Injured workers frequently ask this question when trying to get the workers’ compensation benefits they need. Usually, the worker raises the question because the number provided by the insurance company just does not seem right. Regardless, it is often a source of confusion. In many cases, the insurance company adjuster does a poor job of explaining how average weekly wage is calculated and why it is important.
Your average weekly wage is important in calculating the benefits owed you for any disability. Alabama law places caps (or maximum amounts) on benefits. However, generally a higher average weekly wage means greater benefits to you if you suffer any type of disability.
How is this number calculated? The law can be complex. Also, the law seems to change frequently due to legislative changes and new court cases. So, if you are concerned about the number that the workers’ compensation carrier says is your average weekly wage, you may want to consult an experienced workers’ compensation attorney. Because the law is complex and subject to many issues, I have had to take this issue to trial in many cases. So, what are the formulas for calculating average weekly wage?
- Calculate your average weekly earnings for the 52 weeks (one year) immediately preceding the injury. In other words, the employer takes your earnings for an entire year leading up to your injury and figures a weekly average. This is the method required by Alabama law if you worked at your job for at least a year leading up to your injury. Under this method, you will get the benefit for any periods of overtime you worked in the last year. However, you may also have less average earnings if you lost hours of work during the year for any reason. If you lost more than 7 days of work in a row during the 52 weeks, then the calculation should take the lost time into account and be calculated based on less than 52 weeks.
- If your employment is less than the 52 weeks leading up to your injury, then your earnings are divided by the weeks (and parts of weeks) that you did work for that employer prior to your injury. This is fairly simple. If you worked in your job for less than a year prior to getting hurt, then you calculate the average weekly wage by getting an average based on the number of weeks you did work. However, Alabama law says that this method can only be used if the results are just and fair to both parties. It is this principle of fairness which often leads to a dispute at trial. If this method is not fair, then Alabama law provides a third method to calculate average weekly wage.
- In limited situations your average weekly wage can be based on a similar employee. This method is only available in limited circumstances. Basically, you have worked less than 52 weeks for your employer. And, it is not practical to calculate an average based on the actual number of weeks you did work. Maybe you just worked a few days prior to your injury. Maybe the job was seasonal. In those cases, the best method is to look at the wages of another employee who has held your position over a period of time.
Another factor to consider in calculating your average weekly wage is the value of certain fringe benefits, like health insurance. Some fringe benefits, like health insurance, are very valuable. The money your employer pays for certain fringe benefits can be added to your average weekly wage if your employer does not continue providing these benefits to you after your injury. Many times, insurance carriers will not include this additional compensation in their calculation of average weekly wage. Yet, it can make a significant difference.by Jeff Blackwell