Average Weekly Wage (AWW) and Income Benefit Calculations
MODULE 1: LESSON 8
The Average Weekly Wage, commonly called the AWW, is one of the most important numbers in a Texas workers’ compensation claim.
This single figure becomes the foundation for most income benefit calculations throughout the life of the claim.
When an AWW is accurate, benefit payments make sense, expectations are clearer, and disputes are far less likely. When it is incorrect, even by a small amount, frustration often follows.
For injured employees, the AWW affects financial stability during recovery. For employers and adjusters, it affects benefit accuracy, claim administration, and dispute exposure.
What Is The AWW?
The AWW represents what an employee normally earns during a typical workweek before the injury occurred.
That number becomes the starting point for several types of income benefits, including:
Temporary Income Benefits (TIBs)
Impairment Income Benefits (IIBs)
Supplemental Income Benefits (SIBs)
Lifetime Income Benefits (LIBs)
Death benefits for eligible family members
Key Takeaway
The AWW is the financial foundation of a claim. If the calculation is wrong, nearly every related benefit calculation may be affected.
How The AWW Is Usually Calculated
In most claims, the AWW is based on the employee’s earnings during the 13 weeks immediately before the injury.
Those earnings may include:
Hourly wages or salary
Overtime pay
Documented tips
Certain bonuses
Commissions
How It Fits Together
The insurance carrier generally totals the employee’s earnings during those 13 weeks and divides the total by 13.
The resulting average becomes the employee’s AWW.
This method works well when the employee has a stable and consistent work history leading up to the injury.
Real World Example
Carla works as a waitress at a neighborhood tavern. During the 13 weeks before her injury, she regularly worked overtime due to co-worker absences.
When calculating Carla’s AWW, her overtime earnings may significantly affect the final number.
If the overtime is overlooked, Carla’s income benefits could be lower than intended under the law.
When the Employee Did Not Work All 13 Weeks
Not every employee has a complete 13-week earnings history.
This commonly occurs when an employee:
• Is new to the job
• Works seasonal employment
• Has an irregular work schedule
• Missed work for reasons unrelated to the injury
Texas-Specific Approach
To reach a fair result, Texas workers’ compensation rules allow alternative methods for calculating the AWW, including:
• Using the earnings of a same or similarly situated employee, or
• Applying another reasonable method that fairly reflects typical earnings
The objective is not convenience or rough estimation.
The objective is fairness.
Remember This
AWW calculations should reflect what the employee realistically earned, not simply what is easiest to calculate.
Why Early Review of The AWW Matters
Small wage errors early in a claim can create much larger problems later.
An omitted bonus.
Incorrect overtime totals.
Missing payroll records.
A misunderstanding about wages from a second job.
Each can affect benefit calculations and potentially create disputes that continue throughout the claim.
How It Fits Together
Employees want benefits that accurately reflect their earnings
Employers want payroll information reported correctly
Adjusters need complete wage documentation to calculate benefits properly
The Goal
The AWW is not just a payroll calculation. It is the financial baseline for nearly every income benefit decision in the claim.
When calculated correctly, the AWW creates predictability, fairness, and consistency for everyone involved.
Key Takeaway
When the AWW is reviewed carefully and confirmed early, claims tend to move more smoothly, benefits become more predictable, and disputes become far less likely.
Knowledge Check Questions
1. What is the primary purpose of the Average Weekly Wage (AWW)?
a. To determine whether an injury is compensable
b. To calculate income benefits
c. To establish medical treatment guidelines
d. To determine who was at fault
2. In most Texas workers' compensation claims, how is the AWW calculated?
a. Using the employee's last paycheck before the injury
b. Using the highest earning month before the injury
c. By averaging earnings during the thirteen weeks before the injury
d. By estimating future earnings
3. Which of the following may be included when calculating the AWW?
a. Overtime pay
b. Certain bonuses
c. Commissions
d. All of the above
4. Why is it important to review the AWW calculation early in the claim?
a. Because it determines which doctor the employee can see
b. Because it determines compensability
c. Because wage errors can affect benefit payments and create disputes later
d. Because it determines work restrictions
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b
c
d
c
