Q: How are an injured worker's Iowa average weekly wage (AWW) and a weekly compensation rate calculated?
A: This covers the basics of AWW and rate calculation for an adjustor. Each situation is different and each calculation should be adjusted per the injured worker's situation and case law.
First look to Iowa Code §85.36 and Iowa Workers' Compensation Manual/Rate Book, Weekly Benefits (D), and speak with the employer to determine how the employee earned their wage. For example, an employee paid on an hourly basis would have their AWW calculated under §85.36(6), while §85.36(5) would be used for an employee who is paid on a yearly salary.
You also need to know if the employee is single or married and how many dependents (including the injured employee and their spouse) they had at the time of the injury. For example, a married employee with 3 dependent children is M5. Also, note, additional exemptions for blindness and old age are included (§85.61(6)(a)). Use the maximum number of exemptions that the employee could have taken on their tax return at the time of the injury.
It is generally a good idea to request a year of wage records, if applicable, preceding the injury date for two reasons. First, pursuant to §85.40, the employer is required to provide this information to the injury employee upon demand, and you should have it on hand to provide if this request is made. Second, if the employee is paid hourly, you will, probably, need more than the 13 immediately preceding weeks because, often, weeks need to be excluded as unrepresentative, requiring you to go back another week or more.
If the employee is an hourly worker (regardless of interval at which checks are written, weekly, biweekly, monthly or semimonthly) you will need to know hours worked each week, both regular and overtime, rate(s) of pay, whether regular bonuses were paid, and whether the employee had time off for vacation, sick, holiday, or other personal leave during any week. Since you will be doing a 13 week average, the pay periods need to be broken down weekly, to help you decide which weeks are representative, and which do not fairly reflect the employee's customary earnings and need to be excluded. Be sure the employer includes any pay increases and their effective dates. You may need actual time cards.
You will not use the week of the injury, but will start with the week immediately preceding. Count back until you have 13 representative weeks. If the employee was absent from employment for reasons personal to the employee (such as vacation, holiday or sick leave) during part of the thirteen calendar weeks preceding the injury, the employee's weekly earnings will be the amount the employee would have earned had the employee worked when work was available to other employees, of the employer, in a similar occupation. However, a week which does not fairly reflect the employee's customary earnings shall be replaced by the closest previous week with earnings that do. Include overtime hours at straight time rate of pay (effective 7-1-08 any shift differential pay is also included). Include regular bonuses if they fall within your 13 weeks. If the bonus is an annual one, divide by 52 and add this amount to each of the thirteen weeks. Whether to divide an annual bonus by 13, or 52, is an issue on appeal as of this writing. Take total the wages (hourly rate multiplied by total hours worked, at straight time, plus regular bonuses) and divide this number by 13 and round up to the nearest dollar, for the AWW.
If the employee is on a yearly salary, you will use his yearly earnings, and will divide these by 52.
If the employee either earns no wages, or less than the usual weekly earnings of a regular full-time adult worker, for example a part-time employee, you will use this employee's total earnings from all employment for the 12 calendar months preceding the injury and divide by 50. The provision to Include overtime hours at straight time rate of pay, may apply, although the issue is on appeal as of this writing.
The recently hired employee is covered under §85.36(7). Various methods of calculating an AWW are covered under §85.36.
Once you have the AWW and have double checked your calculations, use the Iowa Workers' Compensation Manual/Rate Book for the year of the injury, noting that effective years run July 1 through June 30, to find the rate.
Remember that, although, this seems like a moving target, "§85.36 is to be applied flexibly, rather than mechanically or technically, with the ultimate objective being to fairly reflect the employee's earning loss."Daniels v. T&L Cleaning Services, File 1283486 (2003).
For more details, and current maximum rates, see current Iowa Workers' Compensation Manual/Rate Book. (top)
If you have questions regarding how to calculate an AWW or rate in any particular situation, you should consult an attorney.
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