Properly calculating the average weekly wage (“AWW”) is one of the more important aspects in evaluating a workers’ compensation claim. Knowing an injured worker’s AWW is necessary to properly calculate benefit payments and future exposure on a claim. Further, failure to calculate an accurate weekly wage can lead to a claim for penalties.
The calculation of the AWW is laid out in Neb. Rev. Stat. § 48-126. For continuous employment of an employee earning wages that are fixed by the day, hour, or by their output, the AWW is calculated based on his or her average weekly income for the six months prior to the accident. Therefore, a wage statement for the 26 weeks prior to the accident is needed from the employer. The wage statement will need to provide the hourly rate for each of the weeks, all hours worked with a designation as to the type of hours (i.e. regular, OT, Double Time, vacation, etc.), and other wages or bonuses paid. Note that overtime hours are included at the straight-time rate, unless the workers’ compensation insurer collects a premium based on the overtime. Shift Differentials, however, are included in the wage calculation. Abnormally low weeks are excluded, but abnormally high weeks are typically included. Gratuities, board, lodging, or similar advantages are only included if the money value of these items was fixed at the time of hire or if the insurer collects a premium based on the value of the gratuities. This applies to bonuses as well, unless the amount paid as a bonus is based on the output of the employee, then it is included.
With the above information, the weekly wages can be determined and then averaged to determine the AWW. Note that simply relying on a paycheck or gross wages is often not enough to calculate to the proper AWW. For instance, gross wages often include pay at time and a half for overtime and, thus, overstate the average weekly wage.
Please note that when switching to permanent disability benefits for continuous employment you will again need to address the AWW. The AWW for permanent disability benefits must be based on at least a 40-hour week or 5-day work week. Thus, a part-time employee working 25 hours per week (or 3 days per week) will see their AWW increase for purposes of permanent disability benefits as the AWW will be their hourly rate times 40 hours (or daily rate times 5). However, an employee working an average of 45 hours per week will have the same AWW for temporary and permanent disability benefits. For seasonal employment, or employment dependent upon the weather, the calculation is different. The employee’s weekly wages will be one-fiftieth (1/50) of the total wages the employee has earned from all jobs during the year immediately preceding the injury. If exceptional cause can be shown as to determine that the calculation is not a fair representation of the earnings of the employee the period of calculation shall be extended so far as to give basis for a “fair ascertainment” of the employee’s average weekly earnings.
The AWW calculation is often an overlooked aspect of a work comp claim, but failure to calculate it correctly can have consequences. Therefore, if you run into a difficult wage calculation situation or you are simply unsure whether your calculation is correct, please feel to contact one of our attorneys. We can provide advice on the wages and hours to include and resources to aid with future calculations.