How is Workers’ Compensation Calculated, and What is the Payout Structure?

Workers’ Compensation Benefits

In order to understand how this compensation is calculated, an employee must remember there are four types of workers’ comp benefits, which are:

• Weekly compensation
• Permanent disability benefits
• Vocational rehabilitation
• Paying of medical bills

One difference between workers’ comp cases and other personal injury cases is that the employee receives no payment for pain and suffering. Because workers’ comp laws are viewed strictly as income protection laws, they focus solely on providing income due to an inability to work. Therefore, if pain keeps an employee from working, they are entitled to weekly compensation but no additional money for pain and suffering.

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Total Disability Benefits

For employees who are totally disabled due to their job-related illness or injury, there is generally no limit on the length of time they can receive benefits. However, rules vary from state to state, and some states will end weekly benefits in these situations when the employee reaches age 65. When determining how much an employee will receive each week, the calculation used is generally 60 percent of the employee’s weekly salary prior to the injury. However, in most states the payment cannot exceed $1,000 per week, regardless of how much the person was earning.

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Partial Disability Benefits

Employees who suffer from partial disability have their benefits calculated in a much different manner. In these situations, it is assumed the employee is able to perform some job tasks, even if it is on a light-duty job. Therefore, the benefits are calculated by reducing the person’s average weekly wage based on their current earning capacity. For example, if an employee earned $1,000 per week prior to the injury but now has an earning capacity of only $500, their benefit would be 60 percent of $500, which would equal $300 per week in compensation.

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Permanent Impairment Benefits

In addition to disability, employees who suffer permanent impairment, such as scarring or having limited use of a hand or leg, are entitled to permanent impairment benefits. If the employee’s condition meets guidelines established by the American Medical Association, they are compensated based on how much they can still function with the impairment. For example, if a doctor uses these guidelines and determines a person has only 25 percent use of their hand, they may be entitled to 25 percent of what their state’s workers’ comp laws allow. Thus, if the law allows for a $100,000 payment for complete loss of use of the hand, the employee would receive 25 percent of $100,000, which is $25,000.

How Can a Lawyer Help?

An experienced workers’ comp attorney can be invaluable in these situations. Not only can they help develop the key medical and vocational evidence needed to prove these cases, but they can also play a significant role in negotiating and structuring settlement agreements. During the negotiations, the attorney will be able to use such factors as the extent of the injury, the cost of current and future medical treatment, and the type of disability resulting from the injury in their client’s favor. And more importantly, the attorney can act as a buffer between their client and the employer’s insurance company. In numerous workers’ compensation cases, an employer’s insurance company will attempt to intimidate a worker by providing so-called “final offers” or trying to force them to settle for far less than that to which they may be entitled. An experienced attorney will know every trick an insurance company will try to use, and be able to negotiate a settlement that will be satisfactory to everyone.

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What Happens if an Agreement Cannot be Reached?

In some cases, a workers’ compensation case is so complex that an agreement cannot be reached between both parties. In these situations, the case moves to an administrative hearing or trial that is heard by a workers’ comp judge. Prior to the hearing, the attorney will gather testimony of witnesses, point out key aspects of the employee’s medical records, and prepare various motions. At the hearing, the attorney will plead their client’s case by stating why benefits should be awarded, make opening and closing arguments, question witnesses, and more. If the results of the hearing are not deemed satisfactory by the client and attorney, the case can then be appealed to a three-judge panel of workers’ comp judges for further review and analysis.

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Third-Parties and Additional Benefits

Along with the workers’ comp claim, a worker may be able to file a separate personal injury claim against a third-party, claiming that the party’s extreme negligence led to the illness or injury that resulted in a workers’ comp claim being filed. In many cases, this lawsuit can provide more financial compensation than the workers’ comp claim, since this lawsuit can include awards for pain and suffering and loss of earnings. Along with this, workers’ comp attorneys can also play a key role in helping injured workers learn of additional avenues of assistance, such as vocational rehabilitation, Social Security benefits, and various other insurance benefits.

For workers who have become ill or injured on the job, it is imperative to work with an attorney in order to receive the benefits they deserve. By making those responsible accountable for their actions, workers can not only improve their lives, but help other workers from being injured as well.