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Iowa Supreme Court Ruling: 401-K Payments Do Not Count For Workers’ Compensation Benefits

On June 3rd, 2016, the Iowa Supreme Court tackled an important workers’ compensation question: should employer contributions to 401-K retirement plans be considered when calculating how much injured employees are entitled to receive under Iowa’s workers’ compensation laws? Radio Iowa reports that the Iowa Supreme Court has upheld the district court’s decision that employer contributions to 401-K plans are fringe benefits that are not part of an employee’s gross weekly earnings.

This ruling is very important because an injured employee who is eligible for workers’ compensation in Iowa receives benefit payments based on the amount that their employer pays them per week. Therefore, because the court determined that a company’s contribution to its employees’ 401-K plan is a fringe benefit and not part of their weekly earnings, injured employees receive smaller workers’ compensation payments than they otherwise would have been entitled to. The court’s decision hinged on the following key facts:

  • An employer’s retirement contribution is not part of an employee’s spendable weekly wages, and
  • Employees themselves determine the amount of money that will be put into their retirement account and then matched by their employer.

How Is Workers’ Compensation Calculated in Iowa?

If you are injured on the job in Iowa you may be able to recover:

  • The costs of any medical expenses that you incurred (as long as they were reasonable and necessary),
  • Up to 80 percent of your weekly wages if you suffer a short-term disability that causes you to miss more than three days of work,
  • Up to 66.67 percent of the difference between your previous earnings and your new earnings if the injury causes you to take lesser-paying work, and
  • Up to 80 percent of your weekly earnings if you suffer a permanent disability.

As you can see, the amount of your gross weekly earnings is very important when talking about workers’ compensation payments as it greatly affects the amount of money that you are entitled to. Under Iowa Code §85.36, the basis of compensation for an injured employee in Iowa is the employee’s weekly earning at the time of the injury. Although this may sound simple enough, calculating your ‘average weekly wage’ (AWW) can be complicated and the circumstances surrounding your case may cause your AWW to be calculated differently than the calculation described below.

Your AWW is determined by taking the gross salary, wages, or earnings that you would have been entitled to had you worked the customary hours for the full pay period in which you were injured. However, workers’ compensation benefits also take into account other factors, such as whether or not the injured person was married or had dependants at the time of the injury, and therefore the computation can become very complicated. In order to make sure that you receive everything that you are entitled to it is advisable to consult with an experienced workers’ compensation attorney.

How Can We Help?

If you have been injured on the job in Iowa and are wondering if you are eligible to receive workers’ compensation benefits, contact the Noyes Law Office, P.C. for a free consultation. Our competent Iowa workers’ compensation lawyers are happy to assist you and can be reached toll free at (800) 875-7148.

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