Identifying the Third Party in a Workers Compensation EDD Lien

Who is the third party in a Workers Compensation EDD lien?

The third party is the California Employment Development Department (EDD), which files a lien to recover unemployment insurance contributions it paid on behalf of the employer when a workers compensation claim is settled.

Why the EDD files a lien

When an employee receives workers compensation benefits, the state may have advanced unemployment insurance (UI) taxes for the employer. The EDD's lien ensures those taxes are repaid before the employer's liability is cleared.

How the lien works

The EDD files a notice of lien with the Workers Compensation Appeals Board, naming the employer as the primary responsible party and the EDD as the creditor. The lien amount is typically the UI contributions the EDD paid, plus any statutory interest.

Impact on the employer and employee

The employer must satisfy the EDD lien before receiving any remaining settlement funds. The employee's compensation is not reduced; the lien is satisfied from the employer's assets or settlement proceeds.

Key steps for resolution

• Employer receives lien notice and verifies the amount.
• Employer pays the EDD directly or negotiates a payment plan.
• Once the lien is satisfied, the remaining funds are released to the employer or claimant.