Since before I started practicing at YCRLAW almost 13 years ago, Workers’ Compensation attorneys here have argued with claimants’ attorneys about how to properly calculate the average weekly wage (“AWW”) and compensation rate for an employee who regularly works fewer than 52 weeks a year. The heart of the problem is fairness. A typical fact scenario involves a 9 month employee, such as a teacher, who actually receives paychecks over a 12 month period. Pursuant to the instructions on the Form 20, we have always advised our clients to divide the claimants’ wages by the number of weeks paid (52) rather than the number of weeks actually worked. The argument from the claimants’ attorneys is typically that the weeks paid does not matter, since the income was actually earned over only 39 weeks or so. The SC Commission has issued inconsistent rulings on both sides of this issue. The SC Court of Appeals or Supreme Court have not yet addressed this issue in published opinions.
Matt Riddle recently tried this very issue in a case involving a school teacher who sustained admitted injuries in a work-related accident. Matt argued that the employer correctly calculated the AWW on the Form 20 by dividing the claimant’s total wages for the year by 52 weeks during which the wages were paid. The claimant’s attorney argued that the AWW should be calculated by dividing the teacher’s total annual wages by the 39 weeks in the school year, which would result in an increase in the AWW of about 35%. The hearing commissioner agreed with Matt’s argument and found that the employer had correctly calculated the AWW. The commissioner clearly understood the flaw in the claimant’s attorney’s argument: the claimant’s earnings would be artificially inflated if calculated based upon the method the claimant’s attorney requested. For example, a claimant earning $40,000 a year based on 9 months of employment would end up receiving over $55,000 a year in workers’ compensation benefits if that person’s yearly wages were divided by the number of weeks worked rather than the number of weeks paid. S.C. Code 42-1-40 states that the compensation rate should be based on actual wages earned unless exceptional reasons make the standard calculation inequitable. In such cases, the wages are to be calculated so that the claimant receives wages based on what he or she would have earned but for the work injury. The Commissioner in Matt’s case correctly noted that it would be a windfall for the claimant to receive $15,000 more a year for not working than she would have earned had she been working.
We fully expect the claimant’s attorney to appeal this issue, and we will certainly keep you posted with any further developments. In the meantime, we will have a very well-reasoned Order from the hearing Commissioner, which will certainly give us added leverage in settlement discussions and hearings when claimants’ attorneys raise this issue in other cases. I think this argument extends to people who have several short term jobs over the course of a year. The bottom line consideration should be whether the claimant would be receiving more money for being on workers’ compensation benefits than for working. Please feel free to contact us if you have questions about how this decision might impact the claimant’s compensation rate in any of your claims.