlements are among the most confusing and litigated aspects of family law. Several factors can affect who gets them in a divorce, including when the injury occurred and the amount of the award. Some courts have ruled conclusively for one spouse or the other; other courts have divided the settlement between husband and wife. Each state determines its own rules and law, but they usually fall into one of three categories.
In states where the courts take an analytical approach to workers’ compensation awards, judges separate the awards or settlements into two categories. They determine which portion of the award was for lost wages and which part was for pain and suffering. These states, such as Ohio, treat the portion for suffering as the separate property of the spouse who was injured. But wages are marital property, so any portion of the settlement attributable to income lost because of the injury is subject to a division between the spouses. Some states, such as Maryland, also consider to what extent other marital funds paid for medical care.
Some states use the mechanistic approach and classify workers’ compensation awards as marital property; these states divide the entire settlement or award between spouses in a divorce. Appellate courts in Connecticut and Michigan have ruled this way. Illinois courts have as well, but they applied the analytical approach to cases that involved permanent disability, dividing the award up into components of wages and suffering.
A few states view workers’ compensation awards as entirely the separate property of the spouse who was injured. This is the unitary approach and it is rare. The state of Washington has ruled using the unitary approach because its workers’ compensation statutes do not allow the worker to transfer the benefits.
No matter how your state treats workers’ compensation awards, other variables may come into play. For instance, if you received an award for lost wages for the calendar year 2010, and you and your spouse separated in June 2010, he would not receive 50 percent of the lost wages portion of the settlement, even if your state uses the analytical approach. He would receive only 25 percent, half of the amount received for the half year you were together before you separated.
The way a court might treat your award is subject to many factors; if you have concerns and your workers' compensation case is still open, speak to your attorney about how to phrase a settlement agreement. The language can address any portion that is premarital, and it can delineate exactly what percentage is for pain and suffering. If you've already settled your case, speak to a divorce attorney in your state to find out exactly where you stand.