How is Workers’ Comp Calculated?
What is your case worth?
If you’re injured at work in Pennsylvania and cannot do your job, you’ll be asking yourself the all-important question, “How much money will I receive?” The answer is not simple.
The amount of your Workers’ Comp. benefits is based on the wages you earned at your job. If you worked at your job for more than one year before you injured yourself, then your employer must calculate your wages for each of the four quarters preceding your injury. In other words, if you sustained your injury on July 1, 2019, your employer must calculate your wages for April 1-June 30, 2019; January 1-March 31, 2019; October 1-December 31, 2018; and July 1-September 30, 2018. Any bonuses, commissions, or tips must be included in your wages. A formula is then utilized to calculate your “average weekly wage” – a number which fairly approximates how much you earned at your job on a weekly basis.
The next step is plugging your average weekly wage into a chart, which will reveal your weekly Workers’ Comp. rate. If your injury occurred in 2019, and your average weekly wage is $1,573 or higher, then you would receive the maximum weekly amount under Pennsylvania Workers’ Compensation law — $1,049. (The number would be slightly less if your injury occurred in a recent year before 2019, slightly more if it occurs in 2020.) So even if you earned $2,000 or $2,500 per week, your weekly Workers’ Comp. benefits would be capped at $1,049.
If your average weekly is between $786 and $1,572 (again, this is based on the 2019 table), your Workers’ Comp. benefits would be 2/3 of your average weekly wage. Therefore, if your average weekly wage is $900, then you would receive $600 per week in Workers’ Comp. benefits.
If your average weekly wage is between $583 and $785, your rate will be between 2/3 and 90%; anything less than $583 will entitle you to 90% of your average weekly wage. So if your average weekly wage is $500, you would receive weekly Workers’ Comp. benefits of $450.
Of great importance, your Workers’ Comp. benefits will be entirely non-taxable; no taxes will be deducted, and you will not have to report the money on your tax return. So while the amount of your Workers’ Comp. benefits will be less than your wages, your “take home” should be at least as much as what your were bringing home after taxes. The exception is if you are a very high wage earner and your benefits are capped. If you were earning $2,000 per week, your $1,049 in Workers’ Comp. benefits would be less than your take home pay when you were working.
Let’s look at another scenario. Suppose you had not been working at your job for more than a year when you were injured. Then the calculation of your Workers’ Comp. benefits is based on your earnings in any completed calendar quarters. If you were working for ten months, the last three quarters are considered; if you were working for four months, your last quarter is considered.
What happens if you were injured your first week on the job? Are you barred from receiving Workers’ Comp. benefits because your injury occurred so early in your employment and you have not completed any quarters? Fortunately, your claim cannot be denied for that reason – you’re entitled to Workers’ Comp. benefits whether you were injured on the first day of your job or have been working at your employer for thirty years.
But how is your rate determined if you’re injured the first week at a new job? There is no track record of wages to consider, so your rate is based on your expected wages. If you’re told when you were hired that you will work forty hours per week and get paid $20 per hour, your average weekly wage will be $800. If you were told that your base salary would be $600 per week and you could expect to earn commissions of another $600 per week, your average weekly wage will be $1,200.
Insurance companies sometimes underestimate an injured worker’s average weekly wage, so if you get hurt on the job, it’s important for you to contact Pearson Koutcher Law and speak with one of our experienced and highly knowledgeable Workers’ Comp. lawyers. We will determine if your average weekly wage is calculated correctly and advise you with regard to any other issues in your claim.