Calif. Releases Impact of 2004-2005 Increase in State Average Weekly Wage On Workers’ Comp

July 21, 2005

The U.S. Department of Labor has announced that California’s State Average Weekly Wage (SAWW) rose from $806.11 to $838.42 for the 12 months ending March 31, 2005 – remaining just below the threshold level of $840 that would have required an increase in maximum temporary total disability (TTD) and permanent total disability (PTD) rates for workers injured in 2006.

California’s 2002 workers’ compensation reforms (AB 749 and AB 486) mandated a 71 percent benefit hike, phased in over three years, that increased maximum weekly payments for TTD and PTD from $490 for pre-2003 injuries to $840 for 2005 injuries. The law also required that beginning with TTD and PTD payments for 2006 work injuries, the rates are to be adjusted annually to the greater of $840 or the State Average Weekly Wage, defined as the average weekly wage paid to employees covered by unemployment insurance as reported by the U.S. Department of Labor for California for the 12 months ending March 31 in the year preceding the injury.

The SAWW for the 12 months ending March 31, 2005 was $838.42, so TTD and PTD rates for 2006 injuries will remain $840 – the same as for 2005 injuries.

On the other hand, AB 749 also amended LC §4659(c) to provide a cost of living adjustment for workers injured on or after January 1, 2003 who have either a permanent total disability (100 percent PD) or a permanent disability rated at least 70 percent but less than 100 percent (entitling them to a life pension).

Effective Jan. 1, 2004 and every Jan. 1 thereafter claims administrators must increase these workers’ PTD and life pension payments to reflect the increase in the California state average weekly wage (SAWW). The 2004-2005 increase in the SAWW was $32.31 (4.00813 percent), so effective Jan. 1, 2006, California workers’ compensation claims administrators will need to adjust PTD and life pension payments for claims with injury dates on or after Jan. 1, 2003 to reflect that increase in the SAWW.

The California 2004 State Average Weekly Wage is available online at the Department of Labor Web site at www.ows.doleta.gov/unemploy/content/data_stats/datasum04/1stqtr/finance.asp#California. The 2005 SAWW is at www.ows.doleta.gov/unemploy/content/data_stats/datasum05/1stqtr/finance.asp#California.

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