The Two-Part Approach To Dealing With Average Weekly Wage Issues In New Jersey

Brittany Atkinson

BRITTANY ATKINSON focuses her practice on workers’ compensation matters in New Jersey.  She defends insurance carriers against work-related injuries and issues arising therefrom. Ms. Atkinson has defended clients in cases involving chemical exposure, jurisdictional questions and employment issues and has argued such issues up to the New Jersey Supreme Court.    Before joining Chartwell Law, Ms. Atkinson served as a judicial fellow for the Hon. Karen Shreeves-Johns in the Court of Common Pleas...

It has been routinely adopted by New Jersey practitioners to calculate a petitioner’s average weekly wage (AWW) based on the 26-week period preceding the injury. However, this has led to a common misconception about the proper way to calculate AWW.   

Statutorily, calculating an AWW based on the 26-weeks preceding the injury is only appropriate when the work being performed by the petitioner is considered “piece-work.” Nowadays, employers are generally not assessing an employee’s wages based on the amount of work that is being produced. Rather, employees are being hired at a salary/hourly rate.  

Pursuant to N.J.S.A. 34:15-37, the average weekly wage should be calculated based on the 26 weeks preceding the injury only in cases where “prior to the accident, the rate of wages is fixed by the output of the employee.” This is what we refer to as “piece-work.” The statute furthers that “when the rate of wages is fixed by the hour, the daily wage shall be found by multiplying the hourly rate by the customary number of working hours constituting an ordinary day in the character of the work involved.” This is often known as “contract-work.”

Often, the calculations yield very similar results. However, there are times when calculating the AWW utilizing the customary hours worked per week will result in a higher rate. Becoming aware of this situation before it presents itself could help respondents avoid issues in litigation. The difference in calculations will certainly affect the amount that petitioner is due in terms of temporary disability benefits. It could also affect petitioner’s overall permanency award. This is because the calculation of permanency is dependent on petitioner’s earnings. For example, at 2016 rates, 35% of partial total is equivalent to $85,260.00 based on an AWW above $600.00. If petitioner’s AWW is less than $600.00, then the value of 35% of partial total decreases. This is what practitioners often refer to as a “capped rate.” For example, 35% of partial total using an average weekly wage of $500.00 is equivalent to $73,500.00. That’s almost a $12,000.00 difference just by decreasing the AWW by $100.00. Therefore, a capped rate could significantly lessen the amount of a permanency award.  

It can be more difficult to calculate AWWs for "contract-work" because the phrase “customary number of working hours constituting an ordinary day in the character of the work involved” is very loosely defined. There is very little guidance on how the term should be interpreted. In Engelbretson v. American Stores, 49 N.J. Super. 19 (App. Div. 1957), the court held that one should use the “regular or normal working day followed by the employer in the line or type of work in which the particular employee is engaged.” Therefore, it is possible to argue that this means calculating based upon the hours and days for which the employee was hired to work or calculating based upon the customary hours and days for which an employee in that type of industry generally works. Due the difficulty in determining wages based on this type of calculation, practitioners often defer to using the “piece-work” calculation initially unless an issue arises.