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How Is Workers Compensation Calculated for Tipped and Commissioned Workers?

On Behalf of | Jun 24, 2019 | Firm News

Workers’ compensation insurance ensures that employees injured on the job are compensated for their injuries and lost wages. In Iowa, workers’ compensation is governed by state law and administered by the Iowa Division of Workers’ Compensation. In addition to the cost of medical care and related expenses, an injured worker may be entitled to various other benefits like temporary full or partial disability, healing period, and permanent full or partial disability payments. Learn more about these types of disability benefits here. Further, Know-how is worker’s compensation calculated. These wage-related benefits are calculated based on an employee’s income, pursuant to statutory guidance. This can make it difficult to figure out the number of benefits payable to employees who earn most of their income from commission or tips since these can vary from day to day and week to week.


 Many Types of Workers Compensation Benefits Are Calculated Based on Average Weekly Wage

If you miss more than three days of work due to your on-the-job injury, you may be entitled to wage replacement benefits (temporary total disability) starting your fourth day out. (If your total time absent exceeds fourteen calendar days, you can also receive back pay for the first three days missed.) Temporary total disability (TTD) benefits amount to 80% of your average weekly wage, not to exceed the statutory maximum rate (approximately 200% of the Iowa average weekly wage, which is currently $843.81). TTD benefits are paid until the date you return to work, are declared medically capable of returning to a similar position, or are deemed to be at maximum medical improvement (MMI) by your doctor.  If your injury causes an impairment or disability that makes you able to work only a lower paying job (or fewer payable hours), you may be entitled to temporary partial disability benefits. These will compensate you for roughly two-thirds of the difference between your former average weekly wage and current wage.

If you have permanent limitations on your earning capacity because of your injury, you may be entitled to permanent disability payments. While some injuries have set compensation amounts listed in the Iowa Code workers’ compensation disability tables (injuries to “scheduled body parts”), compensation for permanent disabilities that affect the body as a whole (known as “industrial disabilities”) is based on a percentage of loss determined based on many factors. These benefits are awarded as a multiple of your average weekly wage.

If you can’t return to any type of gainful employment, you may be entitled to receive permanent total disability benefits for as long as you remain totally disabled. As with temporary benefits, the benefits are paid weekly and are based upon 80% of your average weekly wage, not to exceed the statutory limits.

You may also be entitled to compensation for time and wages lost while you undergo medical treatment on a day-to-day or short-term basis (for example, leaving work early for a doctor’s appointment).


Statutory Guidance on Calculating Average Wage for Tipped and Commissioned Employees in Iowa

Generally, your average weekly wage is based on your average weekly earnings in the period before your disability begins. If you are paid a yearly salary, your average weekly wage is 1/52 of that salary; if you are paid on a monthly pay period basis, your average weekly wage is your monthly gross earnings multiplied by twelve and then divided by fifty-two. This helps ensure that your benefits are a fair representation of your lost wages.

In the case of an employee who is paid primarily by tips or commission payments, the average weekly wage is generally determined by adding up the earnings (including any shift differential pay but not including overtime or premium pay) from the 13 weeks prior to the injury, then dividing the total by 13. If one or more of those thirteen weeks don’t fairly reflect the employee’s customary earnings, more representative weeks can be substituted.[1] So, if an employee earns quarterly or semi-annual commissions, it may be more appropriate to average more or different weeks. An experienced workers’ compensation attorney can help you ensure that your weekly wage determination fairly represents your earned income.

For employees who earn a significant portion of their incomes from tips or commissions, it’s important to accurately and fully report your earnings. Not only is it required by law, but it also allows you to properly collect workers’ compensation benefits in the event of a workplace injury.

Workers’ Compensation Protection for Iowa Employees

If you have been injured at work, contact the Platt Law Firm today. We will review the facts of your situation and help you figure out whether you are entitled to workers’ compensation benefits for medical expenses, lost wages, temporary or permanent disability, or other covered expenses.

Our experienced Des Moines and Urbandale, Iowa worker’s compensation attorney ensures that you get the benefits you are entitled to, protects your rights during the valuation process, and helps guide you through the complicated and often confusing workers comp process. Don’t wait—contact us today and get top-rated personal injury lawyers near you.