Decision #81/06 - Type: Workers Compensation

Preamble

A file review was held on May 11, 2006, at the request of a worker advisor acting on behalf of the worker.

Issue

Whether or not the worker's average earnings should be $425.15 per week.

Decision

That the worker's average earnings should be $425.15 per week.

Decision: Unanimous

Background

On January 12, 2005, the worker suffered a compensable injury to his shoulders.

The worker had been employed by the accident employer since October 18, 2004 as a steel erector. His hourly wage was $17.00/hour, which worked out to gross bi-weekly earnings of $1470.98, or $735.49/week ($1470.98 ÷ 2).

On April 6, 2005, the WCB did a file review of the worker's average earnings. In an April 6, 2005 memorandum, the Payment Assessor noted that:
  • the worker's total gross earnings from October 18, 2004 until the date of the workplace accident were $5,934.47, which worked out to $470.99/week ($5934.47 ÷ 12.6 weeks);
  • the accident employer laid off its employees from mid-March to mid-May;
  • the accident employer had no intention of re-employing the worker after that period;
  • the availability of work depended on weather conditions;
  • prior to employment with the accident employer, the worker was self-employed as a scrap metal recycler.
Based on this review, the Payment Assessor recommended that the worker's average earnings be rated on a projected earnings basis of $306.05/week effective April 7, 2005. This recommendation was implemented and explained to the worker in a letter dated April 13, 2005:

Actual earnings from your employer -
October 18, 2004 to January 12, 2005 = 		$5934.47
Actual earnings averaged over the period worked -
$5934.47 ÷ 12.60 weeks = $470.99/week		  
Estimated earnings January 13, 2005 to March 14, 2005 -
(to expected date of lay-off)
$470.99/week x 8.60 weeks = 		4050.52
Employment Insurance (EI)
2 week waiting period March 15, 2005 to March 28, 2005		  
Estimated EI earnings March 29, 2005 to August 23, 2005 -
$282.59/week x 21.20 weeks = 		$5990.91
EI earnings estimated to end as of August 24, 2005 -
Therefore estimated earnings for August 24, 2005 to October 17, 2005 		$ 0.00
  TOTAL $15,975.90

The total estimated earnings of $15,975.90 averaged over 52.20 weeks is (sic) $306.05 per week…."

The worker disagreed with the decision of primary adjudication and on April 11, 2005, he submitted a letter to the WCB Review Office requesting reconsideration of the decision to reduce his weekly average earnings.

By way of decision dated May 11, 2005, Review Office accepted the worker's appeal. It determined that the worker's average earnings should be $425.15 per week (and not $306.05 per week) effective April 7, 2005.

Review Office based its decision on WCB policy 44.80.10.10, Average Earnings (hereafter "the Policy"), which provides various methods for calculating average earnings. It found that in the worker's case, the most appropriate method would be to use probable yearly earning capacity. It came to the decision based on the fact that:
  • the worker's employment as a steel erector was recent;
  • in the approximate three years prior to working with the accident employer, the worker had only self-employment earnings;
  • in the three years prior to that, the worker had only T-4 earnings;
  • the worker's decision to return to an employed position negated the possibility of using his self-employed earnings as a basis for average earnings;
  • had he not been recalled by the accident employer after the lay-off, the worker would most likely find other employment at a similar wage.
On January 20, 2006, a worker advisor acting on behalf of the worker provided a further submission to Review Office with a request that they reconsider their previous decision to establish the worker's average earnings at $425.15 per week. The worker advisor suggested that the probable weekly earnings estimated by Review Office would not accurately reflect what is paid to an experienced steel worker in the Manitoba construction industry ($16.80 per hour). He suggested therefore that the worker's earnings as reported in the 2000 tax year, when he worked for a similar company to the accident employer, would most accurately reflect the earning history. The worker advisor stated that $30,851 provided a closer estimate of the worker's loss of earning capacity (annual) and should therefore be used in calculating the average weekly earnings.

The request for reconsideration was rejected by Review Office on February 1, 2006 as it took the position that using the 2000 earnings would not meet WCB policy requirements. The Policy allows average earnings to be based on earnings in 12 consecutive months prior to the injury only when the period is in the one or two years prior to the workplace injury. If 2000 earnings were to be used, the total earnings from 1999 to 2004 would also have to be used; this would decrease the worker's average earnings.

It is this February 1, 2006 decision that the worker appeals.

Reasons

Analysis

This Policy allows for different methods of calculating loss of earnings. At issue in this appeal, are the "average yearly earnings" and "probable yearly earning capacity" methods.

The Policy defines "average yearly earnings" and "probable yearly earning capacity":

Average Yearly Earnings:

Average yearly earnings include any remuneration that the worker received as a result of employment or employment-insurance benefits. To determine a worker's true loss of earnings, the WCB will generally use documentable employment data from any consecutive 12-month period during the one or two years before the compensable accident. If the WCB determines that this calculation does not produce an accurate reflection of a worker's loss of earnings, it will generally use documentable employment data from a 12-month period during, or an average of, a longer period of up to five years.

Probable Yearly Earning Capacity:

Probable yearly earning capacity is the worker's projected earnings for the next twelve months. It is based on the worker's regular earnings at the time of accident as applied to the worker's established work pattern. Consistent with Section 45 of the WCA (1992), the probable yearly earning capacity must be based on the worker's earnings before the accident, but may be based on "income from employment and employment insurance benefits, and over such period of time, as the board considers fair and just."

Schedule B of the Policy clarifies when the probable yearly earning capacity should be used:

"The probable yearly earning capacity formula forecasts what a worker may be expected to earn for a consecutive 12 month period after the accident. This formula is used when neither regular earning nor average yearly earnings accurately reflect the worker's loss of earning capacity. Examples of when it would be used include:

  • The worker does not have a history of prior employment (e.g., due to unemployment or other reasons) or was not available for work for a portion of the previous 12 months (e.g., was going to school, was unable to work for verifiable health or personal or family reasons, was incarcerated, or was receiving WCB temporary total disability benefits).
  • The worker's employment circumstance at the time of the accident is significantly different from past employment circumstances (e.g., the worker has experienced a career or occupational change, or some other change in circumstances that is likely to affect future earnings).
  • The worker is an apprentice or youthful worker (see policy 44.80.30.30).
  • The worker is a probationary employee.
The formula uses the worker's regular earnings or average yearly earnings adjusted to reflect the worker's employment pattern or the earnings and employment pattern of a few similarly employed workers. It also may include presumed employment insurance benefits (based on 60% of worker's average earnings and assuming a two-week waiting period)."
The worker says that his 2000 income should alone be used to calculate his average earning capacity incurred as a result of his January 12, 20005 workplace accident, as 2000 most accurately reflects his prospective loss of earnings. He says that the wording of the Policy allows to simply use this one year of earnings rather than averaging his earnings from 2000 - 2004.

We do not agree with this position. The "average yearly earnings" method necessarily implies that an "average" be taken of a worker's prior earnings. The calculation must best represent the worker's loss of earnings.

In the case before us, the worker has had several jobs over the previous five years: he was self-employed as a scrap metal recycler, worked at a restaurant, and worked in steelwork.

Given the worker's prior employment history, it is our opinion that the formula which best represents the worker's loss of earnings is the "probable yearly earning capacity" method which was used by Review Office. The specific calculation used by Review Office takes into consideration the worker's average earnings, on the basis of $470.99/ week but also includes a period of unemployment (from March 15 - May 15) during which the accident employer informed the WCB it typically lays-off its employees. Based on this calculation, the worker's average weekly earnings work out to $425.15/week. We find this calculation to be reasonable.

Accordingly, we find that the worker's average earnings should be $425.15 per week effective April 7, 2005.

The worker's appeal is therefore denied.

Panel Members

L. Martin, Presiding Officer
A. Finkel, Commissioner
M. Day, Commissioner

Recording Secretary, B. Miller

L. Martin - Presiding Officer
(on behalf of the panel)

Signed at Winnipeg this 13th day of June, 2006

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