The rate is typically two-thirds of the average weekly wage subject to maximum and minimum limits set annually. Average weekly wage calculation includes overtime, bonuses, and in some states concurrent employment.
Miscalculation generates penalty exposure.
Alternative Names:
Comp Rate|Average Weekly Wage Rate
Why it Matters?
Average weekly wage calculation errors are common and generate penalty exposure, since including or excluding overtime, fringe benefits, and concurrent employment earnings varies by state and the correct method is frequently counterintuitive. Underpayment penalties and interest accrue automatically in many jurisdictions. Auditing the calculation at claim setup is substantially cheaper than correcting it after a penalty assessment.
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Frequently asked questions
Why do rate errors occur?
What is the exposure?
