Calculating Average Weekly Wage and How It Effects the Value of Your Claim
One of the initial points of litigation in any Workers’ Compensation claim is setting the claimant’s average weekly wage. There are a number of ways to calculate a claimant’s average weekly wage. Understanding the different ways in which to calculate an average weekly wage can be useful, as it can impact the value of a claim by thousands of dollars.
As an initial matter, a claimant’s average weekly wage is established after a carrier submits a C-240 payroll for the claimant. This form will detail both the claimant’s days worked and pay for the preceding 52 weeks. WCL §14 states that a claimant’s “average annual earnings shall consist of three hundred times a daily wage or salary for a six-day worker, and two hundred and sixty times the average daily wage or salary for a five-day worker…” The C-240 form provides a guideline for determining whether a claimant was a five-day worker (234 days worked in the preceding year), or whether a claimant was a six-day worker (270 days worked in the preceding year).
Using the correct calculation is vital in ensuring that the claim is valued correctly. Take the below example for instance.
Worker A worked 230 days in the preceding year over the course of 52 weeks and earned $52,000.00. At the initial hearing, Worker A’s average weekly wage is set at $1,000.00 using a weekly divisor. This results in a temporary total disability rate of $666.67.2.
Worker B also worked 230 days in the preceding year over the course of 52 weeks and also earned $52,000.00. However, at the initial hearing, Worker B’s average weekly wage was set at $1,130.43 using a 260-day multiple. This would result in a temporary total disability rate of $753.62.
As shown above, calculating the average weekly wage can result in a difference of almost one-hundred dollars per week in benefits, which over the course of a claim can easily turn into thousands of dollars. This also becomes a big factor in determining a claimant’s permanency award. Using the same figures as above, let’s look at what the difference in a permanency award would look like assuming that each worker was found to have a 25% Schedule Loss of Use of the arm. A 25% Schedule Loss of Use of the arm would entitle a claimant to 78 weeks of compensation at the temporary total rate.
Worker A: 78 x $666.67 = $52,000.26.
Worker B: 78 x $753.62 = $58,782.36.
Whether the claim is litigated to permanency or is closed via a settlement, all claims are valued based off the claimant’s average weekly wage. This is why properly litigating a claimant’s average weekly wage is a crucial part of a claim for any insurance company. If the claimant’s average weekly wage is not set properly, it can cost the insurance company potentially tens of thousands of dollars over the course of a claim.
For more information regarding average weekly wage calculations, please contact Earl Menard, Esq., email@example.com or at (201) 880-9374.