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The Two Minimum Rates in New Jersey Workers’ Compensation

By on September 7, 2018 in Workers' Comp with 0 Comments

Everyone knows that New Jersey has a minimum rate for temporary disability benefits, but it is not as widely understood that New Jersey also has a minimum rate for permanency.  In 2018 the minimum rate for temporary disability benefits is $241 per week.  But the minimum rate for permanency remains $35 per week, as it has for many decades.

Why is this important?  Part-time employment is at an all-time high in the United States, and millions of Americans have second jobs. There are many situations where an employee will have a high-paying full-time job but the injury occurs on the part-time job.  The question for adjusters and professionals is how to set the rate and thereby determine exposure and reserves.

Consider a cafeteria worker in a private business who works part-time earning $100 per week.  He falls, fractures his hip and develops problems with walking.  What do we pay this worker for temporary disability benefits?  The answer is $241 per week until he reaches maximal medical improvement or can return to work either full-time or on a light duty basis.  It does not matter that $241 per week is higher than the wage of $100 per week.  That is the minimum rate.

Now fast forward to the permanency stage of the case.  The injured worker has had a hip replacement and has permanent gait issues.  The Judge of Compensation has reviewed the permanency estimates for both sides and recommends 50% permanent partial disability as a compromise for settlement purposes.

What do we pay this worker for a 50% award?  He is back to work at the cafeteria job and back to work full-time at his regular job at a grocery store, but he clearly has objective evidence of a significant impariment.  The rate chart which we all have at our desks says that 50% permanent partial disability equates to 300 weeks of compensation at a rate of $657 per week for a 2018 injury for a grand total of $180,600.   But remember that his wage is $100 per week in the part-time job.  That is the wage we focus on, not the worker’s full-time job at the grocery store.  Can we pay less than $241 per week, which is the minimum for temporary disability benefits?  Yes we can because there is a different minimum for permanency purposes.

This is an area of practice that every good practitioner must master.  We do not pay $180,600 over 300 weeks.  That would be an enormous overpayment.  We take the wage of $100 and multiply it by 70% for a rate of $70 per week.  We then multiply $70 per week times 300 weeks and get an award of $21,000.  That is about $160,000 less than the rate chart provides for someone with a 50% disability!

So the lessons in understanding the minimum rate for permanency are crucial to grasp.  Countless workers’ compensation cases get overpaid for failure to understand that the minimum for permanency is far less than the minimum for temporary disability benefits.

  • Remember not to use the rate chart on your desks for low wage employees. The rate chart is only relevant for high wage employees
  • Do not count the other job’s wages in New Jersey in calculating the amount due for temporary disability or permanent disability purposes.  You use the wage for the job where the injury occurred.
  • For permanency awards, take the average weekly wage, multiply by 70% and that becomes what we refer to as the “capped rate.”  The rate never goes higher than that number.  In the above case, the capped rate is $70 per week.
  • Set the wage and rate at the start of the case for both temporary and permanency purposes.  All accurate reserves and exposure analysis depend on this.
  • We do not reconstruct wages for temporary disability benefit purposes.  In some cases a worker’s part-time wage may be reconstructed to a 40-hour week if the worker can show a permanent diminution of working ability.  It is our position that someone who is back to work on both jobs cannot meet this test for reconstruction of wages.
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John H. Geaney

About the Author

About the Author:

John H. Geaney, an executive committee member and shareholder with Capehart Scatchard, began an email newsletter entitled Currents in Workers’ Compensation, ADA and FMLA in 2001 in order to keep clients and readers informed on leading developments in these three areas of law. Since that time he has written over 500 newsletter updates.

Mr. Geaney is the author of Geaney’s New Jersey Workers’ Compensation Manual for Practitioners, Adjusters & Employers. The manual is distributed by the New Jersey Institute for Continuing Legal Education (NJICLE). He also authored an ADA and FMLA manual as distributed by NJICLE. If you are interested in purchasing the manual, please contact NJICLE at 732-214-8500 or visit their website at www.njicle.com.

Mr. Geaney represents employers in the defense of workers’ compensation, ADA and FMLA matters. He is a Fellow of the College of Workers’ Compensation Lawyers of the American Bar Association and is certified by the Supreme Court of New Jersey as a workers’ compensation law attorney. He is one of two firm representatives to the National Workers’ Compensation Defense Network. He has served on the Executive Committee of Capehart Scatchard for over ten (10) years.

A graduate of Holy Cross College summa cum laude, Mr. Geaney obtained his law degree from Boston College Law School. He has been named a “Super Lawyer” by his peers and Law and Politics. He serves as Vice President of the Friends of MEND, the fundraising arm of a local charitable organization devoted to promoting affordable housing.

Capehart Scatchard is a full service law firm with offices in Mt. Laurel and Trenton, New Jersey. The firm represents employers and businesses in a wide variety of areas, including workers’ compensation, civil litigation, labor, environmental, business, estates and governmental affairs.

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