How Is the Average Weekly Wage Calculated for Employees of More than One Employer 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.
PART-TIME EMPLOYEES WHO WORKED TWO OR MORE JOBS IN LOUISIANA WORKERS COMPENSATION
The simple Average Weekly Wage calculation for a part-time employee with two or more jobs (who are “moonlighting”), where the work injury prevents wage loss in all jobs, is to:
- Add up the total actual hours worked for all employers for the four full weeks preceding the accident;
- Then divide that number of hours by four; and
- Then multiply that number by the employee’s hourly rate at the job where the employee was injured.
However, the total hours may not exceed 40 hours. If the average number of hours is over 40, then use only 40 hours.
Also, the employer in whose service the employee was injured is required to pay all the workers compensation benefits.
In other words, Louisiana law holds that when an employee is employed in “successive” employments, the employer in whose employ he is injured owes him applicable compensation, and that the benefits will be based on the average weekly hours which he worked in all of his employment or forty hours, whichever is less.
“Successive” employments simply means working two or more different jobs at the same time, one after another, or “moonlighting.”
Last, under Louisiana law, a part-time employee is specifically defined as “an employee who as a condition of his hiring knowingly accepts employment that (a) customarily provides for less than forty hours per workweek, and (b) that is classified by the employer as a part-time position.”
SAMPLE CALCULATION OF AN AVERAGE WEEKLY WAGE FOR A PART-TIME EMPLOYEE WHO WORKS TWO OR MORE JOBS
So again, for part-time employees with two or more jobs (“moonlighting” employees), where the work injury prevents wage loss in all jobs, in order to calculate the employee’s Average Weekly Wage: add up the total actual hours worked for all employers for the four full weeks preceding the accident, and then divide that by four, and then multiply that by the employee’s hourly rate at the job where the employee was injured.
But also remember that the total hours may not exceed 40 hours, and that the employer in whose service the employee was injured pays all the indemnity benefits.
So, for example, take the employee who works on average 20 hours per week for Employer #1 earning $15.00 an hour, and on average 10 hours per week with Employer #2 earning $10.00 an hour. If this employee is injured while working for Employer #2, then the employee’s Average Weekly Wage is $300.00 (30 hours x $10.00), as follows:
- Week 1: 21 hours at $15/hour and 10 hours at $10/hour
- Week 2: 20 hours at $15/hour and 11 hours at $10/hour
- Week 3: 22 hours at $15/hour and 12 hours at $10/hour
- Week 4: 17 hours at $15/hour and 7 hours at $10/hour
- Total: 80 hours ($1,200.00) and 40 hours ($400.00)
- Average: 20 hours ($300.00) and 10 hours ($100.00)
- Average Total Income: 30 hours ($400.00)
Again, if this employee was injured while working for Employer #2, then the employee’s Average Weekly Wage is $300.00 (30 hours x $10.00).
But if this employee was injured while working for Employer #1, then the employee’s Average Weekly Wage is $450.00 (30 hours x $15.00).
Now, in a second example, take the employee who works on average 30 hours per week for Employer #1, earning $15.00 an hour, and on average 20 hours per week with Employer #2 earning $10.00 an hour. If this employee is injured while working for Employer #2, then the employee’s Average Weekly Wage is $400.00 (40 hours x $10.00), as follows:
- Week 1: 33 hours at $15/hour and 20 hours at $10/hour
- Week 2: 25 hours at $15/hour and 22 hours at $10/hour
- Week 3: 32 hours at $15/hour and 18 hours at $10/hour
- Week 4: 30 hours at $15/hour and 20 hours at $10/hour
- Total: 120 hours ($1,800.00) and 80 hours ($800.00)
- Average: 30 hours ($450.00) and 20 hours ($100.00)
- Average Total Income: 50 hours ($550.00)
Again, if this employee was injured while working for Employer #2, then the employee’s Average Weekly Wage is $400.00 (40 hours x $10.00).
This is because, even though the employee worked 50 hours a week with both employers, the part-time employee’s average actual average hours cannot exceed 40 for the purpose of calculating the Average Weekly Wage.
But if this employee was injured while working for Employer #1, then the employee’s Average Weekly Wage is $600.00 (40 hours x $15.00).
Again, this is because, even though the employee worked 50 hours a week with both employers, the part-time employee’s average actual average hours cannot exceed 40 for the purpose of calculating the Average Weekly Wage.
ARE THE EMPLOYEE’S JOBS SUCCESSIVE EMPLOYMENT OR JOINT EMPLOYMENT?
Employment by more than one employer can be either successive employment or joint employment.
Successive employment would be when one employer engages a worker to do one job (for example, during the day), and a second employer engages the same worker to work a different job (for example, at night).
Successive employment is also known as “moonlighting.”
Joint employment, on the other hand, generally is when a person who is jointly employed is performing tasks for two or more employers at the same time.
So an example of joint employment would be where two store-owners have stores adjacent to each other and employ a guard to watch them both at night. Such work by this security guard would be considered joint employment.
SUCCESSIVE EMPLOYMENT
As detailed above, when the employment by more than one employer is successive employment, the injured worker is entitled to be paid lost wage benefits by the employer in whose service the employee is at the time of injury.
An injured worker in successive employment is entitled to a calculation of his wage that reflects the employee’s full earning capacity, but at the rate at which he is paid by the employer in whose service the employee is injured.
The other employer does not need to pay any workers compensation benefits to the injured worker.
JOINT EMPLOYMENT
For joint employment, Louisiana law holds that “in the case of any employee for whose injury or death payments are due is at the time of the injury, employed and paid jointly by two or more employers subject to the provisions of this Chapter, such employers shall contribute to such payments in proportion to their several wage liabilities to the employee.”
This means that for joint employment, both employers need to pay workers compensation benefits to an injured worker, in the proportion in which the employer paid the wages to the employee.
For example, if the security guard was employed by Employer 1 at $10.00 per hour, and at the same time performed the same work for Employer 2, who agreed to pay him an additional $5.00 per hour, then Employer 1 is paying two-thirds of this joint wage of $15.00 per hour.
So if the security guard is injured on the job, his compensation should be calculated on the basis of $15.00 per hour, and Employer 1 must pay two thirds (2/3) of the benefits, while Employer 2 must pay one third (1/3) of the benefits.
THE AVERAGE WEEKLY WAGE IN LOUISIANA WORKERS COMPENSATION
In order to calculate any type of lost wage benefit – including benefits for employees paid on an hourly, 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 the accident is considered to be the last day the employee worked or had harmful exposure.
Employees should separate out any tips or bonuses, and use the calculation method found under “wages based on unit, piecework, commission or other basis” for 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.
GROSS WAGES
Gross wages are defined as the total amount of an employee’s 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 an hourly, 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 throughout 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 throughout the injured worker’s claim.
THE LOUISIANA STATUTE FOR CALCULATION OF LOST WAGE (INDEMNITY) BENEFITS FOR EMPLOYEES OF MORE THAN ONE EMPLOYER IN LOUISIANA WORKERS COMPENSATION
The Louisiana statute outlining calculations for lost wage benefits 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.
(iv) A part-time employee, as defined in R.S. 23:1021(9) and who is employed by two or more different employers in two or more successive employments, shall be entitled to receive benefits as follows:
(aa) If an employee is employed by two or more different employers in two or more successive employments and the employee incurs a compensable injury under the provisions of this Chapter in one of the employments, the employer in whose service the employee was injured shall pay the benefits due the employee as provided in this Chapter.
(bb) If the employee is a part-time employee in one of the successive employments, is injured in that employment, but as a result of the injury also incurs loss of income from other successive employments, that employee shall be entitled to benefits computed by determining wages under the provisions of this Subsection using his hourly rate in employment at the time of injury and using the total hours worked for all employers of the part-time employee, but not to exceed his average, actual weekly hours worked or forty hours weekly, whichever is less.
(f) Income tax. In the determination of “wages” and the average weekly wage at the time of the accident, no amount shall be included for any benefit or form of compensation which is not taxable to an employee for federal income tax purposes; however, any amount withheld by the employer to fund any nontaxable or tax-deferred benefit provided by the employer and which was elected by the employee in lieu of taxable earnings shall be included in the calculation of the employee’s wage and average weekly wage including but not limited to any amount withheld by the employer to fund any health insurance benefit provided by the employer and which was elected by the employee in lieu of taxable earnings shall be included in the calculation of the employee’s wage and average weekly wage.
(g) Date of accident. In occupational disease claims the date of the accident for purposes of determining the employee’s average weekly wage shall be the date of the employee’s last employment with the employer from whom benefits are claimed or the date of his last injurious exposure to conditions in his employment, whichever date occurs later.
