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How Is Workers Comp Calculated?

how workers comp calculated

Are you getting the fair compensation amount you deserve? Calculating workers’ compensation can be confusing without proper knowledge, and you might settle for a lower amount than you deserve. Many people face the consequences of accepting insufficient compensation, leading to financial difficulties for ongoing treatment and daily living expenses due to their injury.
In this blog post, we will guide you how is workers’ comp calculated and ensure you have achieved a fair settlement amount.

How Workers' Compensation Payments Are Calculated

If you’re injured at work, you’ll receive ⅔ of your wage without any tax as compensation. Here’s how workers comp coverage are calculated: 

Determining the Average Weekly Wage (AWW)

AWW is a key factor in calculating your compensation. It is based on your weekly wages before the injury. AWW can vary depending on your work type, such as full-time or seasonal employment.

To calculate your compensation rate you need to calculate AWW, using these steps:

  1. Calculate Total Wage: Add up your earnings for the year before the injury.
    Determine Daily Wage: Divide the total wage by the days you worked.
  2. Project Annual Earnings: Multiply the daily wage by 260 (assuming full-time work of 5 days per week, 52 weeks a year).
  3. Average Weekly Wage (AWW): Divide the projected annual earnings by 52.

This gives you your Average Weekly Wage (AWW).

For seasonal workers, follow the same process but multiply your daily wages by 200 instead of 260 to account for the shorter working period.

Calculating Compensation Rates

Compensation rates are calculated as ⅔ * Average weekly wages of a year.

  • For temporary disability, your average compensation rate would be calculated as ⅔ *$1,704 or $1,136 per year in 2025.
  • For permanent disability, your average compensation rate would be ⅔ *$160 or $290 per week in 2025.

However, this might vary according to your state, inflation, and the level of injury.

Accounting for Medical and Rehabilitation Costs

In addition to wage replacement benefits, workers’ compensation also covers medical and rehabilitation costs. This includes treatment for your injuries and vocational training to help you acquire new skills for a job that accommodates your injury.

If you need to travel for medical treatment, you are reimbursed at $0.70 per mile. In cases of permanent injury, you may receive up to $6,000 for vocational training to help you transition into a new role or career. 

What are the Factors That Determine Workers’ Compensation Payments

Type and Severity of Injury

Based on the severity of your case, the compensation differs. If you have a temporary injury, then the compensation is calculated for the time you need to recover and get back to normal life or work. If the injuries result in permanent disability the compensation comes along with the additional benefits to recover including medicinal bills, lost wages, future earnings capacity, and vocational training.

If someone dies, the death compensation their family receives for both economic and non-economic losses. The non-economic loss is usually $250,000 for each deceased person, plus an extra $100,000 for the spouse and each dependent. 

Average Weekly Wage (AWW)

The Average Weekly Wage (AWW) varies based on your earnings. Some state-specific rules include bonuses and overtime in the AWW calculation, while others do not. Additionally, states often set minimum and maximum limits for AWW to ensure fair compensation for all workers. 

State Regulations

State regulations vary, so the amount of compensation you receive can differ depending on the laws and regulations in your state. Each state has its own rules for calculating benefits, including wage replacement, medical care, and disability benefits.

What Are Temporary and Permanent Disability Benefits?

Temporary Disability Benefits

Temporary Disability Benefits refer to compensation provided to employees who are temporarily unable to work due to a workplace injury or illness. This type of disability is characterized by:

  • A limited recovery period during which the injured worker cannot perform their job duties.
  • The expectation is the worker will recover fully and return to normal work activities after healing.

Permanent Disability Benefits

Permanent Disability Benefits are compensation provided to workers who experience severe, long-lasting injuries or illnesses that:

  • Permanently impair their ability to work as they did before the injury.
  • Significantly affect their quality of life, limiting their ability to perform daily activities or live normally.

Caps and Limitations on Wage Benefits

Caps and limitations on wage benefits are the minimum and maximum amount set by state regulations to provide fair workers comp coverage for the victims of work injuries. Here’s how it works:

  • Even if you earn the maximum amount in a week, you are entitled only to the allocated amount for a work injury, & you won’t receive extra pay.
  • If you are severely injured but your weekly income is low, you will receive the maximum benefit for the injuries caused.
  • The time frame for temporary disability is 104 weeks, but it can be changed if you need more time and treatment to recover.
  • There’s a cap amount for permanent disability, but it may vary depending on the doctor’s recommendation and any additional costs for surgeries or recovery.

What can I do if my benefits claim is denied?

If your workers’ compensation claim is denied, don’t give up—stay patient and take action. Follow these steps immediately:

  • Consult your case with an experienced workers’ compensation lawyer.
  • Give the authority to handle the case to a lawyer and they will contact the employer and insurer in place of you.
  • They will identify the reasons for the denial of claims and collect witnesses, and evidence to validate that your accident is work-related.
  • They will negotiate with your employer and insurer, and appeal your case in court if necessary.

Hiring a worker’s compensation attorney ensures you get the maximum compensation you deserve for your losses.

Choose Roy Yang Law As Your Workers Comp Lawyer

At Law Offices Roy Yang Law, we are dedicated to representing workers’ compensation victims with sincerity and commitment. We have earned a reputation as one of the top attorneys in the field and a proven track record of success.

Sacramento Workers Compensation Lawyer - Roy Yang

Contact us today to ensure fair compensation for your losses without delays or denials, and to understand how workers’ comp is calculated. Consulting with us is completely free, and we only charge a fee if we successfully win your workers’ compensation case and secure your benefits.

Frequently Asked Questions About Workers’ Compensation

What If My Injury Prevents Me From Returning to Work?

If your average weekly wage varies, you can calculate it with the highest 52 weeks of earnings and make a fair compensation.

If your average weekly wage varies, you can calculate it with the highest 52 weeks of earnings and make a fair compensation.

Yes, the bonuses and overtime are included in AWW. However, some state specific rules don’t add them.

Need Help Calculating Your Workers’ Compensation Benefits?

Remember us for expert legal advice and support. Our team is here to help you calculate your fair compensation, ensuring you don’t face any unnecessary challenges during your recovery process.

Contact us here at Roy Yang Law, and let us guide you through the workers’ compensation system with confidence and ease. Your rights and well-being are our top priority.

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