When an injured workers misses time from work, workers’ compensation laws provide a system of wage replacement. In other words, workers’ compensation insurance companies must pay the injured workers a percentage of his or her former wages. It is often said that workers’ compensation is meant to compensate injured workers for having lost the ability to earn wages.
Generally, a totally disabled worker in Massachusetts is entitled to sixty percent of the former wage, and a person who is partially disabled is entitled to forty-five percent.
Often, issues arise when determining what the employee’s former wage is. The former wage, known as the “average weekly wage,” is generally determined by taking all compensation paid to the employee during his or her last fifty two weeks of work before the injury, divided by fifty two.
Certain benefits, such as retirement contributions, company cars, travel costs, meals, and similar benefits are included in determining the employee’s average weekly wage.
Taxes and other deductions are generally not included. And since workers’ compensation payment are not taxable, the percentage paid to the employee is not necessarily as big of a reduction in weekly pay as one might think.
For example, if a totally disabled employee used to earn $1,000.00 a week in wages and benefits, but only took home $600.00 after taxes and deductions, the employee’s average weekly wage is $1,000.00, since taxes and deductions are not included. The employee will receive sixty percent of the average weekly wage for total disability, and thus the employee will receive $600.00 per week in workers’ comp, the same amount as before the injury.
Sometimes, an employee hasn’t worked for the employer for fifty two weeks before getting hurt. The law allows for flexibility in determining an employee’s average weekly wage. Thus, a worker who is only employed for a couple of weeks can ask that his or her average weekly wage be based off of a comparable employee working in the same department.
The average weekly wage can also be adjusted to account for naturally expected increases. For example, where an apprentice ironworker is injured before achieving the rank of journeyman. In that situation, the employee can file a claim to have his or her average weekly wage calculated using the wages of a journeyman, rather than an apprentice. In Massachusetts, this is known as a Section 51 claim.
As you can see, calculating an employee’s average weekly wage can get complicated. Insurance companies will use complexities to try and pay injured workers as little as possible. If you are receiving workers’ compensation and have questions about whether you are receiving the correct amount, please contact me at 508.822.2000.
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