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Calculating Average Weekly Earnings

September 3, 2024

Calculating Average Weekly Earnings

Understanding “Average Weekly Earnings” in Workers’ Compensation

When you’re dealing with a workers’ compensation case, a common term is “Average Weekly Earnings” (AWE). But what does that actually mean, and how does it impact your compensation?

What is Average Weekly Earnings (AWE)?

In workers’ compensation law, “Average Weekly Earnings” is a critical figure used to calculate the amount of benefits you are entitled to receive if you’re temporarily or permanently disabled due to a workplace injury. It represents your average earnings over a typical week, and it forms the basis for determining how much you will receive in disability payments. However, calculating AWE is not always straightforward. There are different methods used, depending on your employment status.

Different Ways to Calculate AWE:

  1. Full-Time Employees:
  • For full-time workers—those who work 30 hours or more per week, typically across five or more days—the calculation is relatively simple. Your AWE is based on what you would have earned during the week you were injured, assuming you worked your full schedule. This means your regular earnings at the time of injury are considered the best indicator of your earning capacity.
  • The calculation is based on your “present earnings,” which refers to the income you would have earned in a full week of work at the time of the injury. This approach ensures that your compensation reflects your actual earning situation, rather than being influenced by past earnings or uncertain future prospects.
  1. Employees with Multiple Jobs:
  • If you are working more than one job, the method used to calculate your AWE depends on where you were injured:
    • Injury at the higher-paying job: If the injury occurs at the job where you earn the most per hour, your AWE is calculated by adding together the earnings from all your jobs. For instance, if you earn $500 per week at your main job and $100 per week at a part-time job, and you’re injured at the higher-paying job, your AWE would be $600 ($500/wk + $100/wk= $600 AWE). This approach ensures that your compensation reflects your total earning capacity.
    • Injury at a lower-paying job: If you’re injured at a job where you earn less per hour, the calculation is different. In this case, your AWE is determined by multiplying the hourly rate of the job where the injury occurred by the total number of hours you work across all your jobs each week. This method ensures that even if you’re injured at a lower-paying job, your compensation still considers the total time you spend working each week.
  1. Employees with Irregular Pay:
  • For employees who don’t have a steady paycheck—such as those paid on a commission basis, piecework, or other irregular methods—calculating AWE requires averaging your earnings over a longer period. The law allows for averaging your earnings over a period that can be up to one year. This approach helps to smooth out any spikes or dips in your income, providing a fair representation of your typical earnings.
  1. Part-Time and Irregular Workers:
  • For those working part-time or in jobs where pay fluctuates (like seasonal work), the law has special provisions. If your employment situation doesn’t fit neatly into the other categories, your AWE might be calculated based on what is most fair and accurate, considering all relevant factors

Considering Earning Capacity:

Sometimes, instead of just looking at your actual earnings, the law considers your “earning capacity.” This concept involves estimating what you could have earned in the future if the injury hadn’t occurred. Factors like your ability to work, willingness to work, and the availability of work in your field are all considered. This method is helps determine long-term disability benefits because it reflects your potential earnings over time, rather than just your current or past income.

Why Average Weekly Earnings Matter:

Your AWE is crucial because it directly impacts the amount of compensation you receive while you’re unable to work. Understanding how it’s calculated can make a big difference in ensuring you get the benefits you’re entitled to. Whether you’re a full-time worker, working multiple jobs, or earning an irregular income, knowing the ins and outs of AWE can help you navigate the workers’ compensation process more effectively.

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