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Payroll Deductions for WC Impermissible

Employers are not permitted to take payroll deductions to pay for worker's compensation insurance.;

Payroll Deduction
Employers are not permitted to take payroll deductions to pay for worker's compensation insurance. If this occurs, employees may contact the Employment Standards Division of the Indiana Department of Labor at (317) 232-2655.
 
If an employer has deducted worker's compensation premiums from an employee's check in amounts less than $800, the employee may have the right to collect the amount deducted in a proceeding before the Department of Labor under Ind. Code 22-2-9. Employees may also pursue wage claims through civil/small claims actions. Wage claims exceeding $800 must be pursued in small claims or civil court.

source: Guide To Indiana Worker's Compensation published by the Workers Compensation Board of Indiana

Indiana Code 22-3-2-5 reads "Every employer....shall insure the payment of compensation to the employer's employees..."
The Indiana Code is available on the State of Indiana website at this address: http://www.state.in.us/legislative/ic/code/.

IC 22-3-2-5 Insurance by employers - Carrying risk without insurance - Establishment of program of self-insurance.
(a) Every employer who is bound by the compensation provisions of IC 22-3-2 through IC 22-3-6, except the state, counties, townships, cities, towns, school cities, school towns, school townships, other municipal corporations, state institutions, state boards, state commissions, banks, trust companies, and building and loan associations, shall insure the payment of compensation to the employer's employees and their dependents in the manner provided in IC 22-3-3, or procure from the worker's compensation board a certificate authorizing the employer to carry such risk without insurance.

Social Security Offset
Indiana does not permit a worker's WC benefit payment to be reduced or offset because he/she also received social security benefits.
 
Apparently, about five states permit this offset, but not in Indiana. We could find no mention of such an offset in the policy language or Indiana statute. Note: This research confirmed with DOI and WC Board on 12/03/2001.

However, the Social Security amendments of 1965 required that Social Security disability benefits be reduced, so that the combined total of workers compensation and Social Security disability benefits do not exceed 80% of the worker's earnings. In the releatively few cases where Social Security disability benefits alone amount to more than 80% of earnings, the benefits are not reduced below the DI amount.
Source: Workers' Compensation: Benefits, Coverage, and Costs, 2004; page 34; July 2006, National Academy of Social Insurance
 


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The material in this document has been prepared and shared for informational purposes only and should not be relied upon as legal advice on any particular situation.