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Weekly Wages in the Context of Workers’ Compensation

An employee’s average weekly wage in the context of workers’ compensation benefits is the average amount of money earned in the typical work week before the injury or illness occurred.  The proper calculation of the average weekly wage is important as a significant amount of workers’ compensation benefits are paid in accordance with this figure.  If the average weekly wage is lower than it should be, the injured worker will be provided with less temporary disability, permanent disability, and dependency compensation.

An Example of Temporary Disability Benefits

For further clarification, let’s analyze an example in which an injured worker is provided with temporary disability benefits.  If the injured worker is unable to return to work when recovering, the state’s workers’ compensation law provides him or her with a weekly temporary disability benefit equating to 70% of the average weekly gross wage in the six months prior to the injury or illness.  This means an individual earning $20 per hour across a 40-hour workweek prior to the injury earns an average weekly wage of $800.  In this situation, the injured worker is legally entitled to $560 temporary disability benefits each week.  If the average weekly wage is estimated at $700 per week, the worker is only provided with $490 per week.

An Employee’s Average Weekly Wage

Calculating the average weekly wage is not as difficult as it might seem.  Here’s how to do it: Add the wages earned every week across the six months prior to the injury and divide it by 26.  The number 26 is used as this is the number of total weeks across a period of six months.  As an example, an employee who earns $1,000 per week in half the weeks yet only $950 each week in the other half of the weeks has an average weekly wage of $975.  This figure is determined by adding the 13 weeks of earnings at $1,000 to the 13 weeks of earnings at $975 and dividing by the 26 weeks.

However, if earnings remain consistent, the employee simply needs to multiply his or her rate of pay by the number of hours he/she or a person employed in a similar capacity works in a typical week.  As an example, an individual paid $12 per hour who typically works 35 hours per week has an average weekly wage of exactly $420.

There are some situations in which an employee cannot specify the exact number of hours worked each week.  If this is the case, multiply the rate of pay by the number of hours typically worked by an individual employed in a similar capacity in the same line of work or region.  Using the example detailed above, an individual who averages 40 hours per week has an average weekly wage of $480.

Additional Benefits Included in the Average Weekly Wage

Let’s take a look at additional benefits such as potential lodging and board.  Such extra benefits are included as a component of an employee’s average weekly wage when provided directly from the employer as a component of employee compensation.  Furthermore, tips earned amidst the course of employment from any party other than the employer are also a component of the average weekly wage.  However, these tips are only included in the calculation if the employee keeps a daily/weekly log of the amount of money received.  Those who fail to keep track of their tips might face a situation where a judge establishes an average weekly figure that is tacked onto the average weekly wage for workers’ compensation purposes.

Schibell Law Attorneys at Law are at Your Service

Our New Jersey workers’ compensation attorneys are here to help you maximize your compensation after suffering a work-related injury or illness.  Reach out to us at 732-774-1000 to schedule an initial consultation.

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