Can You Get a Cash Advance on a Workers' Comp Settlement?

By Michael Shemtoub, trial attorney, Beverly Law. Updated November 2026.

What the anti-assignment laws say

A pre-settlement advance works by giving the funder a contingent right to part of what your case pays. When the money is comp benefits, these statutes block that right. Washington goes further: its statute says payments keep their exempt status even after they are issued. If you live in another state, look for similar language in your state’s workers’ compensation law before you sign anything that points to comp money.

Comp settlements go through an agency

Comp claims also settle differently from injury lawsuits. In California, “No release of liability or compromise agreement is valid unless it is approved by the appeals board or referee” (Lab. Code 5001). The Appeals Board may also allow certain liens against compensation, including “the reasonable value of the living expenses of an injured employee or of his or her dependents, subsequent to the injury” (Lab. Code 4903(c)). The statute does not say who may claim that lien, and we did not find a decision applying it to a funding company.

In Texas, a comp settlement must be signed by the commissioner and all parties, and the commissioner approves it only after finding it matches the agreement, follows the law and division policy, and serves the claimant’s interest under the law and facts. A settlement on impairment cannot be made before you reach maximum medical improvement, lump sums are limited, and your right to medical benefits cannot be cut off by the settlement (Lab. Code 408.005). Texas also lists the only liens allowed against income and death benefits, in order: the comp attorney’s fee, court-ordered child support, and the carrier’s subrogation interest (Lab. Code 408.203). A funder is not on that list. Support liens are covered on our child support and lawsuit advances page.

The third-party claim is where funding comes in

Many work injuries involve someone besides the employer: a driver, a property owner, a subcontractor, or the maker of a machine. That claim is an ordinary injury case, and the comp statutes above do not stop you from funding it. Our pages on workers’ comp vs. a personal injury claim and construction accident third-party claims explain who can be sued.

The catch is that your comp carrier gets paid back from that recovery, and future comp may stop for a while. The rules in the three states:

• California. If you sue the third party yourself, the court allows the employer’s comp payments “as a first lien against the amount of such judgment,” after your litigation expenses and fee (Lab. Code 3856(b)). After that, the employer is relieved from paying further compensation up to the balance of the judgment (Lab. Code 3858(a)).
• Texas. You may sue the third party and also pursue comp, and the carrier is subrogated to your rights (Lab. Code 417.001). Your net recovery first reimburses the carrier for benefits paid, and anything above that is “treated as an advance against future benefits” (Lab. Code 417.002). If your employer had no comp coverage, see our guide on Texas non-subscriber work injuries.
• Washington. After costs and fees are shared, you generally receive 25% of the balance (a settlement can set a lower share), the department or self-insured employer is reimbursed for benefits paid, and you get anything left. No further benefits are paid until they would equal that remaining balance (RCW 51.24.060; RCW 51.24.030). Our Washington third-party guide goes into detail.

So a funder’s payoff on a third-party case comes out of what is left after fees, costs and the carrier’s share, and the future-benefit credit can leave you without comp checks for a time. Read how a lawsuit advance is paid back and funding and medical liens for the payment order.

What to ask before you sign

• Does the contract name only your third-party injury claim? If it mentions comp benefits or a comp settlement, ask your lawyer about it before signing.
• What will the comp carrier’s lien or reimbursement be, and how much credit against future benefits could it claim?
• If the third-party case settles, will your comp checks stop, and for how long?
• In Texas, is there a child support lien that would reach your benefits?
• Have you used the wage and medical benefits comp already gives you? Our page on alternatives to pre-settlement funding lists other sources.

The full section on how funding works starts at our lawsuit cash advance guide.

Common questions

Related pages

Cash advance on a lawsuit · Laws by state · Injury law FAQs

Important: This page is general information, not legal or medical advice, and reading it does not create an attorney-client relationship. Every case is different; talk to a lawyer about yours. Texas cases are handled by the firm’s Texas-licensed attorneys, Joyce Ondich and John Efstathiou. Last reviewed: November 7, 2026.