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Do Workers’ Compensation Benefits in California Consider Overtime Pay?


Essentially all employers in California need to purchase workers’ compensation insurance and provide it to all of their employees, including part-time, seasonal, and full-time workers. The benefits of workers’ compensation are used to cover medical costs incurred by the employee’s on-the-job accident. An extended disability could warrant a portion of the claimant’s regular wages being provided for each week of work missed. The question that many workers have, though, is whether or not workers’ compensation will consider the overtime pay they usually receive.

In California, workers’ compensation premiums are paid based on a percentage of an employer’s total payroll. States that use a payroll percentage system do factor overtime pay into workers’ compensation benefits, but possibly not how you might expect.

More Overtime Means Higher Premiums

Your employer has to pay larger workers’ compensation insurance premiums the more they pay their employees. In many situations, this payment calculation disincentivizes employers from allowing employees from using too much overtime since that will raise their monthly operating costs. In some areas, employers can even take a percentage of an employee’s wages to help cover workers’ compensation costs. More overtime in such a situation could mean employees pay more for the monthly premiums than before.

Does That Mean You Get Better Pay Benefits, Though?

Paying more for workers’ compensation due to overtime hours does not necessarily mean that a worker who files a claim will get better benefits, though. Workers’ compensation benefits will provide your average weekly wages or salary, often without any consideration of the overtime hours you work. Your overtime hours might be factored into your pay benefits – which only activate after missing a week or more of work – if you are routinely scheduled and expected to work more than 40 hours in a workweek or 8 hours in a shift. Otherwise, your pay benefits will likely not be adjusted for the overtime pay you often earn.

Do you have more questions about overtime pay and how it is factored into workers’ compensation in California? Get answers and legal guidance from The Law Offices of Wax & Wax in Santa Clarita. Our attorneys can also assist you with a denied workers’ comp claim if you filed for benefits but had your application rejected. Call (818) 946-0608 today.