How Do Layoffs and Plant Closures Impact Workers’ Compensation?

    In Pennsylvania, employers are required by law to provide workers’ compensation insurance, so they hire separate insurance companies that are responsible for providing this coverage. Employers can obtain this insurance through private insurance companies, self-insurance or the State Workers’ Insurance Fund. 

    As an employee, your coverage begins on your first day of work and is available throughout your entire time at the company. If you become sick or injured on the job, you are entitled to compensation. However, this raises the question as to what happens to workers’ compensation during a layoff or if a company closes. 

    Am I Still Entitled to Compensation? 

    You can still receive workers’ compensation if you are laid off or if the company closes. The circumstances are different depending on your situation. 


    If you have an illness or injury and are receiving benefits before the time of your layoff, you will not lose your regular compensation. Keep in mind that health insurance is separate from your workers’ compensation, so you will only receive assistance with medical expenses related to your workplace injury. 

    If your injury occurs before you are laid off but is not recognized, your employer may be liable if it inhibits your ability to work. All injuries should be treated seriously, as a minor injury before a layoff could continue to develop and cause larger issues. Consider contacting a workers’ compensation lawyer to uphold your rights.

    Some workers will receive severance benefits at the time of their layoff. You may be required to sign a waiver that frees the employer from workers’ compensation claims. The only way to permanently remove any claims is with approval from a workers’ compensation judge. 

    Company Closure

    If your company is closing, what happens to workers’ compensation? Fortunately, even if your employer goes out of business, their insurance company is responsible for making workers’ compensation payments. 

    Your workers’ compensation should not change after a factory closes. If you suddenly stop receiving your compensation, contact an attorney to negotiate either a sum payment or the continuation of your payments. 

    Can I File for Unemployment? 

    To qualify for unemployment in Pennsylvania, you must have been laid off due to no fault of your own. Layoffs and closures are relevant reasons to seek unemployment, but you must be able to work and prove that you are attempting to find a job. 

    When you are injured or ill as the result of an event in your previous workplace, you may not qualify for unemployment depending on the injury’s severity and how much it impacts your ability to work. 

    If you contract an attorney to defend your workers’ compensation claims, you may still be eligible for unemployment. Your eligibility will depend on several different factors, such as: 

    • When your injury occurred. 
    • How your employer accommodated your injury. 
    • If you have already settled your workers’ compensation case. 

    In most cases, talking to an attorney is the best way to handle workers’ compensation and unemployment cases, especially when they coincide. 

    Get Advice From Trusted Attorneys 

    Frommer D’Amico only deals with workers’ compensation cases. We have a team of experts specializing in workers’ compensation to answer your questions and represent you. We will help you navigate a layoff or plant closure. 

    Contact us online or give us a call at 717-400-1000 if you want more information or to find a representative for your workers’ compensation case.


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