How to Calculate Lost Earnings After a Work Injury
Workers' Compensation pays people with an injury or illness for their lost earnings. State and federal Workers' Compensation laws each have a different method for determining the payment amounts. For every injured worker, the calculation involves basic steps for determining average earnings, lost work time, and lost earnings.
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Things You'll Need
- State or federal workers compensation statute
- Count for actual lost work time
- Earnings records for before injury or illness
- Earnings records for period of injury or illness
Instructions
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1
Determine the Workers' Compensation law that covers your injury or illness. The typical work injury is covered by the state's Workers' Compensation law. The federal government provides Workers' Compensation to certain maritime and ship workers under laws like the Longshore and Harbor Workers Act. Look up the state or federal law to see if your injury is covered.
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2
Assess your of injury or illness. States use lost earnings payments to compensate temporary disability. Workers with a permanent disability are compensated with amounts listed in a schedule for a particular injury. These amounts are intended to cover lost earnings for these workers.
The lost earnings calculation method depends on whether the worker has a total or partial disability. With a total disability, the worker cannot return to work to perform the same kind of work. Inability to do work suitable for their position keeps the person out of the workplace entirely. A worker who can return to work, but is not offered a suitable position can also receive total disability payments. A worker with a partial disability can fulfill duties, but not enough for the same full pay.
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3
Determine your average weekly wage before injury or illness. Look up the state or federal method in the statute. Use the method's work period and pay rate time unit (hours, days or weeks) for your employment type. Note that the rules are not the same for long-term employees, recently hired employees, and employees with variable schedules. Typically, a worker mutiplies a work period by the pay during the time unit and then divides the number into a weekly amount. However, you might have to use a standard pay or the wage rate agreed to in your contract instead. Check your law.
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4
Find how much work time you lost under the Workers' Compensation statute. According to the law, the period begins after you have reported the injury or illness to the employer. Count any time you will be unable to perform at least part of your work. Limit the period to no longer than the maximum weeks allowed.
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5
Calculate the earnings lost because you are unable to work. Workers with a total disability multiply average weekly earnings by the total number of weeks out of work. For a partial disability, the worker mutliples the difference between average earnings and partial earnings by the total number of weeks.
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6
Calculate the lost earnings paid for compensation. Multiply the the earnings lost by the state or federal rate, typically two-thirds. Make sure the weekly benefit amount is between the minimum and maximum amount allowed. If low, use the minmum. If high, use the maximum.
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Tips & Warnings
• If you are out of work entirely on some days and can do partial work some days, use the total disability calculation for lost earnings on the out days and the partial disability calculation for the partial work days.
• Look up which kinds of pay the statute covers in addition to regular wages. Overtime, tips and payments for work outside the employment might be covered. The term 'wages' includes all amounts allowed by the statute.
• Remember to offset the benefit amount by other payments for lost work, including unemployent benefits and federal disability benefits. A worker can receive both state and federal Workers' Compensation, but must offset the amounts. The offset rules are in the statute.
• Remember to write down the weekly lost earnings from step five. Totally disabled workers use the full average weekly earnings. Partially disabled workers use the difference in earnings. You can find the weekly compensation benefit by multiplying this number by the rate.
