The Importance of the AWW Calculation in Workers' Compensation Cases.
There are several basic elements in a workers' compensation case.
The Average Weekly Wage (AWW) is a significant element in every case.
The calculation of the AWW determines the Employee benefit rate for Total Disability, Partial Disability and Specific Loss.
This AWW figure remains significant throughout the disability claim.
Calculation of the AWW is addressed at Section 309 of the Act, 77 P.S. 582.
There are 7 subsections, each describing different alternatives.
The Bureau of Workers' Compensation LIBC-494C form reflects 8 difference calculation methods.
Since the enactment of the PA Workers' Compensation Act in 1915 (that's one hundred years ago), one might presume that all of the AWW issues have been addressed and settled ... not quite.
AWW issues continue to vex Employees and Employers alike.
In litigated cases, we see a gravitation to the principles of "economic reality" and my personal favorite ..advancing the humanitarian purposes of the Act.
We can easily handle the AWW calculation for salaried employees and hourly employees...
but those other types of compensation... they still provide fodder for our disputes.
Anderson v WCAB (F.O. Transport and UEGF), No. 181 CD 2104, is a published decision of a panel of the Commonwealth Court of Pennsylvania, authored by Judge Leadbetter on March 10, 2015. This decision addresses issues related to AWW calculation and demonstrates the significant of the AWW calculation, through out the life of the case.
Factual and Procedural Background
Employee filed a claim petition for an ankle and foot injury sustained on December 27, 2007, in his employment as a truck driver. Two claim petitions were filed, one against employer and one against the Uninsured Employer Guarantee Fund.
At the time of hire in November 2007 Employer told him he would be paid 30% of the Employer's charges for a load to be delivered.
It was estimated Employee would earn $1,100 to $1,200 per week.
Employee would receive an additional $100 for each run to pay "lumpers", a person paid to unload a truck.
Employee' 1st run was December 20, 2007. Employee unloaded the truck himself and kept the $100 lumper fee.
Employee's 2nd run was December 21, 2007. He paid the lumpers the $100 fee.
Employee's 3rd run was December 27, 2007. The run was from Philadelphia to Springfield, on to Hatfield Massachusetts. At Hatfield Employee unloaded his truck, as he alleged he did not have money to pay the lumpers. He injured his right leg while unloading.
Employer testified that, at the time of hire, he told Employee he could have 5-6 runs per week and earn about $900 to $1,000.
Employer purchased an insurance policy for his drivers, which paid Employee disability benefits.(credit?)
WCJ Decision
Employee was "an employee", not an independent contractor.
Employee Medical witness Pekkar Mooar, MD was credible, that Employee sustained a bimalleolar fracture of the ankle and was unable to return to work as a truck driver.
Employer medical expert, Paul Horenstein, MD was not found credible regarding his opinion claimant was able to return to work as a truck driver as of the January 21, 2009 IME.
The AWW of Employee was calculated by the WCJ, using an alternative method, payments of $270 x 3 runs equals $810, divided by 2 weeks of employment equals a $405.00 AWW.
Employee WCAB Appeal
WCAB affirmed WCJ calculation of AWW...
but remanded to determine if the "lumper fees" should be included in the Employer AWW.
WCAB remanded on issue of a credit to Employer for Employer funded disability benefits paid to Employee.
WCJ decision made Employer and UEGF "jointly liable" to pay work comp benefits to Employee. WCAB amended WCJ order to make Employer primarily responsible and Fund secondarily responsible.
***
During Appeal, Fund filed a Petition to Modify/Suspend Employee benefits as of January 13, 2011, alleging Employee had an earning power equal to, or greater than his AWW.
WCJ on Remand
Awarded Employer a credit for insurance policy payments to Employee.
Determined "lumper fees" should not be included in Employee's AWW.
WCJ on Fund's Modify/Suspend Petition
WCJ found Fund's medical expert Dr. Horenstein and vocational expert Christopher Terranova to be credible.
Dr. Horenstein released Employee to full-time medium duty work as the ankle fracture had healed with slightly decreased range of motion.
Christopher Terranova conducted a labor market survey, he located 10 open and available full-time positions within Employee's physical capabilities. The earning capacity ranged from $360 to $440.
Employee's past criminal record would not impact his ability to obtain employment.
WCJ found Employee's post-injury earning capacity was $440 per week. On this basis he suspended Employee wage loss benefits as of the January 13, 2011 labor market survey. (Suspension was based upon the $405 AWW figure).
WCAB affirmed the WCJ decision.
Employee Appeal - Round 2 - Commonwealth Court
1. AWW calculation.
Employee argued his AWW should be $810.
This was the total amount he earned before his work injury.
(... earned over the course of several weeks!)
Alternative Employee AWW argument.
AWW should be $900 to $1,200 based upon Employee testimony and/or testimony of Employer, as to the amount of his expected earnings.
Employee also argued the "lumper fees' should be included in his AWW figure.
Commonwealth Court reviewed the shortcomings of Section 309(d.2) of the Act, which addresses the situation where an individual has worked less than one period of 13 calendar weeks.
" the hourly wage rate multiplied by the number of hours the employee was expected to work per week under the terms of employment".
Here, this Employee did not have a fixed hourly rate. The number of hours expected per week could not be determined, as he was paid per trip.
"Where the Act does not address a method of calculating the AWW for a particular situation, the AWW is calculated using an alternative method which will advance the overall humanitarian purpose of the Act" . citing Hannaberry v. WCAB (Snyder) 834 A.2d 524, 533 (Pa. 2003).
The AWW should reasonably reflect the economic reality of a claimant's recent pre-injury earning experience, with some benefit of the doubt to be afforded to the claimant in the assessment. citing Triangle Building Center v WCAB (Linch) 746 A..2d 1108, 1112 (Pa. 2000).
As a controlling precedent the Commonwealth Court cited its earlier decision in Burkhart Refractory Installation v. WCAB (Christ), 896 A.2d 9 (Pa. Cmwlth. 2006.
In Burkhart, the worker did not have an expected number of work hours.He earned wages in only 12 weeks during his 16 week employment. Calculating this claimant's AWW according to Section 309(d.2) would not reflect the economic reality of his pre-injury earnings.
The WCAB calculated his AWW by excluding the 4 weeks without earnings and divided his gross wages by 12 weeks in which he actually earned wages.
The Court found this approach accurately captured the economic reality and advanced the humanitarian purpose of the Act.
Here, the WCJ calculation is inconsistent with Burkhart.
Employee earned no wages is his first week of "employment", as the Employer did not have work available to him. Inclusion of that week, would not reflect the economic reality.
Therefore the Court calculated the AWW of this Employee to be his earnings during his 2nd week of employment, or $810.
2. AWW inclusion/exclusion of lumper fees.
The Court would not disturb the credibility determination of the WCJ regarding the exclusion of the lumper fees from the AWW calculation. Employer testified that Employee was not supposed to unload trucks and keep the lumper fees. If he needed more money to pay lumpers, Employer would have provided it.
3. WCJ Suspension Order
The Court would not disturb the WCJ findings of fact, accepting Employer's medical expert and vocational expert as credible evidence of Employee's post-injury earning capacity.
The Employee argument that Employer medical evidence was equivocal on the issue of work-relationship of degenerative arthritis was rejected. This medical witness did not deny a causal relation of the ankle arthritis and work injury, rather he opined Employee was not fully recovered, but Employee could perform the positions in the labor market survey.
The Court would not disturb the WCJ credibility determination of the vocational expert testimony regarding the appropriateness of specific jobs or the impact of remote criminal convictions.
Suspension of benefits was reversed, based upon the "new" AWW figure.
The case was remanded for the WCJ to modify benefits based upon the evidence.
Practice Pointers:
1. Do not be reluctant to ask for advice regarding the correct calculation of the AWW figure.
You are not alone. This can be confusing. There can be legal arguments which seem conflicting. It behooves you to get it right the first time ... as this AWW figure will control the benefit payments through out the claim.
Yes, you may file a Petition for Review and "correct" any calculation error. BUT if it is a unilateral mistake, you may face an argument that you can not recover any difference in benefit amounts.
2. In my experience, certain employers may pay their employees from different accounts due to the different nature of the compensation, such as a salary account, a business expense account, a bonus account or a commissions account.
3. Tell the employer that you need figures and documents for all types of compensation paid to the injured employee, during the 52 weeks preceding the date of injury.
Get the annual W-2, 1099 or Year-to-date figures. Do the figures add up?
4. Do the Employee compensation records raise a question as to Employee vs Independent Contractor status?
5. Do the Employee compensation records address an issue of compensibility or "Scope" of employment? Was the Employee paid for travel time, or paid for attendance time?
6. At times, a careful review of the compensation records may answer questions ... or raise additional questions. Get the records and review.
