BOSTON—A worker's disability benefits should be based on his weekly wages at his most recent job in another state, even though the original injury occurred 23 years earlier, according to a recent decision from the Massachusetts Supreme Court.

Scott Wadsworth's right hand was crushed in 1980 by a metal rolling machine while working for New England Concrete Pipe Corp. in Massachusetts, according to court records. He received temporary total disability benefits for nearly eight years before starting a job at Wholesale Auto Supply in Connecticut.

Mr. Wadsworth applied for permanent total disability benefits in 2003 after a medical procedure meant to alleviate pain in his injured hand left him with “stabbing, stinging, burning pain” in his hand and arm. He argued that he was entitled to weekly benefits based on his pay at Wholesale Auto because his permanent disability was caused by a “subsequent injury that was a recurrence of his 1980 injury.”

An administrative law judge ordered New England Concrete's insurer to pay weekly PTD benefits of $600, based on weekly wages from Wholesale Auto plus cost-of-living adjustments, records show.

But the Massachusetts Department of Industrial Accidents and a state appeals court said Mr. Wadsworth's benefits could not be based on his Connecticut wages. Instead, the department ruled—and the court affirmed—that Mr. Wadsworth should receive $206.43 a week, based on two-thirds of his weekly wage of $309.65 at the time of the 1980 accident in Massachusetts.

In a unanimous decision Friday, the Massachusetts Supreme Court reversed the lower court’s ruling on Mr. Wadworth’s wages. It said that state workers comp law entitles employees to be paid benefits based on their current rate of pay when an injury reoccurs at least two months after an employee returns to work.

The court also said Mr. Wadsworth’s Connecticut wages should be factored into his workers compensation benefits. While a previous decision prevented out-of-state wages from being included, the Massachusetts Supreme Court said that ruling applied only to wages “earned after suffering latent injuries (such as from exposure to asbestos) that do not result in eligibility for incapacity benefits for at least five years.”

“As a measure of earning capacity, it matters not whether the wages are earned in Massachusetts or outside Massachusetts,” the ruling said about Mr. Wadsworth’s case. “The words of (Massachusetts workers comp law) are plain and unambiguous.”

The case was remanded to the Department of Industrial Accidents review board, which will recalculate Mr. Wadsworth’s benefits.