Friday, December 26, 2008

Calculating Wage Losses Under the Pennsylvania Workers' Compensation Act

In Pennsylvania, injured workers who cannot return to work are entitled to be paid wage losses, often called “indemnity benefits.” There are two types of indemnity benefits: (1) total temporary disability benefits, and (2) partial disability benefits. Total temporary disability benefits are paid when a worker is unable to work at his or her pre-injury job and is not working at any other employment. Partial disability benefits are paid when a worker has returned to work at modified duty (such as a light duty job) and still has an earnings loss.

Workers' compensation wage loss benefits are calculated based upon an injured worker's average weekly wage. In general, most employees receive workers’ compensation benefits equal to roughly 2/3rds of the wages they earned before their work injury. Unfortunately, calculating wage loss benefits is not always easy.

Workers’ compensation wage losses benefits are calculated under Section 306 of the Pennsylvania Workers’ Compensation Act, which is lengthy and, at times, confusing. For example, extremely high paid workers will not receive 2/3rds of their pre-injury wages because the law caps the amount they receive. On the other hand, workers who earned less than the average worker (statewide) receive either a fixed rate or 90 percent of their prior average earnings, depending upon a number of factors.

In 2008, for example, the maximum weekly benefit that an injured worker could receive was: $807.00; it will increase in 2009. This means that any worker who earned an average of $1,210.50 or more a week can receive no more than $807.00 in weekly wage loss benefits. Although workers’ compensation benefits are not taxable, the reality is that many high-paid workers find themselves in serious financial difficulty because of this cap.

Workers who earned between $1,210.50 and $605.26 per week in 2008 received 2/3rds of their average earnings, while workers earning between $605.25 and $448.33 received $403.50 (a set rate). Finally, lower paid workers (those who earned $448.32 or less per week), receive 90 percent of their average wages in Pennsylvania workers’ compensation benefits.

There are a few other “details” you should know. Workers who are out of work for seven days or less do not receive any workers' compensation wage loss benefits. Workers who are out of work from eight to 14 days are subject to a seven day waiting period. This means that workers who, for example, miss ten days of work, will only be paid for three). For all other workers, who are out of work for more than 14 days, get paid from day one; there are no deductions or waiting periods.

Separately, workers who suffer amputations, loss of vision or hearing, or lose the use of one part of their bodies, may receive “specific loss benefits” under the Pennsylvania Workers’ Compensation Act. People who suffer specific losses receive a specific amount of benefits for their injuries. For example, workers are paid for 335 weeks for the loss of a hand, 370 weeks of the loss of the forearm, and 250 weeks for the loss of a foot. The statute specifies the compensation for each body part.

Finally, most insurance companies pay benefits every other week, although a few pay wage loss benefits weekly. These benefits are not taxable. As you can see, calculating benefits under the Pennsylvania Workers’ Compensation Act can be complicated.

About the Author

Philadelphia workers compensation attorney Jack B. Katz, who has been representing injured workers for more than two decades. Jack Katz concentrates his practice in workers compensation matters. His office is located at 1213 Vine Street Philadelphia, PA 19107. Email Attorney Jack B. Katz or Visit Attorney Jack B. Katz’ website.

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