Average weekly wage (AWW) is the average earnings per week used to calculate income replacement benefits, often under workers compensation frameworks.
Calculation Method
States and plans define wage look-back periods and covered pay components. The formula typically smooths normal weekly pay to avoid manipulation and produce a predictable benefit base across the policy lifecycle.
Claims Use
Claims adjusters use AWW to size temporary and temporary-total disability benefits, estimate duration impacts, and cap exposures. Documentation can include payroll ledgers, overtime history, and bonus treatment rules.
Regulatory Context
AWW rules are often statutory, and disputes are common when employers, insurers, and regulators disagree on included compensation components or averaging windows.
Practical Example
A worker earning $120,000 annually for full-year, 50-week work schedule averages to $2,307 per week. Under a benefit schedule paying 66 2/3%, the initial indemnity benchmark is around $1,538, subject to the plan or state maximum.