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Determining the Correct Rate for Temporary Disability Benefits

New Jersey
November 17, 2021
April 11, 2019

When a claimant is out of work and entitled to receive temporary disability benefits in New Jersey, it is important to make sure that the correct rate is being used to avoid overpayment or underpayment issues.  Before the temporary disability benefit rate can be determined, the wages of the claimant need to be obtained.  This is because the applicable temporary disability benefit rate will be 70 percent of the average weekly wage up to the statutory maximum for that calendar year.

As many employees are not paid a set weekly amount, it is common practice for a 26 week wage statement to be obtained and used to find an average weekly wage for the claimant.  This statement includes the 26 weeks of employment preceding the date of accident, which will be averaged to find the wages and in turn the corresponding temporary disability benefit rate. While this is the method commonly used before payment of temporary disability benefits, the 26 week period is really meant for piece work per N.J.S.A. 34:15-37.  Piece work is not usually relevant as this is no longer particularly common.  With an hourly employee, what the Statute requires is that the hourly rate be multiplied by the number of hours customarily worked in an ordinary day in the character of the work involved.  Likewise, to find the weekly wage, the Statute states that the daily wage should be multiplied by the customary number of days worked in an ordinary week in the character of the work involved.  

The takeaway is that while a 26 week wage statement is most commonly used to determine the average weekly wage and the applicable rate for indemnity benefits, disputes can and do arise over the proper rate.  For example, the average of 26 weeks can end up resulting in calculation of a lower average weekly wage than using the hourly rate for which the person was hired and the customary amount of hours worked.  This can occur when a person happens to work a few less hours some weeks during the 26 week period but ordinarily works more.  Thus, it is important that those issuing indemnity benefits be aware that while a 26 week wage is helpful it is not dispositive of the wage and rate and additional indemnity benefits could be found to be owed to a claimant