Tara Reck, Managing L&I Attorney at Reck Law PLLC - Workers' Compensation Attorneys

L&I Workers Compensation Claim and the Kept-on-Salary Benefit

People that can’t work because of their industrial work injury or occupational disease in Washington State can receive time-loss compensation benefits. Single people with no dependents sometime struggle because the time-loss compensation rate is 60% of what they were making at the time of the work injury. However, keep in mind that you don’t pay taxes on time-loss compensation benefits under a workers’ compensation claim. In other words, when calculating your taxable income, L&I claim payments aren’t taxable.

 

L&I claim and time-loss compensation benefits

Time-loss compensation benefits are vital for work injury claimants. At the same time, many employers are very frustrated by this benefit.  They are frustrated because L&I rates go up when their employees receive time-loss checks. Businesses often argue that it’s unfair. In response, L&I created several incentive programs to help employers keep their rates down.

 

I don’t have a problem with the Department of Labor and Industries (L&I) working to keep employer L&I rates down.  However, I am incredibly critical of L&I’s application of their incentive programs. From my standpoint, I strongly believe that L&I gives employer-incentives way too easily without appropriate oversight or enforcement.  As a result, workplace injury victims are being punished while employers are rewarded for unfair use of incentives.

 

The L&I Kept-on-Salary incentive program for employers

One incentive that works well for employers (and not so well for people with a workers’ compensation claim, especially with self-insured employer) is called Kept-on-Salary (KOS). Like its name, the idea is that a person that suffers work injury continues to receive regular paychecks, even when they can’t work. If you search online, you can find several articles about KOS that help employers reduce their L&I rates and save money.  However, there isn’t any information on the L&I website for the Kept-on-Salary program.

 

Despite having no information for work injury claimants, the Kept-on-Salary plan is available. In fact, it’s governed by RCW 51.32.090 and RCW 49.46.210. Under these rules and regulations, if a work injury claimant is under the Kept-on-Salary program, then they are not getting time-loss compensation payments.

 

How does Kept on Salary work in L&I claims in Washington State?

In short, if a work injury claimant is on kept on salary, it means that the employer continues to pay the worker. However, the employer must meet several conditions:

  • The injured worker shall receive a total of all wages (i.e., form all employers and jobs) as of the date of their work injury. This includes absolutely all payments that the work injury claimant was getting before. Even after-hours or jobs outside the scope of his or her work hours with the employer of injury.
  • The wages must include the benefits that the worker had prior to the work injury. Specifically, payments include healthcare benefits, housing (when applicable), fuel expenses and reimbursement, and so on. On top, it must include tips, shift-change or overtime pay, bonuses, and all other expense and benefits.
  • The employer can deduct certain amounts to comply with state or federal law. However, the employer cannot make any other deductions.
  • The employer must pay wages on a regular schedule at least once a month.

  

Employers misusing the Kept-on-Salary incentive

Employers can’t mandate workers to use benefits they earned over time such as vacation, sick leave or paid time off, to keep from paying time-loss compensation. Therefore, if an employer is making you take time off or vacation and doesn’t pay for that time, then you’re not under the Kept-on-Salary plan. This is one aspect of the program that employers can abuse. After all, L&I relies on employers to report if the L&I claim worker is on KOS.

 

Practically speaking, the problem is the shocking lack of remedy for people with a workers’ compensation claim. Employers can easily abuse this benefit because there are no real penalties or oversight. More explicitly, L&I does not seem to actively check the facts or the reliability and consistency of employer reports.

 

The reality of the Kept-on-Salary program

In my experience, employers are often not adhering to KOS requirements.  I cannot tell you how many times I’ve had to collect evidence to prove the employer is not meeting the requirements.  The process tends to be long, drawn out, and incredibly stressful for people trying to move their L&I claim.

 

In conclusion, incentives to help employers to reduce L&I rates make some sense.  However, L&I needs to do a much better job to ensure that those incentives do not have a punitive impact on people that suffer a work injury.

10 Comments

  1. larry corbin

    i have just received a bill of unpaid bills from physical therapy from 2 years ago .I was on L & I and now I am responsible for half the bill . I am now retired and at this point I was under the understanding everything was taken care of by Company and L & I . can you give me some options here I am a retired Teamster .

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      L&I attorney

      I’m so sorry to hear you are in this situation. There is some additional information we would need to know in order to help you navigate this situation to get the bills paid. If you have a moment, please call our office so that we can discuss this further.

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    Colver Long

    Thanks!

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    Eric Delacruz

    I have a question can someone that was injured but then fired from the job still be put on kept on salary even tho that person doesn’t work for them anymore

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    Debbie

    If employees are injured at work and employer chooses to let L&I pay lost wages but at the same time allowed 40 hrs of my pto time to be paid to me than months later they said they were cutting me a check for past lost wages including giving me 40 hrs of pto back and that I can pay back L&I what they already paid me, this makes no sense. is this even ok?

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      L&I attorney

      Hi Debbie. I’m not sure I fully understand the question. Please feel free to call our office to discuss your question.

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    Tony

    I was injured on the job began collecting time loss through L&I. then 3 months later found out that employer had been paying me time loss through direct deposit without my knowing When I saw this I asked employer why they were paying me still and they said they were required to. so am I liable for any money I received unknowingly ?

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      L&I attorney

      Hi Tony. There are certain cases where if there have been over payments, then you would have to pay some moneys back. Obviously you would have to look into the details of exactly what happened, the amounts paid, and so on. It’s difficult to dive into the appropriate level of details here. If you want help, please call our office.

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    Eddie

    Is time loss taxable if you live in California and was injured in Washington state?

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      L&I attorney

      Good questions. If you live in Washington State, then it’s not taxable at the state level and the federal level. I am not familiar with the tax code in your state. While I don’t expect time-loss to be taxable there, you should consult with a local tax person.

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