Calculating average weekly wage

By Jus­tice Paul E. Pfeifer

This case involved a man named Rick Warner, who began work­ing for Cen­tral Allied Enter­prises – a com­pany that paves road­ways – in 2004. Rick had worked on paving crews before, and he knew when he started with Cen­tral Allied that the work was sea­sonal. In the past, Rick had applied for unem­ploy­ment com­pen­sa­tion dur­ing the win­ter lay­off, and he con­tin­ued this prac­tice with Cen­tral Allied.

On Sep­tem­ber 7, 2007, Rick was injured at work. His ini­tial claim for work­ers’ com­pen­sa­tion was allowed, but he later sought temporary-total-disability com­pen­sa­tion. At that time Rick asked the Indus­trial Com­mis­sion of Ohio – which han­dles such mat­ters – to estab­lish his aver­age weekly wage (“AWW”) for the pur­pose of award­ing the temporary-total-disability compensation.

Typ­i­cally, the Com­mis­sion cal­cu­lates AWW by divid­ing total wages for the year prior to the injury by 52 weeks. But the AWW law con­tains excep­tions to this gen­eral for­mula, one of which requires the Com­mis­sion to exclude from the cal­cu­la­tion “any period of unem­ploy­ment due to sick­ness, indus­trial depres­sion, strike, lock­out, or other cause beyond the employee’s control.”

In the year prior to the injury, Rick had worked for 30 weeks and had been unem­ployed for 22 weeks due to the sea­sonal lay­off; he had received wages for the weeks he worked, and unem­ploy­ment com­pen­sa­tion for the ones that he didn’t.

Rick pro­posed two dif­fer­ent fig­ures for his AWW. The first excluded his 22 weeks of unem­ploy­ment ben­e­fits from the cal­cu­la­tion. The sec­ond included in the for­mula both the num­ber of weeks that he was unem­ployed and the dol­lar amount of his unem­ploy­ment compensation.

But a staff hear­ing offi­cer for the Com­mis­sion rejected both pro­pos­als. Instead, the hear­ing offi­cer used a for­mula that excluded the unem­ploy­ment money, but included the num­ber of weeks Rick didn’t work. Put another way, the for­mula took Rick’s total earn­ings from 30 weeks and divided them by 52 weeks, which sig­nif­i­cantly reduced his AWW.

In his report, the hear­ing offi­cer wrote that the lay­off wasn’t unfore­seen, and Rick had pre­sented no evi­dence that he sought a job dur­ing the lay­off. The hear­ing offi­cer deter­mined that the period of unem­ploy­ment was a “lifestyle choice,” and not beyond Rick’s con­trol. Thus, the hear­ing offi­cer did not exclude that time from the AWW calculation.

Rick next filed a com­plaint with the court of appeals. The court ordered the Com­mis­sion to fur­ther con­sider Rick’s request, con­clud­ing that the Com­mis­sion had abused its dis­cre­tion in fail­ing to include the dol­lar amount of Rick’s unem­ploy­ment com­pen­sa­tion because it was fed­er­ally tax­able income.

The court also crit­i­cized the Commission’s find­ing that there was no evi­dence that Rick had looked for other work dur­ing his lay­off, cit­ing Rick’s receipt of unem­ploy­ment com­pen­sa­tion – because in order to receive that com­pen­sa­tion, he was required to pro­vide proof of a job search.

After the court of appeals issued its judg­ment, Rick’s case came before us – the Supreme Court of Ohio – for a final review.

The AWW is intended to “find a fair basis for award for the loss of future com­pen­sa­tion.” The fig­ure must do sub­stan­tial jus­tice to the claimant, but it can’t cre­ate a wind­fall. Because sea­sonal unem­ploy­ment isn’t listed among the excep­tions for set­ting AWW, Rick could pre­vail only if he estab­lished that those weeks of unem­ploy­ment were beyond his control.

The Com­mis­sion and Cen­tral Allied asserted that Rick’s unem­ploy­ment wasn’t beyond his con­trol – he was aware of the cycle of work and lay­off, but chose to remain at that job. They argued that the lay­off wasn’t an unan­tic­i­pated cir­cum­stance, nor was the period of unem­ploy­ment that followed.

Rick dis­agreed. The yearly lay­off was fore­see­able, but he claimed that dur­ing the lay­off he tried to find other employ­ment – his receipt of unem­ploy­ment com­pen­sa­tion was proof. Thus, while he may have assented to a win­ter lay­off, he didn’t vol­un­tar­ily choose to remain unem­ployed – and that, accord­ing to Rick, made his unem­ploy­ment beyond his control.

In a case from 2004, we deter­mined that fore­see­abil­ity of job loss does not nec­es­sar­ily ren­der sea­sonal unem­ploy­ment vol­un­tary. Sea­sonal unem­ploy­ment can be con­sid­ered vol­un­tary when it’s the result of a choice to enjoy the time off rather than look for work dur­ing the off-season. On the other hand, many sea­sonal employ­ees want to work dur­ing the lay­off, but can’t find employ­ment. In those sit­u­a­tions, unem­ploy­ment may be con­sid­ered to be beyond the individual’s control.

Rick cited his receipt of unem­ploy­ment com­pen­sa­tion as proof that he looked for work dur­ing the lay­off. But that 2004 case also declared that a claimant’s receipt of unem­ploy­ment com­pen­sa­tion did not, for work­ers’ com­pen­sa­tion pur­poses, auto­mat­i­cally estab­lish that post-layoff unem­ploy­ment was beyond the individual’s control.

In Rick’s case, the Com­mis­sion never addressed the ade­quacy of Rick’s job search because it wrongly believed that he hadn’t pre­sented evi­dence of it. The court of appeals was there­fore cor­rect in order­ing fur­ther con­sid­er­a­tion of this issue, and we affirmed that por­tion of its judg­ment by a seven-to-zero vote.

The court of appeals also ordered the Com­mis­sion to include in the AWW for­mula the amount of Rick’s unem­ploy­ment money based solely on its sta­tus as fed­er­ally tax­able income. But we have declared fed­eral tax­a­bil­ity to be irrel­e­vant in deter­min­ing what to include in the AWW total. Accord­ingly, we reversed that por­tion of the court of appeals judgment.

We thus returned the case to the Com­mis­sion to deter­mine whether Rick’s weeks of unem­ploy­ment were beyond his con­trol. In doing so, we clar­i­fied that the Com­mis­sion should total only Rick’s Cen­tral Allied wages from the year prior to his injury and divide by 52, unless Rick shows that he was not able to be employed dur­ing any of the 22 weeks dur­ing which he was laid off. Any week dur­ing the lay­off in which his unem­ploy­ment was beyond his con­trol should be excluded.

Thus, if all his unem­ploy­ment time sat­is­fies the AWW law, Rick’s total wages would be divided by 30 to pro­duce an AWW that arrives at “a fair basis” for the loss of com­pen­sa­tion that resulted from his injury.

•

EDITOR’S NOTE: The case referred to is: State ex rel. Warner v. Indus. Comm., 131 Ohio St.3d 366, 2012-Ohio-1084. Case No. 2010–1283. Decided March 22, 2012. Opin­ion Per Curiam.

Posted by Paul Pfeifer on Jul 24 2012. You can follow any responses to this entry through the RSS Feed. Both comments and pings are currently closed.