The employer and employee file a third party action and obtain a recovery. Who has the first right of recovery?

• A. Employee
• B. Employer
• C. 1/3 to employee; 1/3 to employer; 1/3 to the employee's attorney
• D. Employer, if lien doesn't exceed the amount of the recovery

Answer: (D)

In California workers’ compensation, when benefits have been paid to an employee and a third party is later pursued, the employer has a right of subrogation or a lien on any third‑party recovery. That means the employer is entitled to be repaid first, up to the amount of benefits that were paid, from whatever the third party recovers. If the third‑party recovery is large enough to cover the lien, the employer gets the lien amount back and the rest goes to the employee (subject to any attorney fees). If the third‑party recovery is less than the lien, the entire recovery goes to the employer to satisfy what’s owed, and the employee gets nothing from that recovery. So the first right of recovery is held by the employer, as long as the lien doesn’t exceed what was recovered.