Part 1 of 3: Workers’ Comp Formula

Calculation of wage loss benefits when the insurance company makes an error.

Most employees hurt at work get medical treatment and quickly return to their jobs. Sometimes an employee is unable to work for a period of time. Wage loss benefits under workers’ comp begin on the 8th day. They continue for as long as an employee is disabled.

The amount paid should equal 80% of the employee’s after-tax average weekly wage. This is calculated using the highest 39 paid weeks during the 52 weeks before injury. Overtime, premium pay, bonuses, discontinued fringe benefits, and even wages from a second job can be included. Calculation of wage loss benefits also requires knowing an employee’s tax filing status and number of dependents. Tables provided by the State of Michigan give the weekly comp rate.

Insurance companies frequently underpay disabled employees. This usually occurs when a claims adjuster estimates the average weekly wage instead of obtaining actual wage records from the employer. Here is an example of a common math error.

Example of math error

Kyle is a married man who lives with his two children in Monroe. He works as a machine operator and injured his back while lifting a heavy part. He is paid $18.00 per hour and works 10 hours of overtime each week.

The insurance company calculated $720.00 for his average weekly wage. This was based upon $18.00 per hour x 40 hours per week. His weekly rate is $477.11.

Kyle recognized that his overtime had not been included. He obtained a copy of his wage records showing that he earned an average weekly wage of $900.00. His weekly rate should be $574.58.

Michigan Workers Comp Lawyers never charges a fee to evaluate a potential case. Our law firm has represented injured and disabled workers exclusively for more than 35 years. Call (844) 201-9497 for a free consultation today.

Related information:

Maximum weekly comp rate for 2018

Photo courtesy of Creative Commons, by Sean MacEntee.

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