Untaxed Tip Earnings Included in AMW

By Jason Weinstock on September 14, 2012

waiter.BMP_     In Sierra Nevada Administrators v. Negriev, the Nevada Supreme Court held that when an injured employee reports tip income to his or her employer, that income is included in the average monthly wage calculation.  The average monthly wage calculation is used to determine how much an injury worker receives for compensation benefits.

The injured worker in this recent case was a bartender at a sports pub. He reported his tip income to his employer, but the employer did not include the tip income on his paycheck.  While the bartender reported his tip income to his employer, he did not include his tip income on tax returns filed with the  IRS. The court said it was irrelevant whether the injured worker actually paid taxes. The key was that the bartender had actually reported his tips to his employer.

Remember that the average monthly wage is a factor in calculating the permanent partial disability award as well as the compensation benefits due when lost time compensation is paid.  Make sure that you discuss your average monthly wage with any attorney you see for a consultation  so that the attorney can check for legitimate increases that may have been overlooked.

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