How To Calculate Workers’ Comp Benefits in California

When an employee suffers a work-related injury or illness in California, the state’s workers’ compensation system provides medical care and wage replacement benefits. Calculating benefits depends on several factors, including the worker’s average weekly wage, the severity of the injury, and the type of benefit being provided.

If you have suffered a work-related injury or illness in California, contact our Orange County workers’ compensation lawyers to discuss your legal options. Schedule your free consultation today.

Step 1: Determine Average Weekly Wages

Workers’ compensation benefits begin with the calculation of average weekly wages (AWW). This figure represents what the employee normally earns each week before the injury and forms the basis for wage replacement benefits. To determine AWW, the employer and insurance carrier consider:

• Hourly Employees: Multiply the hourly rate by the average number of hours worked per week. Overtime, bonuses, and shift differentials may also be included.
• Salaried Employees: Divide the annual salary by 52 weeks.
• Variable Schedules: Use the worker’s earnings over the past year to determine an average.
• Multiple Jobs: If the employer knew about other jobs, wages from those positions may be included.

Step 2: Temporary Disability Benefits

If an injury prevents an employee from working while they recover, they may qualify for temporary disability (TD) benefits. California law provides that TD benefits equal two-thirds of the worker’s AWW, subject to statewide minimum and maximum limits set each year. For example:

• If an employee’s AWW is $900, the TD rate would be $600 per week.
• If the AWW is very high, the benefit cannot exceed the maximum set by California’s Division of Workers’ Compensation, which is $1,680.29 per week.
• Benefits are paid every two weeks until the worker returns to work, reaches maximum medical improvement, or the benefit cap is reached (generally 104 weeks within five years of the injury).

Step 3: Permanent Disability Benefits

If an injury results in lasting impairment, the worker may qualify for permanent disability (PD) benefits. The calculation involves several steps:

1. A doctor assigns a permanent disability rating based on the worker’s level of impairment.
2. The rating is adjusted for age and occupation to reflect the impact on earning capacity.
3. California uses a schedule to determine how many weeks of benefits correspond to the disability rating.
4. The weekly rate is two-thirds of the AWW, subject to minimum and maximum amounts.

For example, a worker with a 20 percent disability rating may be entitled to a certain number of weeks of benefits at their calculated rate.

Step 4: Supplemental Job Displacement Benefits

If the injury prevents a return to the same type of work and the employer does not offer suitable modified employment, the worker may qualify for a supplemental job displacement benefit. This comes in the form of a voucher worth up to $6,000 for retraining or skill enhancement. While not paid in cash, it provides valuable assistance in finding new employment.

Step 5: Death Benefits

If a worker dies due to a job-related injury or illness, dependents may receive death benefits. These are calculated as a percentage of the worker’s wages, up to statutory limits, and include burial expenses.

Other Important Considerations

• Statewide Caps: Each year, California adjusts minimum and maximum weekly benefit amounts.
• Partial Return to Work: If a worker returns part-time or at reduced wages, temporary partial disability benefits may apply.
• Medical Care: All reasonable and necessary treatment for work-related injuries must be covered, separate from wage replacement.