Workers’ Compensation and Taxes in Maryland
In Maryland, when an individual receives a workers’ compensation award, just like when receiving a personal injury award or a personal injury settlement in a case, they are getting that money tax-free. An individual does not have to pay taxes on a workers’ compensation award or a personal injury award.
If a workers’ compensation claim is denied for any reason, issues can be filed, a hearing will be set before the Commissioner and a Maryland workers’ compensation lawyer can represent you. If the claim is denied by the insurance company and your employer for whatever reason—it could be that they do not think that the injury arose out of the scope of employment or they think that you were, in fact, an independent contractor and not an employee– a lawyer can file issues and they can represent you in front of the Workers’ Compensation Commission (WCC). However, it’s better to speak with a lawyer long before this happens so that your claim will be filed with the greatest chance of success.
Average Weekly Wage
The average weekly wage in Maryland looks at the injured person’s gross wages for the 14 weeks prior to the injury. The average weekly wage is determined by taking an average of the past 14 weeks of pre-injury wages. There is an online form on the Commission’s website called a Statement of Wage Information that the employee or their attorney will fill out and send in with their workers’ compensation claim. That calculation is used later on in the process when they are determining the amount of the benefits you are entitled to and for purposes of determining a permanency award
In Maryland, the tax is based upon gross wages, so AWW is calculated before any subtractions or deductions are made for tax purposes. It is calculated based upon gross wages and overtime wages and can include job benefits like housing and transportation. Taxes are not involved in the workers’ compensation system for claimants.
Misclassification of Independent Contractors
Frequently, employers misclassify their employees as independent contractors because they only have themselves in mind. They simply want to save money and not protect the workers with workers’ compensation coverage, health benefits and retirement benefits. How do you know if you would be considered an independent contractor under MD’s WC law? The WCC is fairly liberal in determining whether a worker is a covered employee instead of a non-employee contractor. Just because the worker’s contract says he’s an independent contractor (IC) and both the employer and Social Security Administration consider him to be an IC and he is paid cash doesn’t mean the WCC won’t find him to be a covered employee. Several factors are considered and the most important is who controls the work. If you are hurt on the job and your boss says you aren’t covered because you’re an IC, contact a Maryland WC lawyer and get another opinion.