What Is The Minimum Compensation Rate – Why Is It Important

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Term Of The Day – Minimum Compensation Rate

Most states have a minimum threshold of Workers Comp benefits regardless of their wage rate. If the injured employee’s Workers Compensation rate falls below this figure, it is increased to the minimum.   

For instance, if an employee earns $ 8 per hour and works 5 hours per week for an employer their Average Weekly Wage equals $40.00 per week.   In most state the Workers Compensation weekly benefit is 2/3 of the Average Weekly Wage.   Two thirds of $40 equals $26.67 which is the workers’ comp benefits rate.  

In most states the minimum compensation is $30 or a similar figure, so the employee would receive $30 per week. 

One of the complicating factors originates from the employee have multiple jobs.   Some states figure in the other jobs wages also.  Some do not under certain circumstances. 

There has been an ongoing debate on whether or not volunteer employees should be paid the minimum rate.

Graphic of Two Workers Sitting on Coins Minimum Compensation Rate Workers Comp benefits
123RF

The minimum rate can vary quite a bit from state to state.   Most of the states that I handled as an adjuster had a minimum of $30 per week.  This does seem to be a very low number.  I still agree that volunteers should be paid some type of minimum compensation rate when injured on the job. 

One of the debatable areas of increasing the compensation rate to a minimum is when permanent partial disability (PPD) benefits  are paid to an injured worker.   One suggestion I had seen a long time ago was to have no PPD benefits when someone is injured that requires the adjustment to the minimum compensation rate. 

The only time I was ever fined was due to not paying a volunteer TTD benefits.

The lowest I have ever paid was $18 a week.   

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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