Can an Employer Pay a Reduced Wages for Light Duty?

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Question from the Workers Compensation Workers Comp Light Duty:

“If an injured worker accepts light duty, does the employer have to pay the same hourly wage the employee was receiving at the time of injury, or can the wage be reduced?”

Answer:

The Workers Compensation Act provides incentives to the employer and employee to return to work as soon as possible. If the employee is partially disabled, that is, able to work light duty or for limited hours, Temporary Partial Disability (TPD) compensation is paid to help make up the difference between light duty wages and the employee’s pre-injury wage (Ind. Code §22-3-3-9). No TPD is paid if light duty wages exceed the statutory maximum average weekly wage.

Here’s an example:

Joe is injured at work and his claim is accepted by his employer’s workers compensation carrier. He is a maximum wage earner with an Average Weekly Wage of $1,040. While Joe is under treatment and unable to work, he received Temporary Total Disability (TTD), which is 2/3 of his Average Weekly Wage ($693.36).

As Joe reaches a point in his recovery from his injury where he is able to work light duty or for limited hours, his employer offers him a light duty assignment, but it only pays $13 an hour, as opposed to the $26 an hour Joe was making before he was injured. This is where Temporary Partial Disability (TPD) comes in. Assuming a 40 hour work week, Joe’s pre-injury wage was $1,040 and his light duty wage is $520. The difference is $520, and 2/3 of that difference is $347, which will be the amount of TPD Joe will receive in addition to the $520 he’s receiving for his light duty work.

Workers compensation benefits are NOT taxable

An important distinction is that TTD and TPD are workers’ compensation insurance benefits and, therefore, are not taxable. However, any light-duty wage is just that—a wage—and as such is subject to withholding, payroll tax and any other standard deductions for Joe’s employer (union dues, health insurance, etc.).

The only exception to this is if the light duty wage exceeded the statutory maximum average weekly wage, which is $1,040 for injuries incurred on or after July 1, 2014, in which case the injured worker would receive only the light duty wage and no additional benefit.

If you or someone you know has sustained a work-related injury, call us at 317-569-9644. The attorneys at Klezmer Maudlin, PC offer free advice and only charge a fee if you need us. Our fee is set by Indiana law and cannot exceed 20 percent of the total recovery.

We can help you navigate the deadlines, the forms and the process; and we can help you get the treatment you need and the settlement you deserve. If you have questions on workers compensation light duty work please contact us.