Should Bonuses Count Towards the Calculation of Your Average Weekly Wage?
The most important factor in determining the amount of compensation an injured worker is entitled to under the Illinois Workers’ Compensation Act is the calculation of the average weekly wage (AWW). The employee’s average weekly wage is the foundation of the monetary benefits you are entitled to under the Illinois Workers’ Compensation Act. For example, total temporary disability (TTD) benefit is set at 66-2/3% of the average weekly wage and partial permanent disability (PPD) rate is set at 60% of the average weekly wage. The more you earn, the more you recover under the Workers’ Compensation Act.
With the close of 2013, some workers were fortunate enough to receive bonuses. Should these bonuses be included in the AWW calculation? — it depends.
The Act specifically excludes bonuses from the calculation of AWW. InLevkovitz v. the IIC, the claimant, a restaurant manager was given meals on the days he worked. The courts held that the meals were not given for any consideration of work, but rather they were given as an extra benefit by the employer and more closely resembled a “bonus”.
However, The Illinois courts have carved out an exception for incentive-based bonuses. In Arcelor Mittal Steel v. the IWCC, in addition to their hourly wages, the employees received an incentive bonus based on the level of steel production. The Appellate court included production bonuses in the AWW calculation, reasoning that it was received for consideration for work actually performed, not as gratuitous benefit from the employer. Furthermore, the employer had no discretion and was obligated to pay out the earned production bonuses to the employees, provided that the steel production goals were met.
Incentive-based bonuses received for reaching a pre-determined production goal or sales goal should generally be included in the calculation of AWW. Conversely, gratuitous bonuses (holiday bonus, signing bonus and performance bonus awarded at the sole discretion of the employer) will likely be excluded from the calculation of AWW. A good workers’ compensation attorney will make sure that all allowable forms of compensation (i.e. incentive bonuses, overtime, and housing) are included in calculating AWW.