Nothing Average About It: Oregon Average Weekly Wage Calculations
In Oregon workers’ compensation, calculation of an injured worker’s average weekly wage is often litigated and often misunderstood. The first step in calculating an average weekly wage is the most important—establishing whether the worker was earning regular or irregular wages at the time of injury. Regular and irregular wages have separate formulas and calculation using the incorrect formula could result in an underpayment or overpayment of temporary disability benefits.
Regular Wages
Injured workers are considered to have regular wages when the worker is salaried or paid on a consistent basis. OAR 436-060-0005(19). Regular wages are less common. The formulas used to calculate an average weekly wage based on regular wages are straightforward. Under OAR 436-060-0030(5) regular wages should be calculated as follows:
- Daily wages multiplied by the number of days per week the worker was regularly employed;
- Monthly wages must be divided by 4.35
- Wages for other pay intervals must be calculated on an equivalent basis
If at the time of injury an injured worker was paid $100 per day, working Monday through Friday with no fluctuation in schedule, their average weekly wage calculation would be $100 x 5 = $500. If a salaried worker made $2,500 per month, their average weekly wage calculation would be $2,500 / 4.35 = $574.71.
Irregular Wages
Most workers have irregular wages. Wages are considered irregular when the worker is paid hourly and their hours fluctuate from week-to-week; pay depends on commissions, piece rate, or other variable factors; there are gaps in employment with the employer; the worker was recently employed; or there has been a recent pay rate change or change in wage earning agreement. OAR 436-060-0025(4)–(5). Common examples of irregular wage earners include most hourly workers, nurses or caregivers working rotating schedules, commission-based or piece-rate workers, and seasonal workers.
Calculation of an average weekly wage based on irregular wages is more complicated. These calculations are based on the worker’s irregular wages for a period of up to 52 weeks prior to the injury. OAR 436-060-0025(4). A worker is considered to have entered into a “new wage earning agreement” when the worker’s agreement changed for reasons other than a pay rate change, such as a change in job duties or a change in hours. If the worker was employed under the most recent wage earning agreement for fewer than 52 weeks, then the average weekly wage is calculated for the actual weeks of employment. For example, if a worker injures herself on her 25th week of employment under a new wage earning agreement, the average weekly wage would only be calculated based on 25 weeks. There are a few key limitations:
- If the worker is employed for less than four weeks or the most recent wage earning agreement has been in place for less than four weeks, the average weekly wage calculation must be based on the intent of the most recent wage earning agreement.
- If there is a gap in earnings greater than 14 consecutive calendar days that was not anticipated in the wage earning agreement, it must be excluded from the calculation.
Generally, irregular wages are calculated as gross wages divided by the number of weeks used for the calculation, i.e., up to 52 weeks, or the actual weeks worked under the most recent wage earning agreement. OAR 436-060-0025(4)(b). If an irregular wage earner makes $52,000 in 52 weeks with no new wage earning agreement or pay rate change, their average weekly wage would be $52,000 / 52 = $1,000.
If, however, the worker received a pay rate change in the applicable period, a more complex calculation is needed. The worker’s hours must be averaged over 52 weeks (or a shorter period if the worker has not been working under the wage earning agreement for up to 52 weeks) and then multiplied by the pay rate in effect at the time of injury. OAR 436-060-0025(4)(b)(C).
(total hours) / (number of weeks) x pay rate at injury = average weekly wage
So, if an injured worker worked 2,080 hours in 52 weeks, and her hourly rate increased to $25 per hour a month prior to the injury, her average weekly wage would be 2,080/52 x 25 = $1,000.
Payments such as bonuses, commissions, and piece-rates which are not based on time worked should also be included in an average weekly wage computation. Wages earned based on something other than an hourly, daily, weekly, monthly, or yearly rate are treated similarly to irregular wages. OAR 436-060-0025(4)(b)(C). If an injured worker earned a $1,000 holiday bonus within the 52 weeks prior to the injury, that would be included in the average weekly wage by dividing the total amount of the bonus over the total number of weeks. $1,000 / 52 = $19.23.
A worker may earn both regular and irregular wages. OAR 436-060-0025(3)(a). If a worker received a regular salary with bonuses or commissions, their average weekly wage is mixed and the salary portion should be calculated using the formula for regular wages while the bonus/commission portion should be calculated using the formula for irregular wages. After calculating the two portions, they should be combined to calculate a total average weekly wage.
| Wage Type | Formula |
| Regular wages – paid daily |
days worked per week x daily pay rate
|
| Regular wages – paid monthly |
(monthly pay rate) / 4.35
|
| Irregular wages – no pay rate change |
(gross wages) / (number of weeks considered)
|
| Irregular wages – pay rate change |
(total hours) / (number of weeks) x pay rate at time of injury
|
| Wages based on something else (bonuses, commissions, etc.) | (total payment) / (number of weeks considered) |
Use the above table as a helpful cheat sheet for your next average weekly wage calculation! Hopefully this brief overview provides some clarity when it comes to determining which formula to use while calculating the average weekly wage in an Oregon workers’ compensation claim. If you have any questions, please contact me at 971-383-2846 or .
Posted by Sydney Klupar.
