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The Perils of Calculating Temporary Disability
Before calculating temporary disability, the parties should review Labor Code § 4653 and Labor Code § 4453 to determine which section of the Labor Code supports calculation of temporary disability based on average weekly earnings. Under Labor Code § 4653 temporary disability is two-thirds of an applicant’s average weekly earnings, subject to the minimum and maximum levels established under Labor Code section 4453.
Labor Code § 4453(c) provides four options for this calculation. The fact pattern in each case should dictate the which option should be used.
THE MOST COMMON METHOD FOR CALCULATING TD
Labor Code § 4453(c)(1) states: “Where the employment is for 30 or more hours a week and for five or more working days a week, the average weekly earnings shall be the number of working days a week times the daily earnings at the time of the injury.”
This is the most common formula and is generally the one applicable to most fact patterns. For instance, suppose Mary works a full-time job as a receptionist for a law firm. She works five days a week and earns $90 a day. Her average weekly earnings would be $450. Her temporary disability rate would be two-thirds of his average weekly earnings or $300 per week.
THE EMPLOYEE WITH MORE THAN ONE EMPLOYER
Labor Code § 4453(c)(2) states: “Where the employee is working for two or more employers at or about the time of the injury, the average weekly earnings shall be taken as the aggregate of these earnings from all employments computed in terms of one week; but the earnings from employments other than the employment in which the injury occurred shall not be taken at a higher rate than the hourly rate paid at the time of the injury.”
In Robbins v. Susanville Elementary School District (2013) Cal. Wrk. Comp. P.D. LEXIS 281, the WCAB used earning capacity for an employee who worked concurrently for multiple employers. She worked as a custodian as well as an instructional aid prior to filing a workers’ compensation claim for injury to her bilateral upper extremities for the CT period ending 3/15/2012. The Workers Compensation Judge calculated her temporary disability rate using Labor Code § 4453(c)(2) by averaging the income from all of her employment in the year prior to the last day of her CT period which was 3/15/2012. The WCAB on Reconsideration affirmed the Judge’s calculation as an accurate reflection of applicant’s earning capacity.
THE EMPLOYEE WORKING A TEMPORARY OR SEASONAL JOB
Labor Code § 4453(c)(3) states: “If the earnings are at an irregular rate, such as piecework, or on a commission basis, or are specified to be by week, month, or other period, then the average weekly earnings mentioned in subdivision (a) shall be taken as the actual weekly earnings averaged for this period of time, not exceeding one year, as may conveniently be taken to determine an average weekly rate of pay.”
In Signature Fruit Company v. WCAB (Ochoa), (2006) 71 CCC 1044, the Court of Appeal in the 5th district issued an opinion that an employee who would not have worked at all during the off-season, not be entitled to temporary total disability benefits during the off-season. The injured worker in this case had an in-season TD rate of $365.59 which was used by the employer to pay TD during the in-season TTD period. There was no evidence to support off-season employment and no evidence that she would have been working absent the industrial injury. Nonetheless, the workers’ compensation judge awarded benefits during the off-season based on the statutory minimum rate of $126. The Court of Appeal granted defendants petition for writ of review and reversed the WCAB decision affirming the Judge’s award of TD at minimum rates. Therefore, no temporary disability is payable during the off-season, and temporary disability payments “in season” would be based on average earnings “in season.”
WHAT IF THE INJURED WORKER’S EARNING CAPACITY EXCEEDS THE OTHER THREE METHODS FOR CALCULATING ACTUAL EARNINGS?
Labor Code § 4453(c)(4) states: “Where the employment is for less than 30 hours per week, or where for any reason the foregoing methods of arriving at the average weekly earnings cannot reasonably and fairly be applied, the average weekly earnings shall be taken at 100 percent of the sum which reasonably represents the average weekly earning capacity of the injured employee at the time of his or her injury, due consideration being given to his or her actual earnings from all sources and employments.”
What if the employee continues to work after the date of injury and later gets a raise (but is not making the maximum statutory earning) and then goes off work? Which earnings become the basis for calculating the temporary disability benefit?
In Brooks v. E. I. Dupont (2018) Cal. Wrk. Comp. P.D. LEXIS , the WCJ used earnings at the time of injuries 1/22/02 and 2/11/03 to calculate temporary disability rate. The WCAB rejected the Workers Compensation Judge’s position that the applicant’s average weekly earnings should be based on her earnings at the time of her injuries rather than her post-injury earnings The WCAB reasoned that because the applicant’s temporary disability arose many years after her injury and the applicant had multiple changes and increased earnings, it was appropriate to award temporary disability based on the applicant’s actual increased earning on the date her temporary disability commenced in 2007.
By Wesley Liu, Sacramento Office March 2019