SAWW for 2007

Saturday, June 3, 2006 | 0

By Jake Jacobsmeyer

The information to calculate the impact of the increase in the State Average Weekly Wage (SAWW) on next years' benefit rates is now available. Under the provisions of AB 749/AB 486, the maximum rate for Temporary Total Disability (TTD) and Permanent Total Disability (PTD) effective 1/1/07 is to be based on the TTD rate in effect for 2006 (ie: $840 per week) increased by the change in the SAWW for the 12 months ending first quarter in the preceding year (2006) [Labor Code Section 4453(a)(10)] 1.

The Department of Labor's website reports the Unemployment Insurance SAWW for California for the annual period ending on March 31, 2006 as $880.00. With a SAWW for 2006 of $838.42 the differential is $41.58. This results in a percentage increase in the SAWW of 4.96%. Applying this increase to the 2006 maximum TTD rate, results in a new maximum rate effective 1/1/07 of $881.66. This will be the maximum TTD rate for injuries on or after 1/1/07 based on earnings of up to $1322.49.

Effective 1/1/07, the Minimum TD rate will also be subject to annual adjustment based on the increase in the SAWW [LC 4453(a)(10)]. Applying the 4.96% increase to the minimum TTD rate ($126.00) results in an increase in the Minimum rate to $132.25. Any employee with earnings in below $ 198.38 will be entitled for the new minimum TTD rate for injuries on or after 1/1/07.

In addition to the increase in the minimums and maximums for TTD, the increase in the SAWW is also used to calculate increases in life pension awards for injuries on or after 1/1/2003. Therefore if an employee was receiving a permanent total disability award of $500 per week for an injury after 1/1/03, they would be entitled to a PTD benefit as of 1/1/07 increased by 4.96% or $524.80 per week ($500 x 1.0496). If their award had been based on the maximum in effect for 2004 ($728), their benefit would be increased to $764.11 ($728 x 1.0496). Where there have been adjustments from previously increased Life Pension (for PTD awards) rates based on the SAWW increases, the new rate is calculated from such increased benefit rates not the original rate. On Life pension cases for awards between 70% and 99%, the calculation for increases in the payments, is not required until the life pension commences at the end of the award of PD.

The increase in the Minimum and Maximum TTD rates for 2007 means that increased vigilance is going to be required for application of Labor Code Section 4661.5. Since there was no increase in the TTD rate (minimum or maximum) in 2006, many employees did not get an increase in their TTD rate if the 2005 rate (also $840) had already been imposed. However TTD payments being made more than 2 years after the date of injury, where the employee's earnings justifies the higher rate (Earnings in excess of $1260), will require an increase in the TTD payment rate effective 1/1/07.

While for injuries after 4/19/06 Labor Code Section 4656(c)(1) imposes a 2 year cap on the payment of TTD for most injuries [subject to the 9 exceptions in Labor Code Section 4656(c)(2)], attention still needs to be paid to the 2 year provisions of Labor Code Section 4661.5 as the date for triggering the 2 year cap is not the date of injury but the commencement of benefits, which may very well be at some date well after the date of injury.

From a claims standpoint it is certainly ominous that the rate of increases has so far steadily gone up. There was no increase in 2004 (the SAWW dipped slightly and we only calculate based on increases in the SAWW); the increase in 2005 was only 1.97%; for 2006 the increase was 4.01% and this year it is 4.96%. Future years TTD rates, both minimum and maximum, will from this point forward, be increased annually by any positive changes in the SAWW for the preceding year measured by the increase recorded for the annual period ending on the prior March 31.

A link to the website to locate the California Information is: SAWW for 2007 Available.

The information to calculate the impact of the increase in the State Average Weekly Wage (SAWW) on next years' benefit rates is now available. Under the provisions of AB 749/AB 486, the maximum rate for Temporary Total Disability (TTD) and Permanent Total Disability (PTD) effective 1/1/07 is to be based on the TTD rate in effect for 2006 (ie: $840 per week) increased by the change in the SAWW for the 12 months ending first quarter in the preceding year (2006) [Labor Code Section 4453(a)(10)] 1. The Department of Labor's website reports the Unemployment Insurance SAWW for California for the annual period ending on March 31, 2006 as $880.00. With a SAWW for 2006 of $838.42 the differential is $41.58. This results in a percentage increase in the SAWW of 4.96%. Applying this increase to the 2006 maximum TTD rate, results in a new maximum rate effective 1/1/07 of $881.66. This will be the maximum TTD rate for injuries on or after 1/1/07 based on earnings of up to $1322.49.

Effective 1/1/07, the Minimum TD rate will also be subject to annual adjustment based on the increase in the SAWW [LC 4453(a)(10)]. Applying the 4.96% increase to the minimum TTD rate ($126.00) results in an increase in the Minimum rate to $132.25. Any employee with earnings in below $ 198.38 will be entitled for the new minimum TTD rate for injuries on or after 1/1/07.

In addition to the increase in the minimums and maximums for TTD, the increase in the SAWW is also used to calculate increases in life pension awards for injuries on or after 1/1/2003. Therefore if an employee was receiving a permanent total disability award of $500 per week for an injury after 1/1/03, they would be entitled to a PTD benefit as of 1/1/07 increased by 4.96% or $524.80 per week ($500 x 1.0496). If their award had been based on the maximum in effect for 2004 ($728), their benefit would be increased to $764.11 ($728 x 1.0496). Where there have been adjustments from previously increased Life Pension (for PTD awards) rates based on the SAWW increases, the new rate is calculated from such increased benefit rates not the original rate. On Life pension cases for awards between 70% and 99%, the calculation for increases in the payments, is not required until the life pension commences at the end of the award of PD.

The increase in the Minimum and Maximum TTD rates for 2007 means that increased vigilance is going to be required for application of Labor Code Section 4661.5. Since there was no increase in the TTD rate (minimum or maximum) in 2006, many employees did not get an increase in their TTD rate if the 2005 rate (also $840) had already been imposed. However TTD payments being made more than 2 years after the date of injury, where the employee's earnings justifies the higher rate (Earnings in excess of $1260), will require an increase in the TTD payment rate effective 1/1/07.

While for injuries after 4/19/06 Labor Code Section 4656(c)(1) imposes a 2 year cap on the payment of TTD for most injuries [subject to the 9 exceptions in Labor Code Section 4656(c)(2)], attention still needs to be paid to the 2 year provisions of Labor Code Section 4661.5 as the date for triggering the 2 year cap is not the date of injury but the commencement of benefits, which may very well be at some date well after the date of injury.

From a claims standpoint it is certainly ominous that the rate of increases has so far steadily gone up. There was no increase in 2004 (the SAWW dipped slightly and we only calculate based on increases in the SAWW); the increase in 2005 was only 1.97%; for 2006 the increase was 4.01% and this year it is 4.96%. Future years TTD rates, both minimum and maximum, will from this point forward, be increased annually by any positive changes in the SAWW for the preceding year measured by the increase recorded for the annual period ending on the prior March 31.

A link to the website to locate the California Information is: 2006 SAWW.

By attorney Richard "Jake" Jacobsmeyer, managing partner of the Concorde office of Adelson, Testan, Brundo & Popolardo. Jake can be reached at richardjacobsmeyer@atblaw.net.

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