The Commonwealth Court of Pennsylvania has ruled that employers cannot reduce workers' compensation benefits by the cost-of-living adjustments (COLA) received from Social Security Retirement (SSR) benefits. This decision, filed on November 9, 2026, affects injured workers who rely on these benefits for financial support, especially as inflation impacts their purchasing power.

The case, C. McCartney v. Commonwealth of Pennsylvania (Workers’ Compensation Appeal Board), No. 327 C.D. 2025, centers on Cheryl McCartney, who sustained a work-related injury in 1997. After retiring and beginning to receive SSR benefits in 2017, her employer reduced her workers' compensation benefits by 50% of her SSR benefits, including subsequent COLA increases. McCartney challenged this practice, arguing it undermined the intent of both the Workers' Compensation Act and the Social Security Act.

In Pennsylvania, the Workers' Compensation Act allows employers to offset workers' compensation benefits by 50% of the SSR benefits received by an injured worker. However, the law does not explicitly address how COLA increases to SSR benefits should be treated. The Workers' Compensation Appeal Board initially ruled in favor of the employer, stating that the statutory language was clear and unambiguous. However, McCartney's appeal led to a re-examination of the law.

The court, led by President Judge Renée Cohn Jubelirer, found that the Board's interpretation failed to consider the humanitarian purpose of the Workers' Compensation Act. The ruling stated, "The offset allowed [in Section 204(a)] is set at the time the SSR benefit is received and shall not be readjusted based on SSR COLA increases." This decision emphasizes that COLA increases are not funded by employer contributions and should not be subject to offset.

The court's opinion highlighted that the COLA increases are intended to help retirees maintain their purchasing power in the face of inflation. The ruling noted, "Allowing such offset... does not seem to serve the humanitarian purposes of the... Act or the purpose of the COLA increase in SSR benefits." The judges involved in the ruling included Cohn Jubelirer, Christine Fizzano Cannon, and Lori A. Dumas.

This decision has significant implications for injured workers in Pennsylvania. It clarifies that COLA increases to SSR benefits cannot be used to further reduce workers' compensation benefits, thereby protecting the financial stability of retirees who have suffered work-related injuries. The ruling effectively reverses the previous decision by the Workers' Compensation Appeal Board, which had allowed the offset.

The ruling may set a precedent for how similar cases are handled in the future, ensuring that injured workers are not penalized for receiving cost-of-living adjustments that are designed to help them cope with inflation. This case underscores the importance of protecting workers' rights and ensuring that the benefits they receive are not diminished by unrelated factors.

As for what’s next, the employer may seek to appeal this decision to a higher court, although details regarding any potential appeal were not available in the court filing. The ruling could also prompt legislative discussions around the Workers' Compensation Act and how it addresses offsets related to Social Security benefits.