The New Jersey Workers’ Compensation Law entitles the employer and/or their insurance carrier to receive a credit for amounts recovered from a third party causing a compensable work related injury (N.J.S.A. 34:15-40). This provision is intended to prevent the recovery of duplicate benefits for the same injury and disability.
When the gross third party settlement amount is equal to or greater than the total award of compensation benefits, the amount of the credit is generally two-thirds of the amount payable by or on behalf of the employer less $750.
When the gross third party settlement amount is less than the total award of compensation benefits, the credit is generally two-thirds of the gross third party settlement amount less $750.
Where benefits have not been paid, the amount owed to you by or on behalf of the employer will be reduced by the credit amounts.
Workers’ compensation benefits are not taxable as per the NJ Gross Income Tax law NJSA 54A:6-6. For further information, please visit the IRS’ website.