Short-term disability (STD) benefits provide partial wage replacement for employees temporarily unable to work due to a non-work-related illness or injury. The calculation of these benefits for hourly workers typically involves determining an employee’s average weekly earnings over a specific lookback period, often ranging from several weeks to several months. A percentage of this average, commonly between 50% and 70%, then represents the weekly benefit amount. For example, an employee with an average weekly wage of $800 and a benefit rate of 60% would receive $480 per week in STD benefits. The exact calculation can vary depending on the employer’s policy, the insurance provider, and state regulations.
Providing STD benefits is crucial for both employers and employees. It offers financial security to employees facing unexpected health challenges, allowing them to focus on recovery without the added stress of lost income. This, in turn, can lead to improved employee morale and retention. Historically, the concept of disability insurance emerged from the growing recognition of the financial vulnerabilities of workers during periods of illness. STD insurance evolved as a way to mitigate these risks, offering a safety net for employees facing temporary incapacitation.
