How much workers’ comp pays for lost wages depends on your state, but typically each state pays for two-thirds of your average weekly wage (AWW) before taxes. This amount is capped according to your state’s maximum payments, which vary from state-to-state.
There may be exceptions to your lost wage’s limits if you suffered multiple injuries or if it’s a permanent disability. Of course you would have to meet your state’s terms and conditions to even apply for workers’ comp lost wages.
Some states even exclude certain employees from workers’ compensation benefits. You may have to visit a doctor mandated by your employer to determine your condition. Talk to your state’s workers’ comp attorney if you’re wondering whether you qualify for lost wages after an accident.
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What Are Lost Wages?
The term “lost wages” refers to the income you’d normally earn while working at your job before your workplace injury. The US Department of Labor defines lost wages as any income normally subject to payroll taxes. This includes:
- Your salary
- Any overtime you would have earned
- Sick leave
- Vacation leave
- Tips
- Any bonuses you’d have normally received.
Other benefits are specifically excluded, such as:
- IRA distributions
- Pensions
- Annuities
- Unemployment compensation
- State workers’ compensation benefits
- Social Security benefits
If you work under variable wages, the state would calculate your average daily wage (ADW) for your lost wages instead.
Your state may require a three-day waiting period between seeing your doctor and gaining eligibility. You may not be compensated for those three days unless you’re hospitalized or deemed unable to return in 14 days.
Does Workers’ Compensation Cover Lost Wages?
Employers are mandated by state and federal law to provide compensation to workers suffering from a work-related injury. Workers’ comp is meant to only cover losses caused by the injury, like medical bills and lost wages. Workers’ compensation is distinctly different from unemployment insurance.
Legally, your employer cannot deduct any fees from your work paychecks to cover this policy’s coverage. It only pays out if you, the eligible employee, suffer a work-related injury or illness while doing your job.
Workers’ compensation does not replace any lost income if you’re laid off, fired, or hurt when off the clock. If approved, workers’ compensation typically covers medical expenses and may include lost wages only after your state’s waiting period ends.
Because workers’ compensation is an employer-provided insurance policy, the insurer makes all decisions about when and how that coverage applies. In most cases, your employer isn’t the one who decides how much to pay or what that policy covers.
Rather, the insurance company managing your policy must approve or deny your claim and conform to state and federal laws.
What Does My State’s Workers’ Comp Policy Cover?
Every state has its own unique regulations regarding workers’ comp insurance, including:
- Coverage amounts
- Which types of insurance your state requires for specific employers
- Employees exempt from automatic coverage requirements (such as Realtors, federal employees, or contractors)
- How much and how long an employer must pay for benefits
- What penalties each state can levy against employers who fail to follow legal guidelines
Additionally, there are different types of workers’ compensation benefits. The first type covers medical bills only, but not lost wages. It usually applies when you need less than a week off to fully recover from your accident.
The second type covers lost wages if you still can’t work once your state’s required waiting period ends. Generally, both state and federal laws require employers to cover reasonable medical bills for on-the-job injuries.
Types of Workers’ Comp Disabilities
Workers’ compensation benefits to cover your lost wages generally fall into four categories:
- Temporary Partial Disability (TPD) — TPD applies if you can return to work under specific accommodations by your employer. TPD usually covers the difference between your pre-injury paychecks and what you earn while working with restrictions.
For example, if you break your leg and cannot drive a forklift as required, your employer might reassign you to a clerical job. If your forklift-operating position paid $20/hour but your new one pays $15/hour, your TPD would be $5/hour.
- Temporary Total Disability (TTD) — Temporarily unable to work at all, but plan to return to your old job? Then you might qualify for TTD. Once payments begin, this benefit continues until you reach one of three milestones:
- Returning back to work
- Receive the maximum allowable benefit amount
- Reach the maximum number of weeks you’re legally allowed to receive TTD payments.
- Permanent Partial Disability (PPD) — Severely hurt and unable to do your old job due to a permanent impairment? Then you may qualify for PPD benefits. This is a more complicated process, and several factors determine these awards, like the severity of your accident and injury.
Insurers assign a number of weeks to your injury and multiply that by your eligible wages to determine your amount. This payout typically occurs only after you reach maximum medical improvement.
- Permanent Total Disability (PTD) — If a permanent impairment stops you from ever working again, you may qualify for PTD benefits. Some states cap this benefit, while others reduce PTD payments once you qualify for Social Security disability (SSD) benefits.
If you have unanswered questions regarding how much workers’ comp will pay for lost wages, find a workers’ comp attorney. They should know how much you’ll qualify and will fight for your rights so you’ll receive that amount. An attorney will also help you appeal your claim if it gets denied the first time.
When Should I File to Receive Workers’ Comp for Lost Wages?
Each state’s workers’ comp laws list different timelines and requirements for filing, notification of claim approval or denial, and payment. Generally, you should file workers’ comp claims within 90 days to qualify for benefits. The lone exception is if you are a federal worker.
California stipulates your employer must, within a day of receiving your claim, authorize medical treatment (under industrial guidelines and with a maximum of $10,000) while they investigate.
But lost wages are another matter. California law says your employer must respond within 14 days after learning of your injury. If the insurance company delays your claim, an investigation can take up to 90 days.
During that time, the only workers’ compensation benefits insurers must typically pay are for medical treatment, not lost wages. You can, however, apply for state disability payments during this 90-day investigation period. This is a separate process.
When Should I Talk to An Attorney About Lost Wages?
An attorney can help you better understand your state’s requirements and claim timelines to receive benefits. Be sure to ask about other options to cover lost wages after your workplace accident during your free case consultation.
If you’re wrongly denied benefits or suspect other workplace rights violations, then you may have grounds to sue your employer.
Ready to see if you may qualify? Complete your free online workers’ compensation case evaluation now!
Lisa Allen
Lisa Allen is a writer and editor who lives in suburban Kansas City. She holds MFAs in Creative Nonfiction and Poetry, both from the Solstice Low-Residency Program in Creative Writing at Pine Manor College. Prior to becoming a writer, Lisa worked as a paralegal, where she specialized in real estate in and around Chicago.
