Are You Calculating Your Average Weekly Wage Correctly for Your Workers Comp Benefits?

In Virginia, an injured workers compensation rate is based upon their pre-injury “Average Weekly Wage.” Too often Herndon injury lawyer Doug Landau meets with disabled workers who are getting weekly comp benefits based only upon their wages for 40 hours. Often times this leads to a huge underpayment. This is because many workers work and earn overtime; receive bonuses; have other, similar jobs; get company uniforms, trucks, meals, etc. Each of those can increase the average weekly wage calculation if done early on in the case. Unfortunately, many insurance adjusters do not voluntarily tell an injured worker of their family that they are entitled under the law to add on their overtime, bonus and similar jobs’ earnings to correctly, and fairly calculate their Average Weekly Wage (“AWW”) rates.

While attending the Virginia Workers Compensation Commission’s special education program for lawyers, doctors, claims managers & third party administrators, Herndon-Reston area workplace injury lawyer Doug Landau discussed difficult wage issues with insurance defense counsel and comp judges. Note the sign for the “Food Court;” if an employer provides a worker with free meals, clothing, vehicles or transportation, these “fringe benefits” may add value to the disabled employee’s Average Weekly Wage (“AWW”). Make sure that ALL that you get for your work, prior to becoming disabled, are included in these critical calculations.

Correctly calculating the injured worker’s pre-injury AWW impacts the employer and workers compensation insurance carrier’s exposure over the life of a claim. It can affect the immediate payment of weekly indemnity benefits as well as the ultimate settlement value of a file.  The three (3) kinds of indemnity benefits are all affected by the AWW calculation: Temporary Total Disability (“TTD”) benefits (for total wage loss), Temporary Partial Disability  (“TPD”) benefits (for partial wage loss after a return to light duty &/or part-time work), Permanent Partial Disability (“PPD”) benefits, or even Permanent Total Disability (“PTD”).

The reason for calculating the AWW is to approximate the economic loss suffered by an employee or his or her beneficiaries when there is a loss of earning capacity because of work-related injury or death. The usual method for calculating pre-injury average weekly wage is to look at an employee’s earnings for the 52 weeks prior to their on-the-job accident. For most workers, their earnings over the past year are the best estimate of their economic loss after their injury and their AWW. The Virginia Workers Compensation Commission even has a form for employers and insurance companies to use to calculate the Average Weekly Wage, but some companies just use a printout or calculator list and divide by 52. To get the comp rate, they multiply by 2/3rds.

[So by way of an example, if an employee is earning $12.00/hr., 40 hours/week, their average weekly wage would be $480.00, and their comp rate would be $320.00/week. HOWEVER, if the employee also worked and was paid overtime, bonus money, shift/holiday differential, given clothing, food, lodging &/or transportation, their AWW may actually be much higher, and their compensation rates also much higher!]

If a worker was hired a short time before their accidental injury, it may not be appropriate to calculate their economic loss based upon their earnings for a whole year. Herndon workplace injury lawyer Doug Landau notes that, “many injuries occur to new employees, who may not be familiar with all of the safety protocols or who may not have a lot of experience at their job. That is why requiring a 52-week wage chart for a new hire would not be fair to ‘rookie employees.’ Luckily, the Virginia Workers Compensation law allows for other methods for fairly calculating the average weekly wage.

As an alternative, the Commission allows the average weekly wage to be calculated by using the wages of a similar worker (i.e., an employee of “the same grade and character” of the injured employee).  In recent cases, workers comp lawyer Doug Landau has asked for the “like wages” of several similar workers, in order to make sure that the earnings submitted by the employer are fair. He then shared this information with his client to check that these submitted pay records were for people who did the same work, at the same pay grade, with the same seniority, overtime, etc., as his clients.

There are cases for which using the 52-week wages of the employee or a similar employee’s wages would be unfair. Seasonal workers may fall into this group. In limited cases, the parties to a claim may develop their own method for calculating a worker’s average weekly wage. The Virginia Workers Compensation Commission has ruled that a worker employed in seasonal employment should have their gross wages divided by the number of weeks that they worked, not divided by the full 52 weeks.If you or someone you know or care for has been injured as the result of an accident on the job, and there are questions about what laws apply, e-mail or call us at ABRAMS LANDAU, Ltd. (703-796-9555) at once.

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