Workers who regularly work overtime get their time-and-a-half rates figured in the computation for disability benefits.
An Oregon Court of Appeals recently ruled that a claimant’s regular work includes overtime for purposes of determining worker’s compensation benefits. For Wisconsin workers, this issue was settled decades ago. Regularly scheduled overtime counts towards calculating the employee’s average weekly wage, which is the basis for payment of workers’ compensation benefits.
Workers in Wisconsin are entitled to two-thirds of their gross average weekly wage before taxes. All workers’ compensation benefits are tax free. The idea of paying two-thirds was to reflect most workers’ average take home pay, so they would suffer no significant wage loss during a period of injury.
Computation for Wisconsin Workers’ Benefits
For Wisconsin workers, the average weekly wage is the higher of the employee’s hourly wage multiplied by the hours regularly scheduled to work at the time of injury or, the actual gross earnings during the 52 week period before the injury divided by the number of weeks worked during that period. The higher value is the employee’s average weekly wage for benefit calculation purposes.
When an employee is injured, the employer routinely submits a WKC-12 report to the worker’s compensation insurance company, which specifically declares the injured worker’s average weekly wage. I often see reports that omit overtime from the calculation.
Worker’s Regular Schedule
Computation for injury benefits should be based on a worker’s regular schedule. A regular schedule refers to the typical work schedule designed by the employer for employees doing the injured worker’s type of work for at least a 90-day period prior to the date of the injury. This means that overtime hours may or may not be part of the regular schedule.
If the injured worker was regularly scheduled to work overtime hours (with the corresponding premium pay – usually at time and a half) for at least a 90 day period prior to the injury, then the hourly rate including the overtime premium pay, must be used to calculate the average weekly wage.
For example, if an employee has an hourly rate of $10, then his workers’ compensation benefits should be computed based on a $400 average weekly wage. However, if the same employee has a regularly scheduled 45-hour work week at least 90 days before he incurred his injury, then he has an average weekly wage of $475.00 (earning $10 per hour plus time and a half after 40 hours= $10 x 40 plus $10 x 15). This amount, not the $400 basic wage, should be used to compute for his benefits, thus yielding an additional $50 per week in Temporary Total Disability benefits.
Additional items of value are also included as part of the average weekly wage. Specifically, these include incentive pay, shift premium pay, tips, profit sharing, and bonuses. Additional things of value include employer-paid room and board, free meals, rent remission, and housing or apartment costs including utilities. Unfortunately for Wisconsin workers, fringe benefits like employer-paid health insurance and employer contributions to 401(k) investment plans are not part of the average weekly wage calculation (Theuer v. LIRC 2001, Wi 26).
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