How Arizona Calculates Your Workers' Comp Wage Benefits

If you're temporarily unable to work because of a job injury in Arizona, workers' compensation generally pays 66⅔% of your "average monthly wage" — not 66⅔% of your paycheck, and not a flat percentage of your final year's earnings. Under A.R.S. § 23-1045, "compensation of sixty-six and two-thirds per cent of the average monthly wage shall be paid" during the period of disability, and how that average monthly wage figure is calculated, under a separate statute, matters just as much as the percentage itself.

Two statutes, not one

Two different sections of Arizona's workers' compensation law combine to determine a benefit check.

A.R.S. § 23-1045 sets the rate: 66⅔% of the average monthly wage during temporary total disability. The statute also provides an additional allowance — a flat monthly amount, rather than a per-dependent figure — when the injured worker has dependents relying on them for support.

A.R.S. § 23-1041 defines the wage figure that percentage is applied to. Under that statute, "monthly wage" means the average wage paid during and over the month in which the employee is killed or injured — a calculation meant to capture typical earnings rather than a single unusually high or low pay period. The same statute sets a statutory maximum on the monthly wage that can be used in the calculation. For injuries on or after January 1, 2010, that maximum is adjusted annually by the Industrial Commission of Arizona, indexed to a measure of employment costs, with rules preventing it from increasing or decreasing by more than five percent in a given year. Because that maximum changes annually and is set administratively rather than fixed in statute, this article doesn't quote a specific dollar figure — workers who want the number in effect for their injury date should confirm it directly with the Industrial Commission of Arizona.

Why this two-step calculation matters

Because benefits are 66⅔% of a capped, averaged wage rather than 66⅔% of take-home pay, two workers with the same job title and the same weekly paycheck can end up with different benefit amounts if their earnings varied differently in the weeks or months surrounding the injury, or if their wages exceeded the statutory maximum used in the calculation. This is also why the timing of an injury can matter for the benefit calculation, separately from — and in addition to — the reporting deadlines that determine whether a claim is accepted at all. We cover those reporting deadlines, including the Industrial Commission filing window, in our explainer on Arizona work injury reporting deadlines.

This is about calculating comp, not replacing it

Nothing about the average-monthly-wage calculation changes who is eligible for benefits in the first place. Arizona's workers' compensation system is generally no-fault, meaning benefits aren't reduced because a worker was partly responsible for their own accident, the way a personal injury lawsuit can be. But workers' comp benefits are also not the same as full lost wages — the 66⅔% rate means an injured worker's check is, by design, less than an ordinary paycheck, and it may be further limited by the statutory maximum wage figure described above. In some situations, a workplace injury also gives rise to a separate claim against a party other than the employer, where different rules about damages and fault can apply. We cover that distinction in our explainer on workers' comp and third-party claims.

This article explains how Arizona calculates workers' compensation wage benefits in general terms and is not legal or financial advice. Benefit calculations can vary by individual circumstances; anyone with questions about their own average monthly wage figure should contact the Industrial Commission of Arizona or a licensed attorney.