Wages in Nebraska increased by 7.5 percent in 2021 according to the Nebraska Department of Labor. This is the largest percent increase since at least 1996. How will this impact workers compensation in Nebraska?
Increase in maximum benefit amount
The maximum benefit rate for workers compensation benefits in Nebraska increased from $914 to $983. Since 1996 the workers compensation maximum benefit rate has been pegged to the increase in the state average weekly wage.
Typically statewide average wages increase by 3-4 percent per year. The increase in 2021 is unprecedented and is consistent with labor shortages related to the so-called “Great Resignation” and the COVID-19 pandemic.
Under the new maximum benefit rate, workers earning more than $76, 674 per year without overtime will be under compensated for their work injury.
No increase in minimum benefit
The minimum benefit under for injured workers in Nebraska remained $49. That amount doesn’t increase along with the state average weekly wage. If it had, the minimum rate would be $117.76
Part-time workers should note that permanent disability benefits and eligibility for retraining are based on a 40-hour work week.
Wage inflation and loss of earning power
Earlier this year, I wrote about a Mississippi case, Chambers v. Howard Industries, that allowed courts to take inflation into account when calculating loss of earning power. Mississippi law includes a presumption of no loss of earning if an employee is back to work at the same wage. The court in Chambers allowed plaintiffs to use wage inflation to rebut that presumption.
In my experience wage inflation comes into play with overuse injuries involving multiple body parts that take years to treat. Some back surgeries can have long recovery times. Even with wage inflation of 10 percent, I’ve been able to get counselors to increase loss of earning power evaluations. I would expect greater increases if I could use a 15-20 percent increase over a multi-year period.
Some defense lawyers strongly objected to the use of wage inflation in loss of earning power evaluations. After all benefits are capped by earnings at and before the time of injury.
But using wage inflation doesn’t increase the benefit rate, it just increases the percent of the potential benefit for the worker. I would argue the proposition that loss of earning power evaluations should accurately reflect earning power weigh in favor of using wage inflation.