Recoupment of Overpayments from Workers' Compensation Benefits
Under the Pennsylvania workers‘ compensation act, employers are permitted to reduce Workers' Compensation benefits for one half of Social Security retirement benefits that are collected under an award granted after the work injury occurred, pension benefits, severance pay, unemployment compensation benefits and wages from employment or self-employment. Injured workers may receive reporting forms that require them to disclose the receipt of such benefits. If the insurance company is entitled to reduce the injured worker’s benefits because they are collecting these types of benefits, the injured worker may receive a Notice of Workers' Compensation Benefit Offset. This notice may also state that the insurance company intends to recoup overpayments made to the employee during a period when the employee employee was receiving these types of benefits while the insurance company was paying full Workers' Compensation benefits. Where recoupment causes a financial hardship, the terms of the recoupment may be modified by a judge, but in general an overpayment of less than six months will not be enough for a claimant to ask a judge to inquire into the hardship.
Recoupment of Overpayments from Wages
Deductions from wages permissible under Pennsylvania law are governed by the Pennsylvania Wage Payment and Collection Act, 43 P.S. § 260.1 et. seq. The Act provides that wages are to be paid on a regular pay day in full except for deductions provided by law or as authorized by regulation of the Department of Labor and Industry for the convenience of the employee. Regulations passed by the Department of Labor do not specifically permit the deduction of anything from wages to collect a prior overpayment. Any such deduction would have to be authorized by the employee in writing and/or authorized by the Department of Labor and Industry pursuant to 34 PA. Code. § 9.1(13).
This is different from garnishment, which is the process by which creditors obtain a court order permitting the deduction of all or a portion of an employee's wages to satisfy a debt that has been reduced by court order to a judgment. Without a court order, no garnishment is permissible.
If you are overpaid Workers' Compensation Benefits, your employer is supposed to comply with this act if your employer is trying to collect the overpayment from wages. In Most circumstances, the employer will not attempt to collect an overpayment after you return to work but the insurance company may seek to recoup overpayments if your benefits are reinstated.