Workers’ compensation benefits in New York are not arbitrary. They are calculated using a specific formula, applied to specific inputs, subject to specific caps. Understanding how the calculation works is important because the result determines how much money you receive every week while you are unable to work. A miscalculation — or a dispute about the inputs — can mean the difference between benefits that cover your basic expenses and benefits that fall short.
This article explains the benefit calculation from the ground up: the formula itself, the average weekly wage that drives it, the statutory maximum, the disability classifications that determine how the formula is applied, and the timing rules that govern when payments begin.
The basic formula
The standard workers’ compensation wage replacement benefit in New York is two-thirds of your average weekly wage, up to the statutory maximum. That is the formula: AWW × 2/3, capped at the maximum. If your average weekly wage is $900, your weekly benefit is $600. If your average weekly wage is $2,000, your calculated benefit would be $1,333 — but because the statutory maximum for injuries on or after July 1, 2023 is $1,145.43, your actual benefit is capped at $1,145.43.
Workers’ compensation benefits are not taxed. You do not pay federal income tax, state income tax, or FICA on your weekly benefit. This means the net amount you receive is the full amount of the benefit. A worker whose pre-injury take-home pay was $900 per week after taxes may find that a workers’ compensation benefit of $600 per week represents a smaller reduction in actual income than the two-thirds formula suggests, because the benefit is tax-free.
The formula applies to the wage replacement portion of your benefits only. Medical benefits are separate and have no dollar cap.
How the average weekly wage is determined
The average weekly wage, or AWW, is the foundation of the benefit calculation. It represents your typical weekly earnings before the injury. The AWW is generally calculated by looking at your earnings over the 52 weeks prior to the injury, though the Board may use a shorter period if you were not employed for a full year or if a shorter period more accurately reflects your earning capacity.
The AWW includes more than just your base hourly or salary rate. It can include overtime pay if overtime was a regular part of your employment, tips if you received them regularly, commissions, bonuses that are part of your regular compensation, the cash value of board and lodging provided by your employer, and car allowances. If you held concurrent employment — more than one job at the time of the injury — income from both jobs may be included in the AWW calculation.
For workers under age 25, the AWW calculation may include a special provision. If the worker was in a job where wages would reasonably be expected to increase over time — an apprenticeship, an entry-level position with a clear progression — the Board may calculate the AWW based on what the worker would have earned had they not been injured, rather than what they were actually earning at the time of the injury. This provision recognizes that young workers at the beginning of their careers should not be permanently limited by entry-level wages.
When the average weekly wage is disputed
AWW disputes are among the most common disputes in workers’ compensation. The insurance carrier may calculate a lower AWW by excluding overtime, tips, or concurrent employment income. A worker paid off the books may have no formal wage records at all. A worker paid on commission may have weeks of high earnings and weeks of low earnings, making the average difficult to establish.
Documentation is the key to resolving AWW disputes. Pay stubs, W-2 forms, tax returns, bank deposit records, and records of tips and commissions all serve as evidence of earnings. For workers paid off the books, bank deposits, text messages discussing pay, testimony from co-workers, and any other evidence of the working relationship and compensation can help establish the wage. The more documentation you have, the stronger your position in an AWW dispute.
If you believe the AWW the carrier has calculated is too low, you have the right to contest it at a hearing before a Workers’ Compensation Law Judge. The judge will review the evidence from both sides and determine the appropriate AWW. This is not a minor issue. Every dollar of difference in the AWW translates directly into a difference in your weekly benefit for the duration of your disability.
The statutory maximum benefit
New York sets a maximum weekly benefit that adjusts annually. For injuries occurring on or after July 1, 2023, the maximum weekly benefit is $1,145.43. This cap applies regardless of how high your average weekly wage is. A worker earning $3,000 per week receives the same maximum benefit as a worker earning $2,000 per week.
The maximum is tied to the state average weekly wage and is recalculated each year. The maximum that applies to your case is determined by the date of your injury, not the date you file your claim or the date benefits begin. If you were injured in 2022, the 2022 maximum applies even if your case is still open in 2025. This is an important detail for cases that remain open for several years.
How disability classification affects the benefit
The two-thirds formula applies to workers who are completely unable to work due to their injury. This is classified as Temporary Total Disability, or TTD. If you cannot work at all — in any capacity — your benefit is the full two-thirds of your AWW, up to the maximum.
If you can work in some capacity but not at your full pre-injury level, your benefits fall under Temporary Partial Disability, or TPD. The TPD benefit is calculated as two-thirds of the difference between your pre-injury AWW and your current earning capacity. If your AWW was $900 and you can now earn $400 per week in a reduced-duty position, your TPD benefit is two-thirds of $500, or $333.33 per week.
The disability classification is determined by your treating physician based on clinical findings. If the insurance carrier disagrees with the classification, it may request an Independent Medical Examination. Disputes about disability classification are resolved at hearings before a Workers’ Compensation Law Judge.
When benefit payments begin
Your first wage replacement check should arrive within 18 days of the start of your disability or 10 days after your employer has been notified of the injury, whichever is later. If the carrier accepts your claim promptly, benefits may begin even sooner.
There is a waiting period built into the system. If you miss one week or less of work, you will not receive wage replacement benefits for that period. If you miss more than one week but less than two weeks, you receive benefits only for the second week. If you miss more than two weeks, you are paid retroactively for all time lost, including the first week. This retroactive payment recognizes that injuries lasting longer than two weeks are more serious and deserve full compensation from the start.
If the carrier disputes your claim, benefit payments will not begin until the dispute is resolved. This can take weeks or months, depending on how quickly a hearing is scheduled and how complex the issues are. During this period, you receive no wage replacement benefits even if you are unable to work. This is one of the situations where legal representation can make a meaningful difference — an attorney can push for an expedited hearing and present the evidence needed to resolve the dispute.
What workers’ compensation benefits do not include
Workers’ compensation replaces a portion of your lost wages and covers your medical expenses. It does not compensate for pain and suffering, emotional distress, loss of enjoyment of life, or loss of consortium. These types of damages are available only through a personal injury lawsuit, and the exclusive remedy doctrine prevents you from suing your employer for them.
This is why third-party claims matter. If someone other than your employer contributed to your injury, a third-party lawsuit can provide the types of compensation that workers’ compensation does not. The total recovery from a workplace injury may come from two sources: workers’ compensation benefits and a third-party settlement or verdict. Evaluating both is essential to understanding what your case is actually worth.
How Schwartzapfel Holbrook ensures accurate benefit calculations
At Schwartzapfel Holbrook, we review the benefit calculation in every workers’ compensation case to ensure the average weekly wage is accurate and that the correct disability classification has been applied. That review includes examining pay records for overtime, tips, commissions, and concurrent employment income that may not have been included in the carrier’s initial calculation. If the AWW is too low, we contest it at a hearing and present the wage documentation needed to correct it.
We also evaluate every case for third-party liability, because the limitations of the workers’ compensation benefit formula — two-thirds wages, no pain and suffering — mean that the workers’ compensation benefit alone may not reflect the full value of the claim. Understanding what additional recovery may be available is part of the evaluation we conduct for every client.
Schwartzapfel Holbrook / Fighting For You