How is Workers Comp Calculated?

 

You Can Increase the Amount of Workers Comp Payments by Ensuring the Average Weekly Wage is Correct

 

Many of you will not receive your full wages if a work-related injury or an occupational illness causes you to miss time from work.

 

Instead, you will receive only a percentage of your earnings before the injury.

 

Indeed, the standard method for calculating workers comp benefits is to pay the injured worker a fixed percentage of their “average weekly wage,” usually between one-half and two-thirds.

 

Therefore, increasing the average weekly wage (AWW) is the best method to increase the value of your workers compensation claim.

 

Likewise, decreasing the average weekly wage is the most efficient method for an employer and insurance carrier to reduce financial exposure.

 

Given its importance, calculating the proper average weekly wage is a consistent source of litigation under workers comp laws.

 

And that is why I wrote this article: to explain how much workers comp pays and what you can do to get more. Understanding what items (gross wages, overtime, bonuses, per diem payments, part-time job earnings) the rules allow you to include in the average weekly wage calculation is critical to obtaining more money through workers comp.

 

Keep reading for more information.

 

If you have any questions about workers comp in Virginia, or are looking for a top-rated work injury attorney, call me at (804) 251-1620 or (757) 810-5614 or complete this online form.

 

See how my injury law firm can help you increase the amount of your workers comp payments.

 

 

Does Workers Compensation Pay Full Salary?

 

No.

 

Workers comp does not pay your full salary.

 

There is, however, an exception.

 

Your workers comp payments may equal your full salary if your average weekly wage is less than the minimum compensation rate for your jurisdiction at the time of your injury.

 

Does an Employer’s Size (in Revenue and Assets) Affect How Much Workers Comp Pays?

 

No.

 

Unlike other tort claims (product liability, negligence actions arising from car accidents, Jones Act claims for maritime injury, etc.), a defendant’s assets do not affect the amount it must pay for your work injury.

 

Your employer may have “deep pockets” or significant insurance coverage (with large policy limits), but that does not matter.

 

The Workers Compensation Act establishes the types and amount of workers comp benefits available.

 

These benefits are standardized and non-negotiable.

 

Therefore, the exact formula for calculating workers comp benefits applies regardless of whether you work for a large corporation (such as UPS, J.B. Hunt, Amazon, American Airlines, Walmart, or Target) or a small business with only a few employees.

 

The “Average Weekly Wage” Concept: The Starting Point for Calculating Workers Compensation Payments

 

In most jurisdictions (including Virginia), the starting point in calculating how much you will receive in workers comp payments is your “average weekly wage.”

 

Your average weekly wage is the basis for all awards of workers compensation benefits, except for medical payments. 

 

Indeed, the amount of temporary total disability, temporary partial disability, and permanent partial disability benefits paid to you depend on the average weekly wage calculation. 

 

For example, Section 65.2-500(A) of the Code of Virginia directs an employer to pay an injured employee incapacitated for work a weekly compensation equal to 66 and two-thirds percent of the employee’s average weekly wages. 

 

What is the Purpose of Calculating the Average Weekly Wage in Workers Comp?

 

The goal in calculating the average weekly wage is to estimate, as closely as possible, the economic loss you have suffered (and will continue to suffer) due to the work-related injury.

 

This purpose explains the development of the case law on average weekly wage calculations.

 

Calculating the Average Weekly Wage: Different Methods for Determining Workers Comp Wages

 

A specific statute (Virginia Code Section 65.2-101(a)) lists the methods to determine the average weekly wage.

 

But this statute is only a guide. The Workers Compensation Commission has broad discretion to depart from a specific equation when the result would be unfair to you or the employer as long as credible evidence supports the departure.

 

Now we will examine the methods to calculate the AWW and your workers comp wages.

 

Calculating Workers Comp Payments When You Worked for the Same Employer for More than One Year Before the Injury

 

If you have worked in the same job as the one you held at the time of the accident for one year or longer, you calculate your average weekly wage by dividing your earnings for the 52 weeks before the accident by 52.

 

For example:

 

Suppose you were a truck driver for the same employer for three years before suffering a low back injury while picking up a heavy box.

 

In the 52 weeks before the accident, you earned $60,000.

 

You would calculate your average weekly wage for workers compensation as follows:

 

$60,000 / 52 = $1153.85

 

And your compensation rate for wage loss benefits would be $1,153.85 x .66667, which equals $769.24.

 

Calculating Your Average Weekly Wage When You Worked for the Same Employer for More than One Year Before the Accident but Missed Seven or More Consecutive Days of Employment During that Period

 

The second method of calculating workers comp payments is related to the first.

 

You would deduct the lost time from the AWW calculation if you missed more than seven consecutive days of work during the 52 weeks preceding your occupational injury.

 

Using the example above, let’s say you earned $60,000 in the year before your work accident but had missed 14 days because of an illness unrelated to work (such as COVID-19).

 

Your average weekly wage would be:

 

$60,000 / 50 weeks = $1200.

 

And your workers comp benefit amount would be $1200 x .66667, which equals $800.

 

This number is better for you because it increases your claim’s value.

 

Calculating Your Workers Comp Wage if You Had Worked for the Employer for Less than 52 Weeks Before Your Accident

 

Many employees sustain injuries in the first year on the job.

 

In these situations, a different AWW calculation method applies.

 

If you have worked less than a full year for the employer when you get hurt, you calculate your AWW by dividing your earnings by the number of weeks and days worked.

 

For example:

 

Suppose you suffer a torn rotator cuff after working as a nurse for 20 weeks.

 

And you have earned $40,000 in this employment.

 

Your average weekly wage would be:

 

$30,000 / 20 weeks = $1,500

 

And your workers comp payment would be $1,000 per week.

 

Calculating the Average Weekly Wage When You Suffer an Injury Soon after Beginning the Job

 

Suppose you get hurt soon after starting the employment (within a few days or weeks). In that case, the Workers Compensation Commission may calculate your average weekly wage using the earnings of a person of the same grade and character employed in the same class of employment in your community.

 

When the Four Other Methods of Calculating Average Weekly Wage are Unfair

 

The Workers Compensation Commission may create any method that “will most nearly approximate the amount which the injured employee would be earning were it not for the injury” when “exceptional reasons” make the other methods unfair to one of the litigants.

 

What Items and Benefits Can I Include in the Average Weekly Wage? 

 

The average weekly wage is not limited to your paycheck or base pay rate. 

 

Instead, earnings to calculate workers comp benefits may include: 

 

• Overtime Payment: You should add overtime pay to the average weekly wage calculation. 

 

• Bonuses: You should include all bonus payments and rewards from the employer (even cash payments off the books) in the AWW equation. 

 

• Tips and Gratuities: Those injured while working in the restaurant, service, or retail sectors can include cash tips when calculating your workers comp wages – even if you did not pay taxes on that money.

 

• Commissions: A new salesperson injured before building a book of business or steady revenue stream may be able to use earnings from a more established salesperson to show that a higher average weekly wage is fairer.

 

• Vacation Pay: You should add vacation pay received to the AWW. 

 

• Room and Board: You may include the value of room and board provided by the employer. 

 

• Training Pay: If you were hurt while training or receiving additional education on your employer’s behalf, you could include the value of that training or education when calculating your AWW.

 

• Expense Accounts

 

• Meals

 

• Uniforms

 

• Contributions to 401(K) Plans

 

• Transportation Allowances

 

• Value of the use of a motor vehicle and gas

 

The average weekly wage, however, does not include the following: 

 

• Retirement benefits

 

• Contributions for life and health insurance benefits, such as employer-paid insurance premiums 

 

• Reimbursement for mileage or hotel rooms for out-of-town travel. 

 

Wages from Concurrent Employment: Will Workers Comp Pay for Wage Loss if I Miss Time at My Second Job Due to My Injury?  

 

You may hold jobs with two or more employers when you suffer a work-related injury. For example, I have represented many persons with full-time and part-time employment with different businesses.

 

The law permits you to combine wages from jobs with different employers to calculate the average weekly wage if the positions are substantially similar. Even if the second job would not be covered under the Workers Compensation Act.

 

But if the work performed for different employers is dissimilar, the court will exclude wages earned in concurrent dissimilar employment from the AWW calculation.  

 

A majority of states, including Virginia, follow this dissimilar employment rule. 

 

In assessing whether the two jobs are substantially similar, the Workers Compensation Commission and the appellate courts determine whether the jobs share a “primary mission.” Sharing some functions is not enough to prevail on this issue.

 

You should, therefore, present evidence that shows the following:  

 

• You had similar responsibilities in both jobs.

 

• Both jobs required similar skills.

 

• The goal of both jobs was similar.

 

• You faced a similar degree of hazard in both employments.

 

• Both jobs were in the same industry but with different employers.

 

Likewise, the case law does not permit employers and insurers to include earnings from dissimilar employment when calculating the post-injury average weekly wage for temporary partial disability purposes “unless there was some increase attributable to the industrial injury.” 

 

Can the Parties Stipulate a Proper Average Weekly Wage?

 

Yes, the parties may stipulate the average weekly wage.

 

You and the employer may agree to the average weekly wage based on your actual earnings or a compromise. Indeed, agreement on this issue is common.

 

Hearing testimony and documents regarding the average weekly wage are only needed when there is a disagreement.

 

Who Has the Burden of Proving the Correct Average Weekly Wage if there is a Dispute? 

 

The injured worker has the burden of proving (by a preponderance of the evidence) the average weekly wage. 

 

But the employer has to provide specific documents to help you do so. 

 

For example, Rule 1.8(J) of the Rules of the Workers Compensation Commission provides that if there is a dispute about the average weekly wage, the employer must file a wage chart showing all wages earned by you in the year before the date of the injury. 

 

In addition, you may serve interrogatories and requests for the production of documents on the employer during pretrial discovery to determine the basis of the employer’s position on AWW and get records to support your calculation. 

 

Further, you can establish the proper average weekly wage through your testimony if the employer does not submit contrary evidence.

 

There is, however, an exception to these general rules.

 

If a party alleges that the average weekly wage should be based on the earnings of a similar employee, that party has the burden of introducing evidence of those earnings. age

 

Maximum and Minimum Limits on Weekly Workers Comp Payments

 

After calculating the compensation rate based on your average weekly wage, you still have one more step.

 

Many workers compensation laws set maximum and minimum weekly benefit amounts.

 

Your compensation rate, therefore, is subject to the statutory maximum and minimum compensation rates.

 

Because of these maximum and minimum limits, workers comp payments for high-wage earners are often less than two-thirds of those injured workers’ pre-injury earnings. In contrast, low-wage earners may receive workers comp pay equal to their full salary.

 

What is the Maximum Weekly Workers Comp Payment Amount in Virginia?

 

Unfortunately, those of you who are high-wage earners may suffer additional loss of income following an occupational injury. 

 

Indeed, you may get stuck with a workers comp wage rate that does not come close to two-thirds of your AWW.

 

Here are the weekly maximum workers compensation wages for the past five years in Virginia: 

 

• 2022: $1,290.00 payable per week

 

• 2021: $1,195.00 payable per week

 

• 2020: $1,137.00 payable per week

 

• 2019: $1,102.00 payable per week

 

• 2018: $1,082.00 payable per week

 

And here is an example of how Virginia’s maximum workers compensation rate applies.

 

Suppose you earned $125,000.00 per year when you were injured in 2022.

 

With this salary, your pre-injury average weekly wage is $2,403.85.

 

If the maximum compensation rate did not apply, you would receive $1,602.57 in weekly workers comp wages.

 

But instead, you will only get $1,290.00 per week if you are eligible for temporary total or permanent partial disability.

 

The maximum workers compensation rate, therefore, negatively impacts persons earning more than $100,00 per year.

 

And this impact is one reason why negotiating a settlement so you can move forward and pursue an alternate career is often the best strategy.

 

What are the Minimum Weekly Workers Compensation Payment Amounts in Virginia?

 

The General Assembly has also established minimum compensation rates for incapacitated workers. 

 

Here are the weekly minimum workers compensation payment rates for the past four years:

 

• 2022: $322.50 payable per week

 

• 2021: $298.75 payable per week

 

• 2020: $284.24 payable per week

 

• 2019: $275.50 payable per week

 

Make sure any proposed Workers Compensation Award Letter uses the minimum compensation rate if you earn less than $450.00 per week. 

 

Can I Amend the Average Weekly Wage?

 

Yes. But it depends on where you are in the litigation process. 

 

You are not stuck with the average weekly wage on your claim for benefits form if the evidence (including pay records) establishes a higher salary. 

 

But once the Commission has ratified an average weekly wage (through award agreement or judicial opinion), you cannot amend the figure unless a specific exception applies. 

 

For example, the Commission may change the average weekly wage if the awarded figure resulted from fraud, a mutual mistake of fact, a calculation error, or imposition.

 

What Average Weekly Wage Applies if I Get Hurt in a Second Accident with the Same Employer?

 

When you lose time and money because of a second accident with the same employer, the AWW for the second accident is calculated independently of the first injury.

 

This rule may cause financial loss if the second accident occurs when you work light duty at a lower wage.

 

What Earnings Determine My Workers Comp Wages if I Received a Promotion Soon Before the Accident?

 

The average weekly wage should reflect the increased pay if you receive a promotion before the injury.

 

Do not let the employer and insurer (or claim administrator such as Sedgwick or Gallagher Bassett) pressure you into averaging wages from the lower-level position.

 

Can I Exclude Lower Training Wages from the AWW Calculation?

 

Yes.

 

Many employers pay employees lower wages during the initial training period, then increase earnings after a specific duration.

 

In some situations, you may exclude the lower wages during training from the AWW calculation.

 

I Would Have Received a Raise if I Was Not Hurt. Will Workers Comp Pay for This Missed Opportunity?

 

No.

 

Workers comp does not pay for diminished earning capacity or the missed opportunity to receive pay raises.

 

While on workers comp, you may learn that your pre-injury employer gave raises to people in your position. For example, you may be a labor union member who knew you would receive a yearly pay raise under a collective bargaining agreement (CBA), which is standard for employees such as flight attendants. Or a former co-worker may have told you about the increase.

 

Regardless, an employer’s post-injury pay raises do not affect how much workers comp pays under an award.

 

Special Situations: Calculating Average Weekly Wage and Comp Rates for School Teachers and Seasonal Employees

 

Your full-time job may be seasonal.

 

For example, some schoolteachers work ten or eleven months but elect to get paid over 12 months.

 

Similarly, you may be a seasonal worker with three to four busy months during the year and no work the rest.

 

Average weekly wage disputes are common in these cases.

 

But hold your position that your total earnings should be divided by the days worked, nothing more. The law supports it.

 

Cost of Living Adjustments When Receiving Benefits

 

You can receive a higher workers compensation payment if you are eligible for a cost-of-living adjustment (COLA) while receiving temporary total disability benefits.

 

These COLA benefits, however, do not apply to awards of temporary partial or permanent partial disability.

 

Read my article on Cost-of-Living Adjustments under Workers Comp for more information on this topic.

 

Get Help Calculating Your Average Weekly Wage to Get the Maximum Amount of Workers Comp Payments Possible

 

Calculating your AWW seems simple. But determining the right amount often results in litigation and the need for a trial because it is a significant number. 

 

Do not be surprised if the workers comp claim adjuster tries to find ways to lower the amount you receive. Instead, obtain the wage evidence you need and hire a top-rated attorney. 

 

Remember – A minor mistake or inaccuracy in calculating your average weekly wage could cost you tens of thousands of dollars in workers comp payments and reduce your claim’s settlement value.

  

If you have any questions, call me for a free consultation: at (804) 251-1620 or (757) 810-5614. 

 

Let’s start on the path to a better recovery.