Impact of State and Local Minimum Wage Laws on AWW and TTD Payments

Workers’ compensation claims administrators must be cognizant not only of the new minimum/maximum temporary total disability (TTD) rates now in effect for 2018 injuries (Bulletin 17-12), but state laws and local ordinances affecting hourly wage minimums.  In 2016, Gov. Brown signed SB 3 (Leno), mandating incremental increases in the state’s minimum wage, which will boost the statewide minimum to $15/hour for “large” employers (those with 26 or more employees) by 2022, and to $15/hour for all employers in 2023 (see schedule below).  As noted in the schedule, the increase that took effect 1/1/18 reset the minimum for “small employers” to $10.50/hour, while the minimum for large employers rose to $11/hour.  In addition, many municipalities (including Los Angeles, San Diego, San Jose, and San Francisco) have their own minimum wage laws that go beyond the state’s minimum wage requirement.

This is important for claims administrators because the rule from the Thrifty Drug and Grossmont cases remains valid:  A scheduled wage increase that becomes effective during the period of temporary disability is relevant to the issue of earnings at the time of injury.  Although this rule is typically applied to collective bargaining agreements with locked-in wage increases, a wage increase that can be “reasonably anticipated” at the date of injury applies to the benefit of the injured worker to the extent that it affects earning capacity.  A change in state law — or that of a city or municipality — that increases the minimum wage would likely apply here, necessitating an adjustment to the Average Weekly Wage (AWW) and TD rates for those workers whose earnings are at or near minimum.  If you have claims involving minimum wage earners, it is important to review whether state or local laws necessitate a change in AWW and TTD rates.  It is always recommended that you consult with counsel on any case-specific questions you may have.

2017 – 2023 California Minimum Wage Schedule

The Labor Commissioner’s official notice of the 2018 change in the statewide minimum wage is here.

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