June 01, 2014 BY Def Admin
Average Weekly Wage: What Is A Fair Calculation?
Pursuant to the Georgia Workers’ Compensation Act, when an injured worker is either totally or partially disabled as the result of an on-the-job injury, he is entitled to indemnity benefits until said disability ends. This is not peculiar to Georgia and the workers’ compensation laws of all states have a system for providing benefits to injured workers when they are incapable of performing their jobs as the result of an accident at work. While all states generally use the injured workers’ average weekly wage when determining weekly benefit entitlement, the method for calculating the average weekly wage varies greatly from state to state.
Some states, such as New York and Mississippi look at a large sample of the workers’ wage history when determining the average weekly wage and base their calculations on the workers’ wages for 52 weeks. Other states, such as Florida and Texas, utilize a much smaller sample of wage history in making a determination on the workers’ average weekly wage. As with other states, in Georgia, the amount of indemnity benefits injured workers receive on a weekly basis during periods of disability is based on a calculation of the particular employee’s average weekly wage.
The Georgia Legislature has clearly defined the method for ascertaining an injured worker’s average weekly wage. Pursuant to O.C.G.A. § 34-9-260, a workers’ compensation claimant’s average weekly wage is determined based on his or her earnings during the 13 weeks prior to the on-the-job injury. In many instances, this is a relatively easy task and can be achieved by simply obtaining a copy of the injured workers payroll records for the applicable 13 week period and using simple mathematics to calculate the average. However, situations arise when the injured worker was not employed with the company responsible for paying benefits for all of the above mentioned 13 week period.
When the worker in question was not employed or did not work for a “substantial whole” of the 13 weeks prior to his work injury, there are two statutorily mandated procedures for calculating the average weekly wage. It should be pointed out that there has been no clear answer as to what constitutes a “substantial whole”, and the courts have a fair amount of latitude when making this determination. The Court of Appeals of Georgia made this point clear when it held that the word substantially deliberately leaves a wide area of discretion to commissioners and courts. Masterpiece Finishing Co. v. Callahan, 180 Ga. App. 216, (1986).
In any event, the first method for calculating a workers’ average weekly wage when said worker did not work for a “substantial whole” of the pertinent 13 week period is to utilize the wages of a “similarly situated” employee for the 13 weeks prior to the on-the-job injury. Fidelity & Casualty Co. v. Windham, 87 Ga. App. 198 (1953). This is the preferred procedure for calculating the claimant’s average weekly wage when he or she did not work for the 13 weeks prior to the work related injury and the employee bears the burden of showing that the named employee is not similarly situated. Rheem Mfg. Co. v. Jackson, 254 Ga. App. 454, (2002).
A significant amount of litigation has arisen over this issue and the courts have made it clear that the identified employee need not be one that performed the exact same job as the claimant or have the same pay scale. Rather, the only requirement is that the “similarly situated” employee must “at least perform a similar type job for the same employer. Westbrook v. Travelers Ins. Co., 117 Ga. App. 361 (1968). If the injured worker can meet his burden or the employer concedes that there are no “similarly situated” employees, the injured workers’ full time wages are utilized for calculating his average weekly wage. This involves taking the wage per hour multiplied by the number of hours that constitute the full time work week for such an employee. Federated Mut. Implement & Hardware Ins. Co. v. Elliot, 88 Ga. App. 266 (1953).
It should be pointed out that there are a number of collateral issues, not fully addressed in this article, which can arise when calculating a workers’ average weekly wage. For example, if the employee earned bonuses or received a per diem during the relevant 13 week period, that income is factored into the calculation. In addition, if the employee worked a second job during that same 13 week period and, as a result of the on-the-job injury, is incapable of performing that job, those wages will also be factored into the average weekly wage calculation, if the employee can establish that the concurrent employment was similar to the job resulting in the work injury.
Regardless, the system used in Georgia clearly focuses on the 13 weeks prior to the on-the-job injury in determining the amount of lost time compensation injured workers receive as part of the workers’ compensation system. While Georgia’s method of calculation is well entrenched and by all accounts a more employee friendly system that some states utilize, given the wide range of methods used by the various states, it is worth pondering what method of calculating an injured workers’ average weekly wage fairly reflects the workers’ probable future earnings and adequately compensates workers for lost time.
This question has been recently raised in Louisiana and has given rise to a legislative battle. In Louisiana, an injured workers’ average weekly wage is calculated based on that employee’s earnings during the 4 weeks prior to his work injury. This is a very restrictive method and it could be argued, does not accurately reflect prior earnings or constitute a fair representation of future earning capacity. However, as a function of their collective bargaining agreement, profession football players employed in the state of Louisiana are given the benefit of a 52 week wage history, when calculating their average weekly wage.
House Bill 1069, which was introduced into the Louisiana Legislature during the 2014 session, seeks to end NFL player exemption from Louisiana’s current system for calculating average weekly wage. Essentially, if this bill were passed, injured Saints players would have their average weekly wage based off of their earnings during the 4 weeks prior to the on-the-job injury, rather than earning over the previous 52 weeks. House Bill 1069 is being pushed by Tom Benson, the owner of the New Orleans Saints, and has been met with stiff opposition from the NFL Players Association. Admittedly, it can be difficult to feel sympathy for anyone whose minimum salary is $450,000.00.
However, the issues raised by current and former players, as well as the NFL Players Association, do raise some valid points which have far reaching impact beyond the glamorous world of professional athletics. As a function of the contract structure, almost all of a professional football player’s salary is paid out in 17 installments during the football regular season, which runs from September through December. While professional football players earn an overwhelming majority of their salary during this 17 week period, they are required to participate in many off season activities including a lengthy preseason which includes four full contact games.
The instances of injury during these offseason workouts and preseason games are high and under current NFL player exemption, the injured player’s disability benefit compensation is based off of his earning over a 52 week period which takes into account the player’s full yearly salary. If House Bill 1069 does pass, players injured during off season workouts or pre-season games will receive significantly reduced workers’ compensation benefits, as their entitlement would be calculated based on their wages for the 4 weeks prior to their injury, rather than their yearly salary.
Kevin Mawae, a former NFL player and former president of the NFL Players Associates recently addressed player concerns in an article by Emily Lane in the May 14, 2014 edition of the New Orleans Times-Picayune. “Get hurt at training camp”, Magwae said, “and the difference could be between benefits based on earnings of $900.00 and earnings based on $8,700.00 a week, to use an example of a minimum wage player who makes $450,000.00 a year. Earn more under contracts, and the gap widens”. While this bill only seeks to bring New Orleans Saints player’s workers’ compensation benefits structure in line with the rest of the employees of the state, the arguments raised by the Players Association are valid and could be effectively raised by employees in other industries.
Fluctuations in work hours are not peculiar to the world of professional athletes and many workers experience changes in their work hours throughout a given year. This can be especially seen in jobs tied to the construction industry. Construction, by its very nature, can be cyclical and workers in this industry are beholden to the weather and downturns in the economy more than your average worker. As such, they may experience significant changes in earnings throughout the year. Therefore, if a shorter wage history is utilized and an injury occurs during a fairly certain period of diminished work hours as the result of a seasonal downturn, benefits paid may not be a fair representation of future earnings.
A simple fact pattern will highlight this potential problem. Employee A is a long time employee of Company X. As a nature of their business, Company X experiences diminishment in productivity during the months of January and February. During those two months, all employees work hours are cut in half. If Employee A sustains an on the job injury during the month of March, under Georgia’s method for calculating his average weekly wage, his weekly indemnity benefits will be significantly lower than his actual average earnings for the entire calendar year. This would be of particular import if the workers’ injuries are significant and he remains on workers’ compensation benefits up to the 400 week cap.
On the other hand, if Employee A were injured at the end of December and remained on disability benefits for only 8 weeks, the workers compensation benefits he received would be much higher than his actual wages would be during that same 8 week period. Under this set of facts, using the workers’ wages for a 52 week period would be the most equitable method of ascertaining his true average weekly wage. However, many workers do not remain with one particular employee for a 52 week period of time and this creates a number of other issues, especially if the employer responsible for paying benefits, paid the particular worker a much lower average weekly wage than a previous employer during the same calendar year.
Clearly the issues being addressed in the Louisiana legislature are very specific to one profession and there can be endless debate on whether NFL players should entitled to an exemption from general workers’ compensation laws, due to the peculiar nature of their employment. However, the bigger question is what method for calculating an injured workers’ average weekly wage is the most accurate representation of probable future earnings and most fairly compensates disabled workers for lost wages.
Unfortunately, there is no unambiguous answer to this question, which is evidenced by the significant differences in calculation methods utilized by the various states. Most on-the-job injuries do not result in any disability and a majority of those that do, culminate in lost wages for relatively short periods of time. Given this and the transient nature of employment in general, the 13 week period used in Georgia is as fair a method as any. Frankly, no state has created a system that accurately reflects every injured workers probable future earnings or fairly compensates all workers for lost wages. There will always be exceptions, such as the hypothetical above, that lead to unfair results for specific workers or employers.
The Journal is a publication for the clients of Drew Eckl & Farnham, LLP. It is written in a general format and is not intended to be legal advice to any specific circumstance. Legal Opinions may vary when based upon subtle factual differences. All rights reserved.
H. Michael Bagley