Labor Law 240 and Workers' Compensation: Two Recoveries, Not One

Can You Collect Workers' Comp and Sue Under Labor Law 240 at the Same Time?

Yes. In New York they are two separate recoveries, and a seriously injured construction worker is normally entitled to both.

Workers' compensation is your exclusive remedy against your employer. It is not a remedy against the property owner, the general contractor, or the construction manager, and those are the parties Labor Law 240 and 241(6) are written to reach.

Comp pays medical treatment and a capped share of your wages. The Labor Law case pays pain and suffering, full lost earnings, lost earning capacity, and the future.

Filing the comp claim does not waive the lawsuit. Accepting comp benefits does not waive it either.

What can quietly damage it is settling either case without accounting for the other.

Here is how the two systems interact, what each one actually pays, and where the comp carrier's lien fits when the third-party case resolves.

Why Comp Is a Dead End Against Your Employer and an Open Door Against Everyone Else

Workers' Compensation Law 11 makes comp the exclusive remedy against an employer. You give up the right to sue the company that signs your check, and in exchange you get benefits without proving anyone was at fault.^[1]

That bargain ends at the employer's door. On a New York construction site the entities with the statutory safety duty are usually different companies entirely: the building owner, the general contractor, the construction manager, and the other subcontractors on the job. None of them are your employer, so none of them are protected.

This is why New York construction cases are structured the way they are. The comp claim keeps the medical treatment paid and some money coming in. The third-party case, built on Labor Law 240(1), 241(6), and 200, is where the actual value of the loss gets recovered.

One exception runs the other way. Section 11 lets a third party you sue turn around and seek contribution or indemnity from your employer, but only if you sustained a grave injury. The statute defines that narrowly: death, permanent and total loss of use or amputation of an arm, leg, hand or foot, loss of multiple fingers, loss of multiple toes, paraplegia or quadriplegia, total and permanent blindness, total and permanent deafness, loss of nose, loss of ear, permanent and severe facial disfigurement, loss of an index finger, or an acquired brain injury from external physical force resulting in permanent total disability. Anything short of that list and your employer stays out of the lawsuit. Because that provision is so often misread as a route to suing your own employer directly, we cover what it actually controls on our page about grave injury and employer liability in New York.

What Workers' Comp Pays, and What the Labor Law Case Pays

The two systems are not scaled to each other. Comp is designed to keep you medically treated and partly paid. The lawsuit is designed to make you whole.

What Comp Covers

• Authorized medical treatment for the work injury, with no deductible
• Roughly two-thirds of your average weekly wage while disabled, subject to a state maximum
• Scheduled loss of use awards for certain permanent injuries
• Vocational rehabilitation in some cases
• Death benefits and funeral expenses for a surviving family

What Comp Does Not Cover

• Pain and suffering, past or future, in any amount
• The portion of your wages above the weekly cap
• Lost future earning capacity when you can never return to your trade
• Loss of consortium for your spouse
• Home modification, adaptive vehicles, and long-term attendant care beyond authorized treatment
• The union pension credits, annuity contributions, and benefit hours you stop accruing

That second list is the case. For a union tradesperson in the middle of a career, the lost benefit accrual alone can outrun the medical bills, and it is invisible on a comp file. The math of what a construction case is actually worth is broken down on our page about construction accident settlement amounts.

Which Labor Law Claim Carries the Third-Party Case

Three statutes do the work, and which one leads depends on how you were hurt.

Labor Law 240(1) applies to elevation-related hazards: falls from scaffolds, ladders, roofs, and openings, and objects that fall because they were not secured. Liability is absolute and comparative negligence is not a defense, which makes it the most powerful claim in the state. The doctrine is covered in full on our page about the Labor Law 240 Scaffold Law.

Labor Law 241(6) covers construction, excavation, and demolition hazards generally, but requires a specific Industrial Code violation. Comparative fault applies. Which code sections hold up is the subject of our guide to Labor Law 241(6) Industrial Code violations.

Labor Law 200 and common-law negligence require proof the defendant created the hazard, knew about it, or supervised the work. It is the fallback, and on a premises-condition case it is sometimes the strongest theory available.

The Comp Lien: What the Carrier Takes Back When You Settle

Here is where workers get surprised. Under Workers' Compensation Law 29, the carrier that paid your benefits holds a lien against your third-party recovery. When the lawsuit resolves, it is entitled to be repaid out of the proceeds.^[2]

Two rules soften that, and one rule can wreck the case entirely.

The Lien Is Reduced by the Carrier's Share of the Fight

Under Kelly v. State Insurance Fund, 60 N.Y.2d 131 (1983), the carrier has to bear its equitable share of the attorney's fees and litigation costs that produced the recovery it is benefiting from. That reduction is calculated, not assumed, and it accounts for the future benefits the carrier no longer has to pay. Burns v. Varriale, 9 N.Y.3d 207 (2007), narrowed when a full Kelly calculation applies, so the analysis depends on the type of benefits at issue.

The Carrier Gets a Credit Against Future Benefits

After the net recovery is paid, the carrier generally stops paying and takes a credit against future benefits until the credit is used up. That period is often called the holiday. It is not a penalty, but it does mean the settlement figure has to be evaluated against what you would otherwise have collected over the years ahead.

Settling Without Consent Can End Your Benefits

Section 29(5) requires the carrier's written consent, or a court order approving the compromise, when a third-party case settles for less than the compensation benefits paid or payable. Settle without it and the carrier can disallow further benefits. Workers who resolve a case on their own, or with a lawyer who does not handle the comp side, run straight into this.

None of this is a reason to avoid the lawsuit. The lien applies to money you would not have at all without the case, and after the reduction the net to the worker is almost always dramatically higher than comp alone. It is a reason to run both files in coordination from the beginning, which is the practice we follow.

Who Else Can Be Sued Besides the Owner and General Contractor

The third-party defendant list on a construction file is usually longer than the two obvious names. Depending on the accident it can include the construction manager acting as the owner's statutory agent, another subcontractor whose work created the hazard, the equipment lessor that supplied the lift or scaffold, the manufacturer of a failed harness, ladder, or tool, and a property manager or net lessee with control of the premises.

Public projects add a layer. Work for the City of New York, the School Construction Authority, the MTA, the Port Authority, or a state agency brings notice-of-claim deadlines that can be as short as 90 days, and those clocks run while a worker is still in the hospital. The general framework is on our page about third-party liability in construction accidents, and the entity-by-entity analysis is on our breakdown of owner, GC, and construction manager liability.

The Timing Problem Nobody Warns Injured Workers About

Comp moves in weeks. The third-party case moves in years. That difference creates three traps.

The first is the recorded statement. An adjuster for the site's liability insurer will call early, framed as routine, and the answers get quoted back at a deposition three years later. The second is the general release. Some settlement paperwork, particularly on a quick comp resolution or a small property claim, is drafted broadly enough to affect claims against other parties. Read before you sign, and have someone read it who is looking at both cases.

The third is evidence. A comp claim needs an accident report and a doctor. A Labor Law claim needs the ladder, the scaffold, the harness, the site safety log, the daily reports, and the identity of every trade on that floor. Those disappear on their own schedule, and no one on the site has a reason to preserve them for you.