When Do I File a Third-Party Lawsuit Instead of a Workers’ Compensation Claim?

 Posted on July 27, 2026 in Workers' Compensation

Accidents can and do happen on the job, regardless of the occupation or workplace environment. According to Illinois law, if you are injured at work, you can file a workers’ compensation claim. This claim means you cannot sue your employer for an injury you suffer performing your job, even if your employer’s negligence caused your injury. 

Alternatively, when someone else who is not your employer is at fault for your work-related injury, you may sue him or her for wages lost or medical bills caused by his or her negligence. These types of claims against an individual or another company that caused a workplace injury are called "third-party claims."

At McNamara Phelan McSteen, LLC, we have over 150 years of combined attorney experience with a history of successful case results in workers’ comp and personal injury claims. Our Joliet, IL workplace injury attorneys are here to provide you with aggressive representation, exploring all avenues to protect your rights.

What Is Third-Party Liability in Workers’ Compensation Claims?

Illinois has a no-fault workers’ compensation system, meaning it does not matter if the employer or employee is to blame for the injury. If an employee suffers a serious injury at his or her workplace in Illinois, he or she can file a workers’ compensation claim with the Illinois Workers’ Compensation Commission. Benefits can include temporary or permanent disability payments, as well as coverage for medical bills and lost wages.

Workplace injuries can also occur due to no fault of the worker or the employer, but instead because of another person’s or entity’s actions or inactions. Under these circumstances, the injured employee can file a liability lawsuit against the at-fault third party and seek damages. 

Compensation can be for lost wages if the employee cannot return to work for a period of time, and also medical costs, disability, disfigurement, in addition to pain and suffering. In some cases, it may be appropriate to file both a workers' compensation claim and a third-party lawsuit.

Are All Employers Required to Carry Workers’ Compensation in Illinois?

Almost all employers in Illinois must carry workers' compensation insurance. This rule applies whether a business has one worker or hundreds of workers. Even part-time employees are usually covered. If an employer fails to carry this coverage, the state can issue serious penalties.

Workers' compensation pays for medical bills and lost wages after a job injury. However, it does not always cover every loss. If a third party, someone other than your employer or a coworker, caused your injury, you may also have a separate legal claim against that party. 

For example, a delivery driver hurt by a careless motorist while making a work delivery may have both a workers' compensation claim and a third-party injury claim. Illinois law allows an employer or its insurer to seek reimbursement from a third-party settlement in these situations (820 ILCS 305/5(b)).

What Third Parties Can Be Held Liable in a Workplace Injury Claim in 2026?

There are a variety of different accidents that would injure a worker and which would justify filing a liability lawsuit against a third party, including the following:

• Construction accidents: An employee is hurt as a result of another contractor’s unsafe work practices on the job site, such as not properly securing scaffolding.

• Slip and fall accidents: A worker slips on a substance and falls while delivering products to another company’s property.

• Motor vehicle collisions: If an employee is driving while on the job and is involved in an automobile accident caused by a negligent driver.

• Defective products: A laborer is injured by a piece of equipment that has not been properly maintained or contains defective parts.

When an employee files a liability lawsuit against a third party for a workplace injury, he or she may be able to recover the full extent of damages he or she suffered. This can include lost wages, medical expenses, in addition to pain and suffering. In order to recover damages in a liability lawsuit, the injured worker must prove the third party’s negligence caused the injury. Therefore, it is helpful to seek legal counsel to understand all your options if you believe another party is at fault for your workplace injury.

Can You Settle a Third-Party Injury Claim Outside of Court?

Many third-party injury claims settle without ever going to trial. Settlement talks often begin once your medical treatment reaches a stable point and the full cost of your injury becomes clear. Your attorney can present evidence of the at-fault party's conduct, along with proof of your medical bills, lost income, and other damages, to negotiate a fair settlement.

Insurance companies do not always offer a reasonable amount right away. A skilled attorney can push back against a low offer and prepare your case for trial if negotiations stall. Settling outside of court can save time and reduce stress, but only if the settlement truly reflects the harm you suffered.

What Is the Statute of Limitations on a Third-Party Injury Claim in Illinois?

In most Illinois personal injury cases, including third-party injury claims, you have two years from the date of the injury to file a lawsuit. Missing this deadline can prevent you from recovering compensation altogether, even if your claim is otherwise strong. 

Some exceptions can affect this deadline. If the injured person was a minor at the time of the accident, the filing period may not start until they turn 18. In rare cases involving an injury that was not immediately discovered, the clock may not begin until the injury was found or reasonably should have been found. These exceptions are narrow, though, and courts apply them carefully. 

Contact a Joliet, IL Workers’ Compensation Lawyer

Workers’ compensation benefits are for employees who are hurt at their workplace, and the employer is required by law to provide them. However, in the event you are injured on the job due to a third party’s negligence, you may be entitled to compensation by filing a liability lawsuit. The skilled law firm of McNamara Phelan McSteen, LLC can guide you through the legal process for seeking damages.

Contact a Will County, IL third-party lawsuit attorney at 815-727-0100 for a free consultation.