1-29-2018; Shawn Biery on New IL WC Rates With Free Rate Sheet!!!; Lilia Picazo on Tax Concerns about Confidential Harassment Settlements and more

Synopsis: Illinois WC Rates Jump Again—even with jobs leaving the state, there was a significant and regular jump in the Statewide AWW and Your existing PPD Reserves May Need To Be UPDATED RETROACTIVELY(!).


To any of our readers and/or fans, Send a Reply to Get a Free Copy of Shawn R. Biery’s Updated IL WC Rate-Sheet!


Editor’s comment: There continues to be an upward spiral of IL WC rates. Please don’t shoot the messenger for telling you how to get them right.


As mentioned before, twice every year, starting in the 1980’s, the IL WC Act provides a formula which effectively insures no matter how poor the IL economy is doing, our IL WC rates keep climbing.


We caution our readers to pay attention to the fact the IL WC statutory maximum PPD rate is now $794.56 (up from $775.18!!).


When it was published, this PPD Max rate changed retroactively from July 1, 2017 to present. If you reserved a claim based on the prior rate for the period from July 1 to right now, your reserves are wrong.


If you have a claim with a date of loss after July 2017 and a max PPD rate, you need to take a look and see if the new maximum PPD rate applies.


If this isn’t crystal clear, send a reply to Shawn for clarification at sbiery@keefe-law.com.


The current TTD weekly maximum has risen to $1,463.80.


An IL worker has to make over $2,195.70 per week or $114,176.40 per year to hit the new IL WC maximum TTD rate.


We still don’t believe any state in the United States has a TTD maximum that high? If you know of one, let us know.


The new IL WC minimum death or T&P rate also went up.


The IL WC minimum death benefit is 25 years of compensation or $548.93 per week x 52 weeks in a year x 25 years equaling a staggering $713,609.00! Yes, if Claimant makes $100 a week in a part-time job and dies in a work-related accident, the benefit is over $700K.


The new maximum IL WC death benefit is $1,463.80 times 52 weeks times 25 years or a lofty $1,902,940.00 plus burial benefits of $8K.

On top of this massive benefit, Illinois employers/governments have to pay COLA increases under the Rate Adjustment Fund that may double that already-high benefit, depending on the CPI.


The best way to make sense of all of this is to get Shawn Biery’s colorful, updated and easy-to-understand IL WC Rate Sheet.


If you want it, simply reply to Shawn at sbiery@keefe-law.com or email Marissa at mpatel@keefe-law.com and include your mailing address if you would like to be mailed a laminated copy and he and his great team will get a copy routed to you before rates rise again.


Shawn remains your go-to defense source on any issue relating to IL WC rates!



Synopsis: Tax Cuts and Jobs Act – Important Provisions for Employers to Understand About Tax Deductions in Sexual Harassment and Sexual Abuse Claims. Research and Analysis by Lilia Y. Picazo, J.D.  


Editor's Comment: On December 22, 2017, the Tax Cuts and Jobs Act was signed into federal law. It is a seminal change to U.S. law that is required reading for all HR managers.


Within the Act is a provision that significantly impacts confidential settlements in connection with the settlement of sexual harassment or sexual abuse claims.


Under Section 162 of the prior Tax Code, employers were generally allowed to deduct as a business expense, settlement or attorney's fees incurred in defense of confidential settlements reached in sexual harassment and sexual abuse cases.  


Section 13307 of the Tax Cuts and Jobs Act dramatically modifies Section 162 of the Tax Code adding:


"No [Tax] deduction shall be allowed under this chapter for --


(1) Any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement, or

(2) Attorney's fees related to such a settlement or payment."


See 26 USC 162(q). 


The amendment applies to all covered settlements paid or incurred after December 22, 2017. 


The IRS has not provided any additional regulations or guidelines leaving many questions unanswered, including potential double taxation.


For one, the amendment does not clarify if a tax deduction can be allocated to other portions of a settlement where a confidential settlement is reached for multiple and varying claims, inclusive of sexual  harassment or sexual abuse claims.


Based on the plain language of Section 13307, employers may still request confidential provisions as part of a settlement agreement; however, they will need to decide between a confidential settlement or a non-confidential settlement to insure they are getting a tax deduction. 


Additionally, employees previously able to deduct the portion of the confidential settlement apportioned for their attorney’s fees to avoid taxation of monies they didn’t receive would no longer be able to deduct such fees.  


Again, based on the plain language of the amendment, settlements obtained by the employee, including the portion allocated to attorney’s fees would be taxed to the employee receiving the settlement, and to the defending attorney.


KCBA encourages ongoing trainings and seminars to prevent such claims.


We are happy to provide additional thoughts to assist with the development of reporting policies and ongoing training.


We will continue to monitor Section 13307 and provide you updates should the IRS develop additional regulations or guidelines.


This article was researched and written by Lilia Y. Picazo, JD. Lilia can be reached with any questions related to workers’ compensation defense and employment law defense at lpicazo@keefe-law.com.