Definition of Lien
A lien is a form of security interest that is granted over an item of property to secure the payment of a debt or performance of some other obligation. For workers' compensation, a lien is usually only an issue when a third party liability lawsuit is filed in connection with a workers' compensation claim. Under workers' compensation laws, an injured worker is not allowed to bring a personal injury lawsuit against their employer. In return, the employer has to provide workers' compensation insurance coverage in the event a worker sustains a work-related injury or illness. An injury may occur when there is a third party that is involved in the work-related event that causes a worker's injury. If the third party is liable or responsible for the event that caused a worker's injury, the worker is allowed to bring a personal injury lawsuit against the third party.
For example, as part of a worker's job, a worker is delivering materials for their employer. In the process of doing so they are rear-ended by a third party and suffer severe neck and back injuries. Obviously, the worker's employer did not cause the accident but is still responsible for paying workers' compensation benefits because the accident occurred while the worker was doing their job for the employer. The injured worker is allowed to bring a personal injury lawsuit against the third party. Although laws vary from state to state, the worker's employer is allowed to place a lien on what the worker is awarded if they win the lawsuit in order to be paid back the workers' compensation benefits that the employer paid out to the worker.