The formula is complicated, but first you determine a person’s average weekly wage, which is calculated by looking back at the year prior to the injury. For example, if you were injured on January 1, 2018, your average weekly wage should be based on your earnings from January 1, 2017 to January 1, 2018. The employer is obligated to provide the insurance company with a form called a C-240, which breaks down the weekly payroll earnings of the injured worker.
Several calculations are then used. In the most typical cases, you simply take the total earnings for the prior year and you divide it by 52 weeks. Other formulas are used for certain jobs or in instances when a worker is injured shortly after getting hired, making it harder to determine what they might have earned over the course of a year. The employer will provide a similar weekly payroll earnings report for an employee who is working in the same position as the worker and earning similar wages or salary.
If a worker has worked at least 234 days, they may be entitled to what’s called the “260 multiple” in determining their average weekly wage. You would take the total earnings divided by the number of days’ worked and then take that daily rate and multiply it by 260, then divide by 52. The total would be the average weekly wage that you’re entitled to.
In most cases, taking the earnings over the past year and dividing it by 52 can determine what you would get paid based on your level of disability. If you are considered totally disabled, you will get 2/3 of the average weekly wage.
For example, if the average wage is $600, your total will be $400. If you are found to have a lower level of disability, for example, 50%, your payments would then be $200.
In sum, that is how your lost earnings are calculated and workers’ compensation indemnity benefits will only provide wage loss benefits to replace the money that you were earning while working.
Reduced earnings benefits
Aside from indemnity benefits, there is something called reduced earnings, which means that you do go back to work, but either you have to work fewer hours or you are earning less money due to your injuries. You may be entitled to reduced earnings, which means if before your injury you earned $600 a week and now you only earn $200 a week, you would be entitled to 2/3 of the difference to help make up for your lost wages.