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How Workers’ Compensation Benefits Are Handled for Commissioned and Tipped Workers in Iowa

October 22, 2021By Niko Pothitakis

If an employee sustains a work-related injury, workers’ compensation insurance compensates for injuries and lost wages, but the lost wages portion may be difficult to determine for both tipped and commissioned workers. This is because tips and commissions are inconsistent and unfixed.

How Wage Replacement Benefits Work

Injured workers who miss over three days of work because of their injury may be eligible to recover wage replacement benefits on the fourth day. These are also known as temporary total disability (TTD) benefits. Additionally, workers may qualify for back pay for the first three days of work they missed if the total amount of time out of work exceeds 14 calendar days.

TTD benefits account for 80% of an employee’s average weekly income and must not be more than the statutory maximum rate. In Iowa, the maximum weekly benefit amount is currently $1,864. Employees receive TTD benefits up to the time they begin working again and a medical professional determines that they’ve reached maximum medical improvement (MMI), or if they are deemed capable of working a similar job.

Employees who sustain injuries that render them entirely unable to work may also qualify for permanent disability payments. These benefits are also calculated based on 80% of the employee’s average weekly earnings.

Handling Benefits for Tipped and Commissioned Workers

For employees who receive payment primarily via commissions or tips, the average weekly earnings before disability will be based on the total wages earned within the 13 weeks before the injury. This total is then divided by 13. In the event that one or multiple weeks out of those 13 don’t accurately reflect the worker’s income, additional representative weeks can replace them.

Subsequently, if a worker makes semi-annual or quarterly commissions, calculations may be based on an average of added or replacement weeks.

The Need for Accurate Reporting

Employees who earn tips or commissions as a large part of their income need to make sure they report their earnings as accurately as possible. Doing so will help ensure they receive the compensation they actually deserve for lost wages, and it will also keep them in good standing with Iowa law.

If tipped or commissioned workers aren’t entirely sure about how to go about calculating their earnings, workers’ compensation attorneys may be able to help determine whether the employee’s weekly wage accurately represents their income.