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How to Calculate Workers’ Compensation in California

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How to Calculate Workers' Compensation in California

The different formulas used across various states in calculating workers’ compensation, together with their rules and regulations, can easily get you lost in the maze of numbers and formulas. Adding to the confusion faced by employers and injured workers are the different types of benefits joining the mix.

California’s workers’ compensation system uses Utilization Review (UR). Employers or claims administrators use this to assess the necessity and appropriateness of medical treatments recommended by the injured worker’s doctor. An independent doctor will review the recommendation and determine whether to approve, modify, or deny the treatment. This cost-control mechanism ensures that the medical care provided to the injured worker is both effective and cost-efficient.

The way how workers’ comp is calculated in California is closely linked to the medical treatment given to injured workers. As injured workers undergo extensive and ongoing medical treatment, the greater it affects the final compensation amount awarded to the injured worker.

In this discussion, we will tell you how to determine your eligibility, calculate temporary and permanent disability benefits, and the additional factors that can impact your compensation.

Eligibility Requirements

For you to be eligible for workers’ compensation in California, you must meet their requirements. 

  1. You must be an employee and not an independent contractor. This means that you must have a formal employment relationship with your employer, where they’ve control over your work and can dictate how it’s done.
  2. Your injury or illness must be work-related. This means that it must have occurred while you were performing your job duties or as a result of your employment conditions. Pre-existing conditions aggravated by work may also be eligible for workers’ compensation.
  3. You must notify your employer of your injury or illness within a specific timeframe. In California, you typically have 30 days to report the incident to your employer, although there are exceptions for certain circumstances.
  4. Your employer must have workers’ compensation insurance. Most employers in California are required to carry this insurance, but there may be exceptions for certain types of businesses or individuals. 

If your employer doesn’t have workers’ compensation insurance, you may still be eligible to receive benefits through the state’s Uninsured Employers Fund. 

Determining Average Weekly Wage

Determining the average weekly wage is integral to the simplest type of workers’ compensation claim, as it will impact the calculation of the amount of compensation you may be entitled to receive. To determine your average weekly wage, you need to consider your earnings from the last 52 weeks before your injury date.

This includes wages, salaries, tips, commissions, and any other form of compensation you receive from your employer. Certain benefits, such as overtime pay, bonuses, and other non-cash benefits, may also be included in your average weekly wage calculation

To calculate your average weekly wage, you’ll need to add up all of your earnings from the past 52 weeks and divide the total by 52. If you haven’t been employed for the entire 52-week period, the calculation may be adjusted accordingly. For example, if you have only worked for 26 weeks, your total earnings would be divided by 26 instead of 52.

Any periods during which you weren’t working due to vacation, sick leave, or other reasons may also affect your average weekly wage calculation. The factors involved and an accurate calculation of your average weekly wage can ensure that you’ll be given the rightful compensation for your work-related injury or illness.

Calculating Temporary Disability Benefits

In California, temporary disability benefits are calculated at two-thirds of your average weekly wage. To calculate your average weekly wage, you need to determine your total earnings for the 52 weeks before your injury date. This includes wages, salaries, tips, overtime, and any other compensation you received from your employer. Once you have this information, add up your total earnings for the 52 weeks and divide it by 52 to get your average weekly wage.

Once you have calculated it, you can then figure out the amount of temporary disability benefits you’re entitled to. Multiply your average weekly wage by two-thirds to calculate the weekly benefit amount. This is the amount you’ll receive while you’re unable to work due to your work-related injury or illness but there are limits to the amount of temporary disability benefits you can get. In California, there’s a minimum and maximum weekly benefit amount that you may be eligible for, depending on your average weekly wage.

Temporary disability benefits are subject to state and federal taxes. Therefore, the amount you receive may be lower than the calculated benefit amount, and temporary disability benefits are typically paid every two weeks, so you’ll need to budget accordingly.

Estimating Permanent Disability Benefits

Estimating permanent disability benefits involves assessing the long-term impact of a work-related injury or illness on your ability to earn a living. This assessment takes into account various factors to figure out the extent of your disability and the compensation you may be entitled to receive.

To estimate your permanent disability benefits, the first step is to assess your impairment rating. An impairment rating is a measure of the severity of your disability based on medical evaluations. This rating is expressed as a percentage, with higher percentages indicating a more severe disability.

Once your impairment rating is determined, it’s used in conjunction with other factors such as your age, occupation, and future earning capacity to calculate your permanent disability benefits. The formula used to calculate these benefits is complex and varies depending on the nature and extent of your disability.

For an accurate estimate, you have to provide all necessary medical documentation and information about your injury or illness. This includes medical reports, diagnostic tests, and treatment records. It’s also advisable to seek legal advice from an experienced workers’ compensation attorney who can guide you through the process and advocate for your rights.

Additional Factors Affecting Compensation Calculation

To accurately calculate your workers’ compensation benefits in California, several additional factors must be taken into account. These factors can have a significant impact on the amount of compensation you’re entitled to.

  • The average weekly wage (AWW) that you earned before the injury. The AWW is used to settle the rate at which your benefits will be paid.
  • The nature and extent of your injury. The severity of your injury will affect the level of disability you’re assigned, which in turn affects the amount of compensation you receive.
  • The date of your injury also matters. The date determines which set of laws and regulations will be applied to your claim, as the workers’ compensation system has undergone several changes over the years.


Being injured on the job in California involves understanding how workers’ compensation is calculated. By meeting the eligibility requirements and accurately determining your average weekly wage, you can then calculate the temporary and permanent disability benefits you may be entitled to.

Keep in mind that there are additional factors that can affect the final compensation amount and seeking professional advice can help ensure that you receive the full compensation you rightfully deserve.