Time-Loss vs. Loss of Earning Power for Washington Workers’ Compensation
Updated: Apr 4
When workers are injured on the job, they may experience both a loss of earnings and a loss of earning power. These terms may sound similar, but they actually refer to different aspects of the financial impact of a workplace injury. In the state of Washington, workers' compensation provides benefits for both time-loss and loss of earning power, and understanding the difference between the two can help injured workers receive the compensation they deserve.
What is Time-Loss Compensation?
Time-loss compensation is a benefit that replaces a portion of the wages an injured worker loses when they are unable to work due to a workplace injury or illness. In Washington, time-loss benefits are paid at a rate of 60 to 75% of the worker's pre-injury wages, depending on the marital status and number of dependents they have. RCW 51.32.060 These benefits are tax-free and can continue until the worker reaches maximum medical improvement.
To qualify for time-loss compensation, a worker must be unable to perform their job duties for at least three days due to their injury or illness. If they are able to return to work on light-duty or with work restrictions, they may still be eligible for benefits if they are working less than they were at the time of injury. The self-insured employer or the Department of Labor and Industries (L&I) makes these payments on a biweekly basis.
What is Loss of Earning Power?
Loss of earning power, on the other hand, refers to the long-term impact of a workplace injury or illness on a worker's ability to earn income. This benefit compensates workers for the difference between their pre-injury earning capacity and their post-injury earning capacity. In Washington, loss of earning power benefits are paid at a rate of 80% of the difference between the worker's pre-injury earning capacity and their post-injury earning capacity depending on the date of the injury and wages. RCW 51.32.090
When are LEP benefits appropriate?
The worker may be entitled to LEP if they:
Return to work at a lower wage.
Had more than one job at the time of injury and is restricted from performing one of the
jobs, even if it is not the job of injury.
Return to work but is unable to work at the premium or higher rates (overtime/ holiday pay) they normally work.
Return to work at regular wage but fewer hours. This includes workers who return to full time, i.e. 40 hours per week, but prior to their injury or occupational disease were regularly working overtime. (Exception: This does not apply if the employer no longer offers overtime work to any employees.)
To qualify for loss of earning power benefits, a worker must have a permanent impairment as a result of their workplace injury or illness that reduces their earning capacity. You must obtain medical certification to show that your injury is due to a workplace injury or illness. The impairment does not need to be a complete loss of earning capacity, but it must be significant enough to affect the worker's ability to earn income and must be over a 5% loss between the wages at the time of injury and the current earned wages. LEP Fact Sheet from the Washington Department of Labor & Industries
How are Time-Loss and Loss of Earning Power Calculated?
Calculating time-loss benefits is relatively straightforward. The benefit is calculated as a percentage of the worker's pre-injury wages, with adjustments made based on the marital status and the number of dependents the worker has. The maximum rate is set by the state each year.
Calculating loss of earning power benefits is more complicated. The benefit is based on the worker's pre-injury earning capacity, which is typically determined by looking at their wages and hours worked in the 12 months prior to their injury. The difference between the worker's pre-injury earning capacity and their post-injury earning is used to determine the amount of the loss of earning power benefit. This amount is subject to a cap of $8,250.00 (Effective July 1, 2022 to June 30, 2023) per month and will be adjusted based on the wages at the time of injury and the date of the injury. This is determined every year by the Washington Employment Security Department. See:Loss of Earning Power Online Worksheet and Loss of Earning Power Calculations
Why is it Important to Understand the Difference Between Time-Loss and Loss of Earning Power?
Understanding the difference between time-loss and loss of earning power is important for several reasons. First, it can help injured workers understand the types of benefits they may be entitled to and how much they may receive. This knowledge can help workers plan for their financial future and ensure they receive the compensation they deserve.
Second, understanding the difference between these two types of benefits can help injured workers navigate the workers' compensation system more effectively. Workers may need to provide different types of documentation or evidence to support a claim for time-loss compensation versus a claim for loss of earning power. Knowing what is required can help workers prepare their case and ensure they have the best chance of success.
Finally, understanding the difference between time-loss and loss of earning power can help employers and insurers better understand their obligations under the workers' compensation system. Employers and insurers may need to provide different types of benefits or support to injured workers depending on the nature of their injury and the impact it has on their ability to earn income. Understanding these differences can help employers and insurers make more informed decisions about how to support injured workers and manage their workers' compensation costs.
An Experienced Workers’ Compensation Attorney Can Help
If you have experienced a workplace injury in the greater Seattle area, Scott & Scott, PLLC can help. We can assist you with all your workers’ compensation needs and aim to help you to receive all the benefits you are entitled to as an injured worker. If you believe we can help, call us today at: (206) 622-2200.