Iowa: Employer’s 401k Contributions Not Included in Average Weekly Wage Computation

The employer’s matching contributions to an employee’s 401k plan are not weekly earnings for purposes of calculating the employee’s workers’ compensation benefits, held an Iowa appellate court, affirming a decision by a state district court on that issue. The appellate court acknowledged that the employee’s own contributions to the plan would be used in the calculation, but noted that an employer’s contribution to the 401k plan was not dependent upon the hours an employee worked in the normal way that we think of the wage or salary an employee earned for working a particular number of hours in a week. While the employee’s contribution was related—at least tangentially—to his or her earnings, the employer’s contribution was based on the employee’s choice and participation within the plan. Quoting Larson’s Workers’ Compensation Law, the court indicated the majority trend was to treat the employer’s contributions as the sort of fringe benefits that were not included in the AWW computation.

Thomas A. Robinson, J.D., the Feature National Columnist for the LexisNexis Workers’ Compensation eNewsletter, is the co-author of Larson’s Workers’ Compensation Law (LexisNexis).

LexisNexis Online Subscribers: Citations below link to Lexis Advance.

See Evenson v. Winnebago Indus., Inc., 2016 Iowa Sup. LEXIS 65 (June 3, 2016)

See generally Larson’s Workers’ Compensation Law, § 93.01.

Source: Larson’s Workers’ Compensation Law, the nation’s leading authority on workers’ compensation law.

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