The Appeal CommissionThe Workers Compensation Act of Manitoba

Preamble

The worker is appealing the decision made by the Workers Compensation Board ("WCB") regardingthe calculation of his average earnings. A hearing was held via teleconference on January 21, 2015 toconsider the matter.

Issue

Whether or not the worker's average earnings have beencorrectly calculated.  

Decision

That the worker's average earnings have not been correctlycalculated.  

Decision: Unanimous

Background

The worker has an accepted claim with the WCB for injuries sustained in a work-related accident on March 7, 2012 while working as a truck driver.

On April 3, 2012, a WCB case manager wrote the worker to advise that based on information provided by the accident employer, his new benefit rate would be $840.82 per week effective May 31, 2012. The case manager stated:

Flat deck haulers work on average 43 weeks per year this is because of 3 weeks holidays, 2 weeks available in December, 4 weeks for repair and maintenance.

AVERAGE PAY PER WEEK

5 day week - $1181.70

4 day week - $ 945.36

3 day week - $ 709.02

Out of those 43 weeks here is the breakdown of the work weeks.

19 - 5 day weeks will be worked x $1181.70 = $22,452.30

8 - 4 day weeks will be worked x $945.36 = $17,016.48

6 - 3 day weeks will be worked x $709.02 = $ 4,254.12

Total earnings = $43,722.90/52 weeks = $840.82/week

Therefore average earnings will be established based on the above info @ $840.82/week

Due to indexing, the worker's average earnings rate increased to $859.51 per week on April 1, 2014.

In May 2014, the worker wrote Review Office stating that he disagreed with the wages used to calculate his benefit rate. The worker provided Review Office with information concerning his employment history which included exchanging "labor for lodging." Based on the new information, Review Office returned the file back to initial adjudication to conduct a further investigation with respect to the worker's previous income level.

File records show that the WCB obtained copies of the worker's income tax returns for 2010 and 2011. The total T4 earnings in 2010 were $11,510.00 and in 2011 were $39,203.00.

On June 11, 2014, a WCB case manager wrote the worker with respect to his wage loss benefit rate and stated:

Based on a thorough review of all the relevant information, your wage loss benefit rate has been correctly calculated. As such, there will be no adjustment to your rate.

Your rate is based on your employer's information at the time of your injury. It was substantiated at $840.82 per week or $43,722.90 per year. I have enclosed that calculation report.

Recent Revenue Canada information has been received and reviewed. Your 2010 T-4 earnings we (sic) approximately $11,000. Your 2011 T-4 earnings were approximately $39,000 and mostly represent earnings in the same industry as when you were injured. As previously stated your present rate is based on earnings of approximately $44,000 per year which exceeds your 2012 yearly earnings.

Based on this information, your present wage loss rate accurately demonstrates your loss of earning capacity.

On July 9, 2014, Review Office considered the worker's appeal and made the determination that the worker's average earnings effective May 31, 2012 were incorrectly calculated. Review Office outlined that the worker's average earnings rate effective May 31, 2012 was $903.08 per week and not $840.82.

Review Office stated that it considered the worker's position that his T4 earnings in 2011 were earned in less than 12 months as the worker traded lodging for labour. The worker noted that his ability to work in the past was affected by the weather. Review Office did not find a provision in the Act or Board policy to account for the worker's earnings which were not included as T4 income. These circumstances would not alter the worker's average earnings rate. Review Office did find that the worker would have received employment insurance benefits as he had in the past. Review Office calculated that the entitlement (less waiting period) would have been 7 weeks at 55%, a total of $3237.15 to be included in the average earnings. On July 31, 2014, the worker appealed Review Office's decision to the Appeal Commission and a hearing was held on January 21, 2015.

Following the hearing, the appeal panel requested additional information from the worker and the accident employer with respect to the worker's earnings. The worker provided the WCB with a copy of his income tax return along with other information from an accountant. The information requested from the employer was not received. On April 17, 2014, the panel met further to discuss the case and to render a decision.

Reasons

Applicable Legislation

The Appeal Commission and its panels are bound by The Workers Compensation Act (the “Act”), regulations and policies of the Board of Directors.

Under subsection 4(1) of the Act, where a worker suffers personal injury by accident arising out of and in the course of employment, compensation shall be paid to the worker by the WCB.

Subsection 39(1) of the Act provides that wage loss benefits will be paid: “…where an injury to a worker results in a loss of earning capacity…” Subsection 39(2) of the Act provides that the WCB will pay wage loss benefits until such a time as the worker’s loss of earning capacity ends, or the worker attains the age of 65 years.

Section 45 of the Act deals with the calculation of average earnings. Subsection 45(1) of the Act provides:

Calculation of average earnings

45(1) The board shall calculate a worker’s average earnings before the accident on such income from employment and employment insurance benefits, and over such period of time, as the board considers fair and just, but the amount of average earnings shall not exceed the maximum annual earnings established under section 46.

WCB Policy 44.80.10.10 Average Earnings (the “Average Earnings Policy”) addresses how the WCB initially establishes average earnings. The wage loss benefits which are paid to injured workers are based on the average earnings figure. The Average Earnings Policy sets out a number of different methods which may be used to calculate a worker’s average earnings, depending on the circumstances and states that: “The method used will always be the one that best reflects the worker’s actual loss of earnings.”

The formulas which may be used to establish a worker's average earnings are detailed in the Average Earnings Policy. These formulas incorporate either regular earnings at the time of the accident, average yearly earnings or probable yearly earning capacity. Again, the Average Earnings Policy states that the formula that best represents the worker's loss of earnings will be chosen.

The worker’s position:

The worker was self-represented in the appeal and participated via teleconference. The worker disagreed with the WCB's reliance on the information from the accident employer in calculating his loss of income. He characterized the letter provided by the accident employer as "a crude estimation of the driver's average earnings" and stated that the letter contained no verifiable figures to back up its claims. The worker did not know what income model was used to perform the calculations but he felt that it was not based on the amount paid to him by the subcontractor, which was 22 percent of the truck's gross earnings before expenses. The worker urged the panel to compel the accident employer to be forthcoming with some actual verifiable gross earnings for years for all of their lease operators. It was submitted that this would give a better information base on which to calculate a fair income replacement. The worker also suggested that a sampling of earnings from other drivers hauling similar freight would give the panel a more concise overview of the monetary work of a super B flat deck driver in Canada.

The worker submitted that his tax returns for the last year he worked showed that he realized an average weekly net paycheque of $1,435 during that period. It was suggested that the four months that the worker was employed with the subcontractor was sufficient to demonstrate a pattern of earnings for that period and could be used to calculate a fairer rate of compensation. Alternatively, he submitted that using actual figures of gross earnings of all trucks pulling B trains for the accident employer would be acceptable.

The employer's position:

The employer's office manager participated in the appeal via teleconference. It was submitted that the calculations used by the employer were not just random. In fact, the employer used the worker's actual figures for loads that he hauled and the office manager felt that she was quite lenient in considering how many weeks a lease operator's truck would be working in a year. She stated that it was never her intention to shortchange the worker and that she did go off the figures that the worker actually earned. The gross average numbers suggested by the worker were not very accurate in the present market as the profits go up and down in the trucking business. 2008 was a crash and it appeared that 2015 might be heading for another one. Freight hauling generally was a very up and down industry. The office manager was unsure as to why the worker was saying that her calculations were random or not accurate. She had supplied as much as she possibly could to the WCB and stated that if more information was wanted, she could provide the spreadsheets to the panel. Overall, the employer submitted that it was very generous in the calculations which were based strictly on the loads hauled by the worker himself.

Analysis:

The issue before the panel is whether or not the worker's average earnings have been correctly calculated. The Average Earnings Policy directs that the method used to establish a worker's average earnings will be the one that best reflects the worker’s actual loss of earnings. Accordingly, in order for the worker's appeal to succeed, the panel must find that the method used by the WCB to establish the worker's average earnings does not best reflect the worker's actual loss of earnings. We are able to make that finding.

The average yearly earnings figure used by the WCB was $43,722.90. This figure was calculated using information provided by the employer which estimated the worker's pay rate based on actual loads hauled during his three week tenure with the accident employer and the average number of weeks worked by the flat deck haulers employed by the accident employer. Specific details regarding the underlying wage information used to estimate the worker's pay rate were not provided by the employer when supplying the information. The WCB accepted that the employer's information formed an accurate basis for calculating what the worker would have been earning had he not been injured on March 7, 2012.

This case was complicated by the fact that the worker was not directly employed by the accident employer. The worker was actually employed by a subcontractor who paid the worker a percentage of the freight weight hauled. Although the worker had been employed by the subcontractor since October 25, 2011, he had only been hauling freight for the accident employer since February 14, 2012. When the accident occurred on March 7, 2012, the worker had only been hauling loads for the accident employer for three weeks.

Following the hearing, the panel asked the accident employer to provide the spreadsheet which it used to determine the pay rate calculation. The employer was also asked to provide information regarding the average wages it paid in 2012 to its internal company drivers. In response to the request, the employer advised that there was a discrepancy in its notes regarding the pay rates for the worker and that the sub-contractor should be contacted for clarification. The employer also advised that it did not feel that information regarding its drivers was relevant to the appeal. The employer was advised that any determination regarding relevancy was an issue for the panel to decide and was asked to provide the requested information. The employer did not respond.

Meanwhile, the worker contacted the sub-contractor and arranged for the subcontractor's accountant to provide the panel with payroll information regarding the worker's earnings for 2011 and 2012. This information was shared with the accident employer and the accident employer was given an opportunity to provide written comment on the new information. No submission was received from the employer.

The panel must base its decision on the best available evidence and in this case, we find that the actual figures provided by the subcontractor's accountant for the three week period are proven numbers and that it would be fair and just to use this information to determine the worker's probable yearly earning capacity. While three weeks is a short period of time, the panel feels that it provides a more reliable basis for calculating the average earnings than the estimated figures provided by the employer for which the underlying information was never provided, despite repeated requests.

According to the information from the accountant, during the two weeks from February 15 to 29, 2012, the worker was paid gross wages of $2,770.26. From March 1 to 7, 2012, the worker was paid gross wages of $930.60. Over the three week period, the worker was paid $3,700.86. This works out to an average of $1,233.62 per week.

At the hearing, both the worker and the employer provided evidence regarding the average number of weeks per year that a flat deck hauler working for the accident employer would work. The information initially provided by the employer to the WCB indicated that flat deck haulers work on average 43 weeks per year, broken down as follows: "3 weeks holidays, 2 weeks available in December, 4 weeks for repair and maintenance."

While the panel agrees that it would not be appropriate to apply the full 52 weeks per year, we find that 43 weeks is too low. In the panel's opinion, it would be fair and reasonable to estimate the weeks worked at 46 weeks, based on the following assumptions:

• Holidays - the worker's evidence was that he enjoyed driving and never really took vacation time off. He was paid by the subcontractor 4% for vacation pay. This is equivalent to two weeks vacation and the panel finds it would be appropriate to deduct two weeks on account of holiday time.
• December shut down - the employer's evidence was that as the mills and lumber yards typically shut down over the holiday season, there would be very little hauling work available. The worker did not disagree that December is a very slow month. The panel therefore finds that it would be appropriate to deduct two weeks for the December slow period.
• Repair and maintenance - the employer's evidence was that the average mechanical down time for repairs and maintenance would be at least four weeks, and that this was a conservative figure as it may be as much as six weeks. The worker's evidence was that he was in a relatively new truck (2009) and that during his career as a long haul driver, he had experienced very little downtime. He stated that the amount of downtime depended largely on who was driving the truck and he felt that the four weeks estimate was "pretty high." The panel finds that it would be reasonable to deduct two weeks for repair and maintenance given the age of the actual vehicle being driven by the worker and his evidence as to his personal experience with downtime.

The employer also applied a deduction on account of shortened work weeks. In the absence of the underlying details as to how these figures were arrived at, the panel finds that it would not be appropriate to apply this deduction. As noted earlier, we are satisfied that the three weeks of actual earnings provide a fair and just basis for estimating the worker's projected earnings.

The panel therefore finds that the worker's probable yearly earning capacity should be determined using the following calculation:

$1,233.62 per week x 46 weeks = $56,746.52 total earnings

$56,746.52 / 52 weeks = $1,091.28 per week

At the Review Office level, the worker's projected income included an amount representing seven weeks of Employment Insurance benefits. Based on the evidence from the hearing, the worker's periods of unemployment were not continuous and would not have been long enough to enable him to claim these benefits. We therefore find that this amount should not have been included in the calculation of the worker's probable yearly earning capacity.

The worker's appeal is therefore allowed.

Panel Members

A. Finkel, Commissioner
P. Walker, Commissioner

Recording Secretary, B. Kosc

A. Finkel - Presiding Officer

Signed at Winnipeg this 5th day of May, 2015