FAQ - Workers’ Compensation

Calculation of Workers' Compensation Awards

If you are injured or contract an occupational disease at work and are found eligible for workers' compensation benefits, how will your award amount be calculated? Although there are other possible types of workers' comp benefits, such as vocational rehabilitation or medical bill coverage, we focus here on typical compensation for wage loss. Because workers' compensation law is state specific, how your wage loss award is determined will depend on your state's laws. An attorney experienced in workers' compensation, the workers' compensation agency in your state, or both can assess your situation.

The policy behind this type of benefit is to replace the regular income of the worker so as to prevent household financial crisis. Most states employ the "average weekly wage" (AWW) concept to determine benefit amount. Under the AWW concept, the benefit amount is based on an average of actual past earnings usually going backward in time from the date of injury and applying one of several mathematical formulas. Many states have minimum or maximum benefit amounts. By contrast, some states use average statewide monthly earnings as the basis for calculation. Another type of benefit is for a scheduled injury, where the state has a predetermined benefit amount that depends on the particular physical loss of the worker. For example, the state may always pay $2000 per month for the loss of a functioning arm regardless of how much the worker made on average in the past.

Workers' comp benefits for lost wages can be temporary, such as when the worker is convalescing but will eventually be able to return to work, or permanent. A permanent injury may be partial, such that the worker's earning capacity is diminished but not extinguished, in which case the workers' comp authority will usually look at the difference between what the worker can realistically do after the injury and what he or she could have earned if injury or disease free. An employee can also be completely and permanently disabled from ever working, in which case the monetary award will either be based on past wage amounts or on an estimate of future earnings.

To promote fairness to injured workers and sound public policy, most states have special rules for calculating benefit amounts where there are unique work situations, conditions, or factors such as:

Irregular earnings
Part-time earnings
Work dependent on unpredictable factors such as the weather
Publicly supported employment programs
Wage amounts that vary or are difficult to ascertain
Multiple-job holders
High absence rates
Short-term or temporary positions
Overtime
Certain fringe benefits
Average wages that are less than minimum wage
Job availability in the area
Average local wages of similar employees or of other employees at the same company
Recent pay raises or cuts
Recent job changes
Receipt of other public or private benefits
Self-employment
Strike participation
New hirees
Delayed manifestation of disease or injury, cumulative injury, or progressive disease
Unlawful employment such as of children or illegal immigrants
Business expenses
Business profits
Tips and bonuses

To be sure that the state is paying you the correct amount of workers' comp wage loss benefits, you may discuss the details of your situation with a skilled attorney or local workers' compensation agency. If you believe the benefit amount is incorrect, you probably have the right to appeal the benefit award amount, but be careful not to miss any deadlines in your appeal.

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.

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