By: Leonardo Lampret, Associate Attorney
In workers’ compensation claims, one of the most important — and sometimes overlooked — documents is the Employer’s Statement of Wage Earnings form (known also as a C-240 form). The information reported on this form directly affects the calculation of the claimant’s average weekly wage (AWW), and in turn, the overall cost of the claim. Because a claim’s exposure is driven primarily by two factors — (1) indemnity benefits and (2) medical treatment — accurately filled out C-240 is important.
Indemnity benefits include two categories: temporary disability and permanent disability. Temporary partial disability benefits are calculated based on the claimant’s disability rate and 2/3 of the AWW (or total weekly rate). This means that a higher AWW results in a higher weekly benefit, up to the statutory maximum. Permanent disability benefits can arise from either a schedulable body part or a non-schedulable body part. For non-schedulable injuries, awards are determined in a manner similar to temporary disability: the total rate is two thirds of the AWW and the LWEC percentage determines the claimant’s weekly entitlement until the statutory cap expires. For schedulable injuries, the claimant is likewise entitled to a total weekly rate of two-thirds of the AWW, with the duration of awards tied to the severity of the Schedule Loss of Use.
Because the AWW influences both temporary and permanent awards, the C-240 must be completed with care. Earnings should reflect the claimant’s actual wages for the 52 weeks preceding the accident. When a similar worker is needed (if claimant does not work for substantially the whole year), that worker must truly be comparable in role, hours, and earning potential, and make sure that similar worker does not artificially inflates the AWW.
A Practical Example: How a “Close Enough” Similar Worker Can Quietly Inflate Claim Costs
Consider a claimant whose actual earnings over the 52 weeks preceding the accident support an AWW of $750. If this AWW were used, the claimant’s total weekly compensation rate (two-thirds of the AWW) would be approximately $500.
However, because the claimant did not work substantially the whole of the year, a similar worker must be used to calculate the AWW. Suppose the similar worker’s AWW is $825 — seemingly close, but still noticeably higher than the claimant’s true earning capacity. Using that figure, the total weekly compensation rate increases to $550.
That $50 weekly difference may not look dramatic at first glance — but it adds up quickly when applied to permanent awards.
Let’s take a hypothetical where the claimant sustains a 30% SLU, which equates to 93.6 weeks of benefits:
- Using the claimant’s AWW of $750
- Total rate = $500/week
- 93.6 weeks × $500 = $46,800 in awards
- Using the similar worker AWW of $825
- Total rate = $550/week
- 93.6 weeks × $550 = $51,480 in awards
That is a difference of $4,680 — created entirely by the inflated AWW. And importantly, this is just one body part scenario, which is not so common.
This example highlights why selecting a similar worker is not a casual exercise. The similar worker must genuinely reflect the claimant’s expected earning capacity — not simply any higher-paid employee in a comparable title. Even small AWW increases can produce thousands of dollars in additional liability that could have been avoided with a more accurate wage comparison aligned to the claimant’s true wages.
In short, limiting exposure is not achieved only through litigation on disability/permanent impairment issues. It also depends on ensuring the C-240 is accurate, reflects true earnings, uses the proper multiplier (or divisor when employment is seasonal or self-limiting), and relies on a genuinely comparable similar worker when required. It is the best way to control the costs of the claim.