I get a lot of questions about what the attorneys, judges, and insurance companies mean when they talk about the “average weekly wage” in the context of a workers’ compensation case.

In workers’ compensation law, the injured worker gives up his or her right to pursue a negligence or tort case against the employer and agrees to accept an amount of compensation computed by a schedule.

In exchange, the injured worker does not have to prove the employer was negligent or committed an intentional tort causing injury. In order to calculate the compensation necessary to replace an injured worker’s lost income, we use a formula. One essential part of that formula is the average weekly wage.

The average weekly wage is a number that is intended to represent the average amount of money that an employee has been paid by his or her employer under the contract of hire in effect at the time of the injury.

It is important to make sure that the employer or insurance carrier is calculating the average weekly wage correctly because it affects your right to indemnity benefits, loss of earning capacity, vocational rehabilitation, and potential penalties.

Under Nebraska workers’ compensation law, there are actually two different average weekly wages, although the results of the calculation might be the same; the “temporary” average weekly wage and the “permanent” average weekly wage.

The temporary average weekly wage is used to compensate employees for temporary total or temporary partial disability. The permanent average weekly wage is used to compensate employees for permanent partial disability or permanent total disability. In most cases, we look at the employee’s earnings for the twenty-six weeks preceding the date of injury and average the gross amount of money the employee earned per full week of work. We do not reduce the number for taxes, Social Security withholding, or child support obligations. We only use the wages for the job the employee was performing at the time he or she was injured, with very limited exceptions. So, if you’re injured performing your part-time job, we generally can’t use your full-time earnings. We remove any “abnormally low weeks” that do not fairly represent the employee’s earnings. A week might be abnormally low because the employee took unpaid time off to care for a family member or the employer did not have enough work for the employee to do that week. If a week is not fairly representative of the employee’s earnings, then it is excluded.

The average of those weeks is the temporary average weekly wage.

If, in any of the weeks used in the calculation, the employee did not work a full forty-hour week, then we increase the number of hours worked up to full-time and recalculate. That is the difference between the temporary average weekly wage and the permanent average weekly wage. In many instances, the numbers will be exactly the same, but sometimes they are not, and an injured worker needs to make sure he or she is being treated fairly under the law.
There are some special rules that come into play in this calculation. For instance, if the employee was paid “time and a half” for overtime, we generally count the overtime hour, but only include the “straight time” pay. If the employee’s work history is less than twenty-six weeks, we can sometimes use the wages of similarly situated employees to determine the employee’s average weekly wage. If the employee is a “seasonal laborer” ie, his or her employment is dependent on the weather, then we combine the employee’s income from all jobs he or she held in the prior fifty-two weeks and divide that number by fifty.

Once we have determined the temporary and permanent average weekly wage, we multiply those numbers by 67%. The resulting number is the benefit rate that the employee will be paid per week of compensation.

Of course, if you have questions about how your average weekly wage should be calculated or whether the insurance company is calculating it properly, please do not hesitate to contact our office. We would be more than happy to talk with you about your case.

About the author: Justin High

Justin High has been trying cases for over ten years. He has handled hundreds of cases in State and Federal Courts in Nebraska and Iowa. Justin has argued and won a variety of cases in the Nebraska Court of Appeals and Supreme Court. Outside the courtroom, Justin has presented at dozens of seminars educating clients and other attorneys on subjects like Electronic Discovery, Workers’ Compensation, and Personal Injury.

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