Understandably, injured workers often want to know the amount of benefits they may receive from their claims to determine whether they can manage their living expenses and plan ahead. This blog aims to offer helpful guidance on this topic. However, for a more accurate estimate tailored to your situation, we encourage you to schedule a free consultation with one of our attorneys at Staton Silber, P.S.
Importantly, the amount you can expect to receive depends on various factors, such as the type of benefit, the date of injury, your employment pattern at the time of your injury, your average monthly wages, and more.
The Industrial Insurance Act provides for several types of monetary benefits including time loss compensation, loss of earning power benefits, permanent partial disability awards, L&I pension benefits, each with its own calculation method. The following addresses, very generally, the formulas used to calculate the amount of each type of benefit.
If you have specific questions about the amount of compensation you should expect to receive in your or a family member’s case, attorneys at Staton Silber, P.S., can help. Call us for a free consultation!
- Time Loss Compensation
When an injured worker is incapable of returning to work while receiving medical treatment for their industrial injury or occupational disease, they are entitled to time loss compensation. These payments are issued every 14 days, provided the attending physician continues to certify the worker’s medical disability.
An injured worker’s monthly time loss rate – the amount they should receive every month – is calculated based upon the worker’s average monthly wages at the time of their industrial injury or manifestation date of their occupational disease.
The standard method for calculating a worker’s average monthly wages at the time of their injury or the manifestation date involves multiplying the worker’s “daily wage” by a specific factor based on their typical work schedule:
- Multiply the daily wage by 30 for workers employed 7 days a week
- Multiply the daily wage by 26 for workers employed 6 days a week
- Multiply the daily wage by 22 for workers employed 5 days a week
- Multiply the daily wage by 18 for workers employed 4 days a week
- Multiply the daily wage by 13 for workers employed 3 days a week
- Multiply the daily wage by 9 for workers employed 2 days a week
- Multiply the daily wage by 5 for workers employed 1 day a week
To determine an injured worker’s “daily wage,” the worker’s hourly rate is multiplied by the number of hours they normally work per day. For instance, the average monthly wages of a full-time employee earning $20.00 per hour is as follows:
$20.00 x 8 hours per day x 22 days per month = $3,520.00
The average monthly wages of an employee who works four hours per day, three days per week, earning $30.00 per hour, is as follows:
$30.00 x 4 hours per day x 13 days per month = $1,560.00
This calculation should include all hours worked, including from holiday hours, sick leave, vacation hours, and even overtime hours—although overtime hours are not calculated at the higher overtime rate (e.g., time and a half) but rather their regular hourly rate. However, if the employee receives shift differential pay for working holidays or night shift, that hourly rate increase is included. The two types of pay (regular and shift differential rates) are to be treated as two separate jobs. For example, the average monthly wages of an employee who works four days a week at regular pay of $20.00 per hour but receives shift differential pay of $30.00 for working eight hours on Saturdays, is as follows:
Regular pay: $20.00 x 8 hours per day x 18 days per month = $2,880.00
Shift differential pay: $30.00 x 8 hours for Saturday x 5 days per month = $1,200.00
Average monthly wages: $2,880.00 + $1,200.00 = $4,080.00
The average monthly wages of a worker who does not have a normal schedule or is not regularly scheduled for work are calculated differently. If a worker’s employment is exclusively seasonal in nature or their relationship to their employment is intermittent, their wages are calculated by dividing by 12 the total wages the worker has received in a 12-month period prior to the industrial injury or manifestation date of the occupational disease that best represents their employment pattern.
Regardless of the method of calculation, the law also requires the inclusion of any additional compensation such as employer-provided health care benefits, bonuses, tips, commissions, housing, fuel, per diem payments, etc.
Once a worker’s average monthly wages at the time of injury or manifestation date are determined, a time loss rate multiplier is used to determine the worker’s monthly time loss compensation rate – the actual amount the worker should receive every month in time loss payments. For a single worker with no dependents, the time-loss compensation rate is set at 60% of their average monthly wages. An additional 5% is added for a spouse, and 2% is added for each dependent, up to a maximum of five legal dependents. For instance, a worker with a spouse and three dependent children would be entitled to 71% of their average monthly wages in time-loss compensation.
Importantly, there are limits to time loss compensation amounts regardless of a worker’s earnings. Even with very high wages, there is a maximum amount a worker can receive, and those with minimal or nominal wages are guaranteed a minimum time loss payment. These maximum and minimum rates are determined by the date of injury and are adjusted annually to account for changes in the cost of living. Respective tables for maximum and minimum time loss rates can be found here: Maximum Time Loss Rates; Minimum Time Loss Rates
Calculating an injured worker’s average monthly wages can be quite complex. Few cases present straightforward or easily determined wage calculations, and this blog touches on only a few generic scenarios. If you are self-employed or a business owner, the calculation of your average monthly wages is anything but simple or easily explained. To ensure the Department of Labor and Industries or self-insured employer has accurately calculated your average monthly wages and applied the appropriate time-loss rate multiplier, it is highly advisable to consult with an attorney, and experienced attorneys at Staton Silber, P.S., offer a free consultation to do just that.
- Loss of Earning Power Benefits
An injured worker may be released to light duty or less-than-full-time work because of their injury or illness, resulting in reduced earnings compared to their pre-injury average monthly wages. In such situations, the worker may qualify for loss of earning power (LEP) benefits.
There are two methods to calculate a worker’s LEP entitlement: Method A and Method B. Method A involves comparing the worker’s current wages to their wages at the time of their injury, calculating the percentage difference, and then multiplying that amount by the worker’s time loss rate. However, this method is seldom used because it typically does not result in a higher amount than the second method.
The more common method, Method B, calculates LEP by multiplying the difference between the worker’s pre-injury wages and their current actual earnings by 80%. Even though this may seem straightforward, it is more complicated than it sounds. The following are the specific steps to follow:
- Determine your “date-of-injury” wages. (See the above section to determine how to calculate “date-of-injury” wages.)
- Determine your current wages.
- Calculate the wage difference by subtracting your current wages from your date-of-injury wages.
- Multiply the difference by 80%.
A useful LEP calculation worksheet can be found here: LEP Calculation Worksheet (2024)
Alternatively, an on-line LEP calculator can be found here: LEP On-line Calculator
Importantly, the law requires that the date-of-injury wage be adjusted (more often than not, increased) to the amount the employer is currently paying for the work. For example, if the employer was paying the worker $20.00 per hour on the date-of-injury but now pays $25.00 per hour for the same position, the “date-of-injury” wages will be based on $25.00 per hour and not $20.00 per hour. This results in a larger LEP entitlement.
Obviously, LEP must be certified by the attending physician, meaning the physician must support that the worker’s reduced earning capacity is caused by the industrial injury or occupational disease. This can be proven with a light-duty or part-time work restriction from the attending physician.
To request LEP, the Department of Labor and Industries requires the worker to submit an application for LEP, which can be found here: Application for Loss of Earning Power – Medical. The worker fills in the top section, the physician completes the bottom section, and the worker can either ask the employer to complete the middle section or, in the alternative, attach their pay stubs as proof of current earnings. Self-insured employers are often more flexible with LEP requests, typically accepting pay stubs from the worker and a work restriction note from the attending physician to process LEP benefits.
Additionally, a worker’s loss of earnings must be more than 5% lower than their date-of-injury wage; otherwise, LEP is not payable.
More information about LEP can be found here: LEP Adjudication Guidelines.
- Permanent Partial Disability Awards
Once an injured worker’s industrial injury or occupational disease has reached “maximum medical improvement,” meaning further treatment is unlikely to result in permanent medical improvement, each medical condition causally related to the injury or disease must be rated for permanent impairment. Each measurable impairment qualifies for a permanent partial disability award. If a worker has suffered no measurable impairment, they will receive zero PPD.
The first step to calculate your PPD entitlement is to determine whether your entitlement is for a specified or unspecified disability. Specified disabilities are listed in RCW 51.32.080(1)(a) and relate to physical amputation or loss of function of upper extremities, such as shoulders, elbows, arms, wrists, or hands, or lower extremities such as hips, knees, legs, ankles, or feet. Unspecified disabilities include neck, back, and mental health impairments. Specified disabilities are measured according to the AMA Guides to the Evaluation of Permanent Impairment (5th ed.), whereas unspecified disabilities are measured according to guidelines set forth in WAC 296-20-200 through WAC 296-20-660.
Once a licensed physician (or department-approved chiropractor) has provided a permanent impairment rating or ratings for all physical and/or mental conditions caused or permanently aggravated by the industrial injury or occupational disease, converting the impairment rating into a monetary amount is accomplished using the Schedule of Benefits for the year of the industrial injury or occupational disease, which can be found here: LNI PPD Schedules. The date-of-injury determines which schedule to use to calculate PPD, and, obviously, the more recent the date-of-injury and the higher the permanent impairment rating, the higher the PPD amount.
The following is an example of the calculation of a PPD award for an injured worker with a date-of-injury of July 3, 2021, who received a permanent upper extremity impairment rating of 25% for their right shoulder and a Category 2 permanent cervical impairment rating from their attending physician:
100% arm at or above the deltoid insertion or by disarticulation of the shoulder: $130,089.12
$130,089.12 x 25% shoulder impairment rating = $32,522.28 PPD for shoulder condition
Category 2 cervical impairment: $21,681.51 PPD for cervical/neck condition
Total PPD award entitlement: $32,522.28 + $21,681.51 = $54,203.79
It is not uncommon for independent medical examiners to underrate the extent of a worker’s impairment. Therefore, having your attending physician or a consulting physician whom your attending physician trusts will usually result in a more accurate impairment rating and, consequently, PPD award. Our attorneys at Staton Silber, P.S., can help you navigate this complex process to secure the maximum PPD award. Please call for a free consultation!
- L&I Pension Benefits
An injured worker who is permanently incapable of obtaining or performing reasonably continuous, gainful employment may be eligible for an L&I pension, which payments are issued on the 14th of every month. The monthly amount of pension benefits is intricately tied to the worker’s average monthly wages at the time of the injury, similar to the calculation of time loss compensation. In fact, an injured worker who is single should expect to receive about the same amount as their time loss rate barring the situations explained below. However, an injured worker who is married will be given three payment options:
- Full rate paid to the worker. No survivor benefits are payable.
- A reduced rate paid to the worker. The same rate is paid to the designated beneficiary (e.g., surviving spouse).
- A reduced rate paid to the worker, with one-half of the reduced rate paid to the designated beneficiary.
If a married worker passes away before making a selection, the Department will automatically choose option 2 for any surviving spouse.
If a pensioner has chosen option 2 or 3 and later is divorced, the pensioner has a one-time opportunity to select option 1. Similarly, if the pensioner’s spouse predeceases them, the pensioner has a single opportunity to select option 1. However, if the pensioner remarries after making either selection, they cannot then change back to option 2 or 3. Also, if a pensioner remarries while receiving option 1 benefits, they cannot change to option 2 or 3.
The following are other situations that may impact the worker’s monthly pension amount:
- The worker will lose each dependent’s 2% entitlement relative to either time loss compensation or L&I pension payments once the dependent reaches age 18 or age 23 if enrolled in school on a full-time basis.
- If the worker has received a PPD award in the past, the Department will demand reimbursement either in installments deducted from each monthly pension payment until the entire amount is satisfied or from the pension reserve, which will permanently reduce the worker’s pension amount for the life of the pension.
- If the worker receives Social Security Disability Insurance (SSDI) benefits, the Department will reduce the monthly L&I pension payment to prevent “double-dipping” where the worker might otherwise receive full benefits from two different sources. The offset typically applies until the worker reaches full retirement age when the offset rules change.
- Each July 1st, the Department will increase the monthly pension payment amount for cost-of-living (unless the worker also receives Social Security, in which case the Social Security Administration will adjust SS benefits for cost-of-living every three years).
- The Washington State Department of Social and Health Services can place a lien for unpaid child support or public assistance benefits against an injured worker’s pension payments under certain circumstances.
Additionally, injured workers cannot receive L&I pension benefits if they are incarcerated.
The calculation of benefits in a workers’ compensation case is a complex process, often involving multiple factors and detailed considerations. In this author’s experience, both the Department of Labor and Industries and self-insured employers frequently make errors in calculating these benefits. One of the most critical components is the determination of a worker’s average monthly wages, as this figure directly impacts not only the time loss compensation rate but also the pension rate, should the worker become totally, permanently disabled. Even a small error in these calculations can result in significant financial consequences for the injured worker over time.
Given the importance of accuracy, it is essential to ensure that all benefits are calculated correctly. Speaking with an experienced workers’ compensation attorney such as one of our attorneys at Staton Silber, P.S., can help you identify potential miscalculations, advocate for proper adjustments, and ensure you receive the full benefits to which you are entitled under the law. This additional layer of scrutiny can provide invaluable peace of mind and financial security during what is often a challenging time.
