California Labor Code §3852 — Third-Party Lawsuit and Employer Subrogation

## What types of third-party defendants are common?

Third-party defendants include vehicle drivers, equipment manufacturers, general contractors, premises owners, chemical suppliers, and any other non-employer entity whose negligence contributed to the work injury.

The most common third-party claims arise from motor-vehicle accidents during the course of employment (delivery drivers, sales representatives, anyone driving for work) where another motorist is at fault. Construction injuries frequently involve third parties, a general contractor on a project where the worker's employer is a subcontractor, an equipment manufacturer when a defective tool or machine caused injury, a property owner whose dangerous premises contributed to the harm, or a separate subcontractor whose work created the hazard. Products-liability claims against manufacturers, design defects in safety equipment, and unsafe premises all support third-party recovery. ### How does workers' comp interact with the third-party recovery? Labor Code §3856 and §3859 give the employer (and its carrier) a right of subrogation against the third-party recovery for benefits paid. The worker, the employer, or both can file the third-party action. Most often, the worker files and the carrier asserts a lien for benefits paid, medical bills, temporary disability, permanent disability, and any death benefits. The lien is satisfied from the civil recovery before the worker receives the balance, but a credit also runs to the carrier for future benefits up to the worker's net recovery. ### What is "the credit" and how does it affect the comp case? After the lien is reimbursed, the carrier receives a credit against future comp benefits equal to the worker's net recovery from the third party. In practice, this means workers' comp benefits may pause until the credit is exhausted by the value of future benefits that would otherwise have been paid. The credit is calculated under §3861 and is one of the more technical aspects of third-party practice. Coordinating settlement so the worker preserves access to ongoing medical care requires careful structuring. ### Can the worker recover pain and suffering through the third-party action? Yes, and this is the single biggest reason third-party claims matter. Workers' compensation does not pay general damages. The third-party tort action does. Pain and suffering, emotional distress, loss of enjoyment of life, and (for a spouse) loss of consortium all flow to the worker after the lien is satisfied. In serious-injury cases, the general-damages portion often dwarfs the comp benefits. ### How do we coordinate the WCAB case with the civil action? We typically continue the WCAB case to preserve medical treatment access and lock in disability ratings, while the civil action develops in parallel. Discovery in the civil case often produces evidence, accident reconstruction, surveillance, defendant's records, that helps the WCAB case. Settlement is sequenced to maximize the worker's net recovery. We negotiate lien compromises with the comp carrier under §3859(b), which usually accepts less than full reimbursement to facilitate settlement. The math matters: a $1.50 lien on a $1.00 recovery is worth more compromised than litigated.

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