Average Weekly Wage Calculations: Not So Average
When handling workers’ compensation claims in Nebraska, once an injury is determined to be compensable, it should be easy to determine the employee’s average weekly wage (AWW) for purposes of calculating the payment of indemnity benefits. It’s simple math, right?
In continuous employment situations, an employee’s AWW is based upon the hours worked and the wages earned by the claimant during the 26 week period prior to the accident, or so much thereof preceding the date of the accident during which the claimant was employed by the insured. Neb. Rev. Stat. § 48-126. For example, if an employee worked 40 hours a week for the previous 26 weeks at $10 an hour, his AWW would be $400. See – simple math.
What about overtime hours? Do you include overtime at the rate actually paid (150% of the actual wage)? Maybe. 48-126 says you only include overtime at time and a half if the employer “paid a premium” for the wage at “time and a half.” It can be difficult to find out whether the employer paid a premium for overtime.
What should be a simple fourth grade arithmetic problem is not so black and white in application to most wage questions. We know about gray areas that exist regarding the determination of an “ordinary” work weeks. Abnormally low weeks in which the employee worked fewer hours than normal must be excluded in the computation, but abnormally high weeks in which the employee worked more hours than normal must be included. For example, if a claimant normally works an average of 40 hours per week, a week in which he works only 8 hours would be excluded from the AWW calculation, but a week in which he worked 50 hours would be included. Canas v. Maryland Cas. Co., 236 Neb. 164, 459 N.W.2d 533 (1990).
What about when the wage changes during the 26 week period or when an employee can be characterized as a seasonal employee?
If you want a real challenge, consider a job where an employee is paid a monthly salary over a twelve-month period but actually works fewer than twelve months per year. This issue was addressed in Mueller v. Lincoln Public Schools, 282 Neb. 25, 803 N.W.2d 408 (2011), where a cafeteria worker only worked 9 months out of the year, but was paid over a 12 month period. While the Court did not clearly articulate how the average weekly wage should be calculated, it seems that the appropriate method in these situations is to look at the total annual salary and divide that by 52 weeks to derive a more accurate average weekly wage.
It is important to calculate the AWW correctly, as a miscalculation could result in overpayment or penalties. For more information about average weekly wage calculations, contact David Dudley or Sara Hughes at Baylor Evnen at (402) 475-1075.