Decision #124/16 - Type: Workers Compensation
Preamble
The worker is appealing a decision made by the Workers Compensation Board ("WCB") regarding the calculation of his average earnings. A file review was held on June 21, 2016 to consider the worker's appeal.
Issue
Whether or not the worker's average earnings have been correctly calculated.
Decision
That the worker's average earnings have not been correctly calculated.
Decision: Unanimous
Background
The worker has an accepted claim with the WCB for an injury to his right hand that occurred on May 2, 2015 during the course of his employment as a welder.
On May 11, 2015, the WCB advised the worker his weekly gross earnings were initially calculated at $2,377.44 based on the earnings from his most recent period of employment of March 30 through April 25, 2015.
On June 1, 2015, a representative with the employer advised the WCB that the worker was hired for a project that would run until September 15, 2015. At the end of the project, the worker would be laid off and it was not known whether he would be called back if another project became available.
On June 23, 2015, the WCB suspended the worker’s wage loss benefits because the worker was incarcerated effective June 18, 2015. Upon the worker’s release, wage loss benefits were reinstated effective July 7, 2015.
On July 13, 2015, the WCB advised the worker that based on the total earnings information provided on his 2013 and 2014 income tax returns, his weekly gross earnings was calculated at $1,096.13 per week effective August 14, 2015.
On July 23, 2015, the worker appealed this decision to Review Office.
On July 27, 2015, the WCB revised the worker's average weekly earnings to $1,369.62 based on actual and projected earnings had he not been injured.
In correspondence dated July 31, 2015, the WCB advised that the worker's average earnings would be decreased as the previous determination (of July 27, 2015) incorrectly included the time when he was incarcerated. Based on this revised calculation, the worker’s weekly gross earnings were established at $1,245.26 per week effective August 14, 2015.
Based on new information provided by the worker, the WCB again recalculated the worker's weekly gross earnings on August 11, 2015 as $1,266.03.
On September 21, 2015, Review Office considered the worker's appeal disagreeing with the calculation of his average earnings. Based on its review of all the file information, Review Office determined that the worker's average earnings were not calculated correctly. Review Office found that the worker's average earnings should be established at $1,096.13 per week, which was the most accurate reflection of the worker's loss of earning capacity. This was the initial rate established by Compensation Services in their calculation of July 13, 2015.
On February 3, 2016, the Worker Advisor Office appealed Review Office's decision to the Appeal Commission and a file review was arranged.
Reasons
Applicable Legislation and Policy
The Appeal Commission and its panels are bound by The Workers Compensation Act (the "Act"), regulations and policies of the Board of Directors.
Subsection 39(1) of the Act provides that where an injury to a worker results in a loss of earning capacity, wage loss benefits are payable in accordance with section 40. Subsection 40(1) sets out that loss of earning capacity of a worker is the difference between the worker's net average earnings before the accident, and the net average amount that the board determines the worker is capable of earning after the accident.
Subsection 45(1) explains that "… [t]he 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…."
The process for calculating "Average Earnings" is set out in WCB Policy 44.80.10.10, Average Earnings (the "Policy"). The Policy provides that in calculating a worker's average earnings under section 45 of the Act, the WCB will use formulas that incorporate regular earnings at the time of accident, average yearly earnings or probable yearly earning capacity. The Policy requires that the WCB use the formula that best represents the worker's loss of earnings.
"Regular earnings" are defined in the Policy as:
"… the amount of earnings a worker normally receives as remuneration in the occupation(s) in which he or she was employed at the time of injury. Regular earnings are based on the normal payment schedule (daily, weekly, monthly, annually, etc.) converted to a weekly amount.”
“Average yearly earnings” are defined in the Policy as including any remuneration that the worker received as a result of employment or employment insurance benefits, as determined generally by documentable employment data from any consecutive 12-month period during the one or two years before the compensable accident.
"Probable yearly earning capacity" is defined in the Policy as the worker’s projected earnings for the next 12 months based on the worker’s regular earnings at the time of the accident as applied to the worker’s established work pattern. Schedule D to the Policy goes on to provide additional explanation for when the probable yearly earning capacity will be used; for example, when a worker does not have a history of prior employment or was not available for work for a portion of the previous 12 months, or when the worker’s employment circumstances at the time of the accident differ significantly from past employment circumstances, or when the worker is an apprentice, youthful worker or probationary employee.
Worker's Position
The worker was represented by a worker advisor who made a written submission to the appeal panel. The worker’s position is that the average earnings were not calculated correctly in that the formula that best represented his loss of earnings was not used as required by the Policy. The worker submitted that the probable earnings formula should be used to calculate his average earnings as it most accurately reflects the actual loss incurred by the worker.
In his appeal to Review Office dated July 23, 2015, the worker noted that he relocated to take this position and had potential to earn more in this employment than he had previously earned.
He stated that he understood that work would have been available to him at least until the end of October 2015, if not longer, and that he would not have been laid off sooner as suggested by the employer.
Employer’s Position
The employer did not participate in the appeal.
Analysis
The issue before the panel is whether or not the worker's average earnings have been correctly calculated. In order to find that the average earnings have been correctly calculated, the panel must find that the formula that best represents the worker’s loss of earnings has been used. We have determined that the formula that best represents the worker’s loss of earnings has not been used and therefore the worker’s average earnings have not been correctly calculated.
The Act requires that calculation of a worker’s average earnings shall be carried out as the WCB considers “fair and just.” The WCB has developed and approved a comprehensive policy that sets out how such calculations are to be carried out. The Policy sets out three options for determining the worker’s average earnings: the regular earnings formula; the average yearly earnings formula; and the probable yearly earning capacity formula. The Policy explicitly requires that the formula that best represents the worker's loss of earnings be used to calculate and determine a worker’s average earnings.
In determining average earnings, the Policy requires that the calculation be based upon documentable employment data verified against income tax information. In this case, the file record includes the following information:
At the time of the workplace accident, the worker was earning $4,500.00 biweekly
From the date of hiring on March 30, 2015 to the date of the workplace accident on May 2, 2015, the worker earned $9,176.91 from this employment
The employer advised that the worker would have been employed to September 15, 2015 and would have been laid off at that time
The worker was incarcerated on June 18, 2015 and released on July 7, 2015
Canada Revenue Agency documents confirm the worker earned income from all reported sources in 2014 of $52,510.44 and in 2013 of $61,486.92
The worker, in his submission, speculates that he would have been employed beyond September 15, 2015 citing an ongoing need for welders on the project he had been employed on and his overtime hours as evidence. He argued that the project he was working on was not weather dependant and that his work would have continued well past September 2015.
In the panel's view, the worker’s employment history suggests that he is a seasonal worker. No regular work pattern has been established by the employment information provided to the WCB. In his employment at the time of the workplace accident, there were no long-term guarantees and the employer did not make any commitment to the worker.
Another complicating variable in this situation is the worker’s period of incarceration in the early summer of 2015. While the worker assumes that he could have returned after his period of incarceration, this may be another example of the worker making an assumption and projecting optimistically into an uncertain future.
In fact, the file shows that the worker did not return to that employment and noted there were no jobs with this employer in his area as of February 2016. At that time, the worker stated he was looking for other employment and was waiting to hear about a job as a truck driver with another employer. Although the worker indicates he was committed to this employment situation, his actions suggest otherwise.
The Policy requires use of the formula that best represents the worker’s loss of earnings. Applying the policy provisions requires the panel to consider whether the regular earnings formula, average yearly earnings formula or probably yearly earning capacity formula best represents the worker’s loss of earnings.
The regular earnings formula is based upon the normal payment schedule converted to a weekly amount. It applies to earnings a worker normally receives as remuneration in the occupation in which he was employed at the time of the injury and does not include overtime, special reimbursements for employment expenses or bonuses that are not regularly paid.
On the facts here, we have determined that it is not appropriate to apply the regular earnings formula. The worker is a seasonal worker, employed in a temporary capacity, without guarantee of ongoing employment. In fact, there were no jobs available with this employer when the worker was preparing to return to work, and the worker was looking for work with another employer in a different field. These facts do not reflect a situation of regular employment in an occupation and are further complicated by the worker’s period of incarceration in the months following the workplace accident.
The worker’s position is that the probable yearly earning capacity formula best represents his loss of earnings. The panel, however, does not find this formula to be appropriate.
The Policy sets out that the probable yearly earning capacity formula is used to forecast what a worker may be expected to earn for a consecutive 12-month period after the accident. This formula is used where neither regular earnings nor average yearly earnings accurately reflect the worker’s loss of earning capacity. In other words, it is the formula of last resort.
For example, it can be used where the worker does not have a history of prior employment or was not available for work for a portion of the prior year, or where the worker’s employment circumstance at the time of the accident is significantly different from past employment circumstances, such as where there has been a change of occupation. None of those circumstances are evident here, based upon the information available for consideration by the panel.
The panel finds that under the provisions of the Policy, the average yearly earnings formula is effectively the default formula for calculation and we see nothing in these facts to suggest that it should not be applied here. The average earnings policy defines average earnings as including any remuneration that the worker received as a result of employment or employment insurance benefits, as determined generally by documentable employment data from any consecutive 12-month period during the one or two years before the compensable accident. The 12-month period need only be consecutive and during up to two years before the compensable accident. If it is determined 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 5 years.
Our review of the potential application of these various formulae leads us to conclude that average yearly earnings based on a consecutive 12-month period over up to two years prior to the workplace accident provides the best approximation of the worker’s loss of earnings in this case.
With respect to the worker’s comment in his submission that he has also experienced a loss of additional income relating to pension contributions, we note that the regular earnings definition does not include pension benefits, and in fact explicitly excludes overtime, special reimbursements for employment expenses or bonuses that are not regularly paid. Benefits related to contributions to the worker’s pension therefore would not fall within the definition of regular earnings.
We note that the WCB in its decision of July 13, 2015 applied the average yearly earnings formula based upon the worker’s income in the two years before the compensable accident. As set out in that letter, in 2013 the worker earned $61,486.92 and in 2014 the worker earned
$52,510.44. The sum of these yearly income amounts was then converted to a gross weekly earnings amount of $1096.13. The decision of Review Office confirms that this was the appropriate formula to be applied and that it was correctly applied.
While we agree with the conclusion that the average yearly earnings formula is the appropriate formula to be applied, we disagree with the application of that formula and the calculations undertaken by both the WCB and Review Office.
The Policy sets out that the average yearly earnings calculation is first based on any consecutive 12 month period during the one or two years before the compensable accident, unless it does not produce an accurate reflection of a worker's loss of earnings.
Given the information available to us here, the options are that we could calculate the worker’s average yearly earnings based upon his 2013 earnings of $61,486.92 or based on his 2014 earnings of $52,510.44. Based on the 2013 earnings, the gross weekly earnings would be $1,182.44. Based on the 2014 earnings, the gross weekly earnings would be $1,009.82.
On the basis of the file record and evidence reviewed, we have determined that, relying upon the average yearly earnings formula, the worker’s average earnings should be calculated on the basis his 2013 total earnings converted to a weekly amount of $1,182.44.
The panel therefore concludes the worker's average earnings have not been correctly calculated.
Panel Members
K. Dyck, Presiding OfficerA. Finkel, Commissioner
P. Walker, Commissioner
Recording Secretary, B. Kosc
K. Dyck - Presiding Officer
Signed at Winnipeg this 5th day of August, 2016