How Are Workers’ Compensation Benefits Calculated in Pennsylvania?
When you are hurt on the job in Pennsylvania, your employer is required to provide you with workers’ comp coverage. This coverage will pay for your medical bills as well as mileage to and from treatment. However, the coverage also covers wages you may lose if you cannot work due to your injury.
It is important to understand that, under workers’ comp, you will not receive your full salary, but a portion of the income you were making prior to your injury. Understanding how workers compensation benefits are calculated in Pennsylvania can better prepare you for the income you will receive as you recover from your injury.
Formula Seems Simple
An initial review of how workers compensation benefits are calculated in Pennsylvania seems fairly straightforward. Your gross wages for the full year prior to the injury are divided into 13-week segments, or quarters. Any tips, boarding payments or bonuses you receive as part of your salary are divided by 52 weeks and added to the total.
The quarter in which you made the most money is then divided by three to determine the pre-injury average weekly wage. Two-thirds of that total will be paid to you as workers’ comp lost wages benefits. Although the process seems relatively simple, other factors may exist that can complicate the process.
Factors That Affect Lost Wage Benefits
There are several factors that can make calculating workers’ compensation benefits more difficult. You may not have worked for the employer for one year prior to suffering a workplace injury. Issues also arise when you receive commission on sales as part of your salary.
If you are unable to work, you cannot make sales, which means there are no commissions. For many people, this can result in a significant loss of income. For this reason, Pennsylvania has established rules that make the calculation fairer, but also make them more complicated.
Maximum Weekly Compensation Rate
Each year, the Pennsylvania Department of Labor and Industry sets what is known as the Maximum Weekly Compensation Rate. This means that you can only receive two-thirds of that rate as your workers’ comp lost wages benefit, even if you make significantly more than that.
In 2016, the rate was set at $978 per week for injuries that occur in 2016. For an injury that occurred in 2015, the rate is set at $951 per week. By the same token, low wage earners are provided additional payments based on their annual salary.
In 2016, if you earned between $733.50 and $543.33 per week, you will be provided a weekly compensation of $489 per week, regardless of your income. If your weekly wage is $543.32 or less, you receive 90 percent of your total salary rather than two-thirds.
If you have not worked at your employer for more than a year, the employer must look at how long you were employed. If you have not been there for three consecutive 13-week periods, the average weekly wage is based on the average gross income of the period immediately preceding the injury.
If you have not worked 13 weeks for the employer, the wage is determined by multiplying the hours per week you were expected to work by the hourly wage. Unfortunately, there have been cases where the employer reports that an employee was required to work far less hours than the employee actually believes they were.
It is also important to remember that workers compensation benefits are calculated on gross income and not take-home pay. This is a common error on both the employee and the employer.
Income that is not taxed is not included in the average weekly wage. If you are a server in a restaurant and do not report your tip income on your taxes, you may not be permitted to claim those tips as salary in a workers’ comp claim.
It is important to note that an error in the calculation of workers’ comp benefits that results in underpayment is a violation of the law. If the miscalculation is discovered, even three years later, the employer is responsible for paying any back money that is owed to the employee plus ten percent interest for each year it was not paid.
In addition, the employer may face fines for violating the Workers’ Compensation Act. If you have been injured at work, or if you have been collecting workers’ compensation and you feel the calculations were incorrect, contact Lundy Law today for a review of your case. You can arrange your initial consultation by calling 1-800-Lundy Law or by completing the easy form on our website in order to have a knowledgeable workers’ compensation attorney review your case.