Average Weekly Wage on a Weekly, Monthly, Seasonal or Annual Basis in Louisiana Workers Compensation

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How is the Average Weekly Wage Calculated for Work Done on a Weekly, Monthly, Seasonal or Annual Basis in Louisiana Workers Compensation?

Louisiana law provides for a variety of means of calculating an average weekly wage, depending upon whether the injured worker was paid by the hour, the month, the year, or on some other basis.

Louisiana law applies specific mathematic formulas, depending upon the method of payment of wages, to determine the correct calculation of an injured employee's average weekly wage.

This average weekly wage serves as the basis for calculating the actual benefit; if a total and permanent award is involved, for example, 66 2/3% of the average weekly wage would equal the weekly benefit, subject to applicable maximums and minimums.

An outline of the formulas used to determine average weekly wage of an injured employee - who is paid on a Weekly, Monthly, Seasonal or Annual Basis - is as follows:

(1)  Weekly wages: Simply use the employee's weekly salary.

(2)  Monthly wages: Take the employee's monthly salary, multiple it by 12, and then divide it by 52.

(3)  Seasonal employment: Take the employee's annual salary and divide it by 52. Specific rules exist for seasonal employees employed less than a year. A seasonal worker is someone who regularly works less than 44 weeks per year.

(4)  Annual wages: Take the employee's annual salary and divide it by 52.

Employees paid on a weekly, monthly, seasonal or annual basis should separate out any tips or bonuses, and use the calculation method found under "wages based on unit, piecework, commission or other basis" for any tips or bonuses.

No fringe benefits or other compensation are to be included in calculating the average weekly wage, unless these benefits or compensation are taxable as income. 

Again, the average weekly wage must typically be multiplied by two-thirds (2/3) to determine the exact amount of the employee's weekly check, or different calculations and adjustments can be made based on the type wage benefit.

The Average Weekly Wage in Louisiana Workers Compensation

In order to calculate any type of lost wage benefit - including benefits for employees paid on a weekly, monthly, seasonal or annual basis - an injured employee must determine his or her Average Weekly Wage, using the employee's gross wages.

In most cases, Louisiana worker compensation will provide an injured worker with a weekly indemnity check for 2/3 (two-thirds) of the employee's average weekly wage, if the employee is physically unable to work due to an injury on the job.

Gross wages mean the total amount of pay, before deductions and taxes, Social Security, retirement, etc.

If the employee had an illness, instead of an accident or injury, the date of accident is considered to be the last day the employee worked or had harmful exposure.

Gross Wages

Gross wages are defined as the total amount of an employee earnings before deductions - such as deductions for taxes, social security, health insurance, or retirement plans - are taken from the paycheck.

If an injured worker is a salaried employee, the gross wages are the amount of his or her annual salary.  

Under Louisiana workers compensation, gross wages may also include taxable fringe benefits, such as the payment of some business expenses or amounts taken out of an employee's income and deposited into a pre-tax retirement account such as a 401(K).  

A good rule of thumb is that, if an employee is required to pay income tax on something, then likely it should be counted as gross wages for purposes of determining a Louisiana workers compensation average weekly wage.

The Average Weekly Wage is Set As Of the Date of Accident

The average weekly wage of the employee paid on a weekly, monthly, seasonal or annual basis is set as of the date of the accident.  

So for example, even if the employee's salary or pay rate was temporarily higher or lower than usual at the time of the accident, the employee's average weekly wage is based on this hourly rate at the time of the accident.

Maximum and Minimum Limits

Lost wage benefits are subject under Louisiana law to both a maximum compensation rate and a minimum compensation rate.

The maximum and minimum rates are determined and adjusted each year, but the compensation rate is determined at the time of injury. 

So unfortunately, some injured workers - who are employed in middle or high paying jobs - will not receive full lost wage benefits based on their entire average weekly wage.

Present Maximum Rate Limits on Indemnity Benefits

For example, as of 2019, Louisiana law caps the maximum benefit amount based on an average weekly wage of $886.30.

So if an employee actually earns more than $886.30 per week, sadly this employee will only receive benefits based on the $886.30 wage rate.

Also, as of 2019, Louisiana law caps the maximum indemnity benefit amount at $655.00.

So, for an accident or injury that occurred in 2019, no matter how much the employee earned before the accident or injury, the employee will not receive a weekly indemnity check for more than $655.00.

This maximum amount will remain the same through out the injured worker's claim.

Present Minimum Rate Limits on Indemnity Benefits

If the average weekly wage of an injured employee falls below the minimum compensation rate, the compensation rate for that employee is the employee's actual average weekly wage.

But the minimum compensation does not apply to Supplemental Earnings Benefits (SEBs) and Permanent Partial Disability (PPD) benefits. 

So, for example, as of 2019, Louisiana law caps the minimum indemnity benefit amount at $177.00.

So, for an accident or injury that occurred in 2019, no matter how little the employee earned before the accident or injury, the employee - if totally disabled - will not receive a weekly indemnity check for less than $177.00.

This minimum amount will remain the same through out the injured worker's claim.  

Employees Paid on a Weekly Salary or Rate in Louisiana Workers Compensation

In order to determine the average weekly wage of an injured employee who is paid on a weekly basis - meaning with a weekly salary or at a weekly rate - the employee should simply use the employee's weekly salary or rate.

In other words, the employee's weekly salary or rate is the employee's average weekly wage.

Louisiana workers compensation courts have consistently used the employee's weekly salary or rate as the employee's average weekly wage.

However, it should be noted that the Louisiana Workers Compensation Act does not actually specify what is to be done if the person is employed on a weekly-wage basis.

This omission was likely unintentional, and does not matter for almost all injured workers.

But, now suppose that an employee is paid on a weekly rate but that rate tends to fluctuate somewhat from week to week, for example in a seasonal employment situation.

In such a case, taking solely the weekly rate at the time of the accident might not be an accurate measurement of earning capacity.

But in such a case, the workers compensation judge - because the statute does not specifically address what is to be done if the person is employed on a weekly-wage basis - will simply use his or her sound discretion based on the facts of the case in order to determine the most accurate measurement of earning capacity.

Employees Paid on a Monthly Salary or Rate in Louisiana Workers Compensation

In order to determine the average weekly wage of an injured employee who is paid on a monthly basis - meaning with a monthly salary or at a monthly rate - the employee should simply take the employee's monthly salary, multiple it by 12, and then divide it by 52. 

In other words, the employee's average weekly wage is the employee's monthly salary or rate times 12 divided by 52. 

So for example, if an injured employee is paid $3,000.00 per month, then this employee's average weekly wage is $692.31.

That is: $3,000.00 times 12 divided by 52 equals $692.31.

Monthly Salary with Added Bonuses or Commission

However, what if the monthly income is made up of both a salary and a designated percentage of sales, as is the case with some sales personnel?

In such a case, the salary portion and the commission portion would each be handled separately.

That is, only the salary portion would be multiplied by twelve and then divided by four, and the commission portion should be calculated under the rules applying to commission income.

Then the commission figure would then be added to the salary amount (calculated by multiplying by 12 and then divided by 4), and then this total would constitute the average weekly wage of a person employed on both a salary and a commission basis. 

Employees Paid on a Seasonal Salary or Rate in Louisiana Workers Compensation

In order to determine the average weekly wage of an injured employee who is paid on a seasonal basis, the employee should simply take the employee's annual salary or income and then divide it by 52. 

In other words, the seasonal employee's average weekly wage is simply his or her annual earnings divided by 52. 

Seasonal employment is defined as employment that customarily operates during regularly recurring periods of less than forty-four weeks annually. 

So a seasonal worker is defined as someone who regularly works less than 44 weeks per year. 

Also, the annual earnings used to calculate the average weekly wage of a seasonal employee are the employee's annual earnings in all employment, not just the seasonal employment.

Seasonal Employees Employed Less Than a Year

Specific rules exist for seasonal employees employed less than a year.

Specifically, if the employee was not engaged in seasonal employment for more than a year prior to the accident, the employee's annual income is deemed to be the average annual income of other employees of the same or “most similar” class working in the same or “most similar” employment for the same employer.

In such a case, the workers compensation judge will typically use his or her sound discretion based on the facts of the case in order to determine the most accurate measurement of earning capacity.

Employees Paid on an Annual Salary in Louisiana Workers Compensation

In order to determine the average weekly wage of an injured employee who is paid on a annual basis - meaning with an annual salary or at an annual rate - the employee should simply take the employee's annual salary and then divide it by 52. 

In other words, this employee's average weekly wage is the employee's annual salary divided by 52. 

So for example, if an injured employee is paid $26,000.00 per year, then this employee's average weekly wage is $500.00.

That is: $26,000.00 divided by 52 equals $500.00.

Annual Salary with Added Bonuses or Commission

If the employee's income is made up of both an annual salary and a bonus or commission, then the salary portion and the bonus or commission portion would each be handled separately.

In such a case, only the salary portion would be divided by four, and the bonus or commission portion should be calculated under the rules applying to bonus or commission income.

Then, the commission figure would then be added to the salary amount (calculated by dividing the annual salary by 52), and then this total would constitute the average weekly wage of a person employed on both an annual salary and a bonus or commission basis. 

Teachers Who Receive An Annual Salary But Who Only Work Nine Months Per Year 

Typically, teachers receive a salary which is quoted on an annual basis, even though the required work of teachers usually spans only nine or ten months.

Should a teacher's average weekly wage be the annual salary divided by fifty-two, or rather perhaps by thirty-six or forty or some other number?

Basically, like other employees, a teacher's annual salary will typically be divided by 52 in order to determine the teacher's average weekly wage.

Louisiana workers compensation courts have found that teachers are to be considered annual employees who simply can chose to be paid in nine or ten months rather than in twelve months.

The Louisiana Statute for Calculation of Lost Wage (Indemnity) Benefits for Employees Paid on a Weekly, Monthly, Seasonal or Annual Basis in Louisiana Workers Compensation

The Louisiana statute outlining calculations for lost wage benefits for employees paid on a weekly, monthly, seasonal or annual basis is La. R.S. 23:1021.

In pertinent part, this statute reads as follows:

(13) "Wages" means average weekly wage at the time of the accident. The average weekly wage shall be determined as follows:

(a) Hourly wages.

(v) For an employee in seasonal employment, his annual income divided by fifty-two.

(aa) For purposes of this Subparagraph, seasonal employment shall be any employment customarily operating only during regularly recurring periods of less than forty-four weeks annually.

(bb) If the employee was not engaged in the seasonal employment more than one year prior to the accident, his annual income shall be the average annual income of other employees of the same or most similar class working in the same or most similar employment for the same employer or, in the event that the employee was the only individual engaged in that specific employment, then his annual income shall be the average annual income of other employees of the same or most similar class working for a neighboring employer engaged in the same or similar employment.

(b) Monthly wages. If the employee is paid on a monthly basis, his monthly salary multiplied by twelve then divided by fifty-two.

(c) Annual wages. If the employee is employed at an annual salary, his annual salary divided by fifty-two.

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