The Industrial Commission of Arizona (ICA) is preparing to increase the state’s minimum wage in 2022. On January 1, workers will begin receiving a minimum of $12.80 an hour. This increase is 5.3% higher than the $12.15 that many employees received in 2021.
The ICA announced the minimum wage increase after a report from the U.S. Bureau of Labor Statistics showed a 5.3% increase in the Consumer Price Index from August 2020 to August 2021.
Minimum wage increases began in 2016, when voters approved Proposition 206. According to Prop. 206, the minimum wage must be increased yearly based on August’s inflation numbers. Prop. 206 increased the minimum wage from $8.05 to $10. Every year since, until 2020, the minimum wage has been increased again. By 2020, the minimum wage had reached $12.
Analysts say that Arizona employers likely will not feel a major impact from the pending increase since the industries that are most likely to pay minimum wage (hotels, restaurants and retailers) have already been forced to increase their pay above minimum wage for even entry level positions to find enough people to fill their empty positions.
Impact of a minimum wage increase and workers’ compensation
When it comes to workers’ compensation in Arizona, there are limits to how much employers and their insurance companies are required to pay out in benefits to their injured employees. Employers aren’t required to pay injured workers for pain and suffering.
The 3 categories of compensation which injured workers can receive benefits for include:
- Medical expenses
- Lost wages and disability
- Death benefits
Reimbursement for medical expenses won’t be impacted by Arizona increasing its minimum wage; however, lost wages and death benefits will likely increase. Under Arizona’s lost wages and disability policies, workers who are injured on the job are entitled to receive 2/3 of their average monthly wage up to the maximum amount the state will pay.
Those entitled to disability payments fall under 4 categories:
- Temporary total disability (TTD). TTD is paid to employees who are injured temporarily but will be able to return to work after treatment.
- Temporary partial disability (TPD). TPD payments are also for temporarily injured workers. The difference is that these workers won’t be able to go back to their specific duties. Their employer will have to find an equivalent job for them to perform. Also, their restrictions will need to be specified by a physician.
- Permanent partial disability (PPD). PPD is paid to workers who have received a permanent injury but are still capable of performing their job in some capacity.
- Permanent total disability (PTD). PTD is paid to workers who are permanently disabled severely enough that they’re unable to continue working.
For the individuals who are unable to perform their jobs, this minimum wage increase will consequently help expand and increase workers’ compensation benefits for lost wages and disability. This will put more money in the pockets of injured workers who need it.
Like lost wages and disability payouts, death benefits are also contingent on the amount of wages that a worker earned prior to their passing. If a worker is killed at work, the compensation for their loved one(s) is 2/3 of the worker’s average monthly salary, as well as up to $5,000 for funeral and burial expenses.
If some employees are making more money because of a higher minimum wage, then naturally they would also make more if they’re injured on the job through workers’ compensation lost wage benefits.
Many individuals are confused by the workers’ compensation system and what benefits they are entitled to. To help cut through the red tape and understand your rights, consider consulting with an experienced Arizona workers’ compensation attorney at the Law Offices of Robert E. Wisniewski.
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