The Appeal CommissionThe Workers Compensation Act of Manitoba

Preamble

The worker is appealing the decision made by the Workers Compensation Board ("WCB") regarding the calculation of his average earnings. A hearing was held on August 2, 2017 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 been correctly calculated.

Background

The worker suffered an injury to his left shoulder on May 25, 2016 while employed as a truck driver. His claim was accepted by the WCB on July 28, 2016. On November 23, 2016, the WCB's Review Office determined that the worker had a loss of earning capacity related to the May 25, 2016 accident and was entitled to wage loss benefits.

The WCB obtained income tax and benefit return information for 2013, 2014 and 2015, together with additional information supplied by the worker.

In a memo to file dated December 12, 2016, a WCB payment assessor stated:

The workers' (sic) initial gross weekly wage will be based on the workers' (sic) period of employment from May 10/16 to May 25/16. This will be used to calculate benefits for the 1st 12 weeks of benefits.

Total gross earnings May 10/16 to May 25/16 = 116.5 hours x $23.50/hr = $2737.75

RDO (regular day off): 7 day worker

POE (period of employment): 2 weeks, 2 days

$2737.75 ÷ 2.29 = $1195.52 per week.

In a letter dated December 13, 2016, the worker was advised by the WCB that his weekly gross earnings were calculated at $1,195.52.

In a further memo to file dated December 12, 2016, the WCB case manager stated:

For average earnings, I will use the earnings noted above spread over 52 weeks, as we have no indication of the duration of the contract. We have no indication that the contract will last longer than 12 weeks (average earnings date).

Given the worker's clear disrespect for, and disagreement with, the employer on various issues, as well as the demonstrated conflict between the employer and worker from almost the first day of employment, it is difficult to see how this employment relationship might have lasted more than a few weeks at best.

In a memo dated December 15, 2016, the WCB payment assessor stated:

Since there is no history of employment income, no confirmation of the worker's employment status with the accident employer and no entitlement to EI benefits (worker only had 2.29 wks of employment income with accident employer), the workers' (sic) earnings will be annualized as there is no evidence of further earnings.

$2737.75 ÷ 52 weeks = $52.65 per week

Therefore, average earnings established at $52.65 per week effective August 18, 2016.

In a memo dated December 15, 2016, a WCB payments supervisor stated:

I reviewed this file as requested and agree with recommendation to establish average earnings effective Aug 18, 2016 at $52.65/wk based on the worker's estimated POE from the accident employer for the period May 10 - May 25, 2016 averaged over 52 weeks as indicated in your average earnings memo.

On January 9, 2017, a worker advisor, acting on the worker's behalf, requested that the WCB adjust the worker's benefit rate for the first 12 weeks based on new information - an order dated December 23, 2016 that was issued to the accident employer by a Manitoba Employment Standards Officer stating that the worker was owed wages in the amount of $3,092.63. The worker advisor also stated that they disagreed with the decision made by the WCB to establish the worker's average earnings at $52.65 per week effective August 18, 2016.

In a further decision dated January 10, 2017, Compensation Services advised the worker that his benefits for the first 12 weeks of the claim would be recalculated using the new information provided by the Manitoba Employment Standards determination, to reflect total gross earnings of $3,092.63 for the period of May 10 to 25, 2016 inclusive. Compensation Services also advised the worker that an adjustment was being made to his average earnings rate to reflect that the total gross earnings were $3,092.63 rather than the $2,737.75 that was used previously.

On January 13, 2017, the worker advisor wrote Review Office requesting reconsideration of the worker's established average earnings. The worker advisor stated:

…the probable yearly earnings formula is the proper one to use in the worker's case. By our interpretation, it allows the WCB to use the worker's period of earnings (i.e. regular) projected forward for the next 12 months.

On February 21, 2017, Review Office determined that the worker's average earnings had been correctly calculated. Review Office stated, in part, that the probable yearly earnings method is used when there is little to no earnings history upon which to establish a loss. It found that the worker's pattern of employment in the five years prior to the accident did not support a substantial loss of earnings post-accident. Based on the evidence, the worker's average earnings had been calculated appropriately. The average earnings established at $59.47 per week was confirmed, as was the method used to calculate it.

On March 1, 2017, the worker advisor appealed Review Office's decision to the Appeal Commission and an oral hearing 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 WCB's 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) provides that the 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) of the Act deals with the calculation of average earnings, and reads in part as follows:

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…

Methods for calculating average earnings are set out in WCB Policy 44.80.10.10, Average Earnings (the "Policy"). The Policy directs that in establishing 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 which 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 as including:

…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" is defined as:

…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 Act…, 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 D to the Policy provides additional explanation as to when the probable yearly earning capacity will be used. Schedule D goes on to state that:

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.

Worker's Position

The worker was assisted by a worker advisor, who made a presentation on his behalf. The worker's position was that the reduction of his wage loss benefit rate to $59.47 per week effective August 18, 2016 was inappropriate because the time period used to calculate that rate was unfair and unjust, and did not accurately represent the employment income the worker lost when his accident occurred. The advisor suggested three different ways of establishing the worker's average earnings, any one of which, it was submitted, would better reflect the worker's loss of earnings at the time of the accident.

The worker's primary position, as advanced by the worker advisor, was that his gross weekly benefit rate should have remained at $1,350.49 through the application of the probable yearly earnings formula. That amount was based on the gross wages which the Employment Standards Division had determined were owed to the worker ($3,092.63), divided by the time period in which those wages were earned (16 days). It was submitted that dividing employment earnings by the actual time period in which they were earned is the fairest way of calculating a worker's average earnings. The WCB, however, divided 16 days of employment earnings by 52 weeks, which was neither fair nor just, and did not accurately represent the worker's actual loss of earnings at the time of the accident.

It was submitted that the probable yearly earnings formula was the most appropriate method to use in this case, given the worker's short period of employment, his unemployment for most of the five-year period prior to his accident and his having experienced a significant occupational change, namely a move from self-employment to an employer-employee relationship which was expected to be a year-round, full-time position.

Alternatively, as a secondary position, the worker adviser stated that the worker's average earnings should be based on the employment pattern of workers who performed similar work. With reference to labour market information which they had supplied, the advisor submitted that $20.00 per hour, being the average median wage in the area where the worker had been working, should be applied.

Finally, if the panel were to agree with Review Office that the probable yearly earnings formula was not appropriate, it was submitted that although the WCB appeared to have applied the average yearly earnings formula to calculate the worker's current weekly benefit rate, it had not included all employment remuneration which the worker received during the 12-month period immediately prior to his workplace accident. File information showed instances where the worker reported having been paid for subcontractor work performed for two other employers. Documentation provided by the worker in advance of the hearing substantiated that he performed work and was paid wages within that 12-month period. The worker was therefore requesting, at a minimum, that this employment remuneration be included in the calculation of his average earnings.

Employer's Position

The employer was represented by a director at the hearing. The representative stated that the worker was not hired on a year-round, full-time basis. The worker had said that he did contract work and had insisted that he wanted to work as a subcontractor. The representative stated that the worker was not careful, and "things…clearly didn't work out." He therefore told the worker that he did not have any more work for him. A few days later, the worker changed his mind and said he wanted to be considered an employee. The representative noted that the worker never told the employer he was injured, and did not report an injury until after there was no more work for him.

Analysis

The issue before the panel is whether or not the worker's average earnings have been correctly calculated. The 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. For the worker's appeal to be successful, the panel must therefore 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. The panel is unable to make that finding, for the reasons that follow.

The worker's position is that the probable yearly earnings formula, to reflect the worker's employment pattern, or alternatively the earnings and employment pattern of a few similarly employed workers, best represents his loss of earning capacity in the circumstances of this case and should be applied. Based on our review of the information on file and information and submissions at the hearing, the panel is satisfied that the application of that formula is not appropriate in the circumstances of this case.

The panel notes that the probable yearly earnings formula is applied in exceptional circumstances, when neither regular earnings nor average yearly earnings accurately reflect the worker's loss of earning capacity. Examples of when that formula will be used are set out in Schedule D to the Policy as follows:

• 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… 

• The worker is a probationary employee.

The worker advisor has argued that the worker's circumstances fall squarely within the first two examples listed above, and that this is precisely the type of situation where the probable yearly earnings formula would apply. The panel is unable to make that finding. While it was argued that the worker was unemployed and not earning any income for most of the previous five years, the panel finds that this was the result of an employment decision on his part. Information on file shows that the worker advised the WCB that he sold some property and took a break from work from approximately 2010 to mid-2015, during which time he lived off the proceeds of that sale. The reason the worker had no income over this period of time was therefore not that he was unable to work or unable to find employment, but that he decided not to work.

It was also argued that the first example set out above applies on the basis that the worker took a break and was not available for work for a portion of the previous 12 months. The panel is not satisfied that the evidence establishes that the worker was in fact unavailable during that period of time. In any event, to the extent that the worker may have been unavailable, this was again due to his own decision to take a break from working. In the panel's view, the choice or decision not to work does not fall within the meaning or intent of this example.

The advisor further argued that the worker's employment circumstance at the time of the accident was significantly different from his past employment circumstances and therefore falls within the second scenario listed above. The panel is unable to make that finding. The basis for the worker's position was the worker had moved from self-employment to an employer-employee relationship which was expected to be a year-round, full-time position. The evidence shows, however, that the nature and terms of the work relationship were unclear. Even if the worker was working as an employee as opposed to a subcontractor, the panel is of the view that this would not have been a significant difference. The worker said that he drove trucks as a subcontractor for two other companies earlier in 2015, and he was similarly driving trucks for the accident employer. The work which he was performing was therefore not significantly different from work he had done previously. Further, the evidence does not show that the worker was guaranteed year-round employment or that he would have continued to work for the employer. The employment relationship lasted only 16 days, and it was acknowledged that the termination of that relationship was not due to the worker's injury. The panel is therefore satisfied that the second example is not applicable in the circumstances of this case.

The panel notes that there was no suggestion that the worker's circumstances fall within the third or fourth examples listed above.

The panel further notes that by definition, the probable yearly earning capacity represents the worker's projected earnings for the next twelve months and is based on the worker's regular earnings at the time of accident as applied to the worker's established work pattern. Based on the foregoing, including the evidence of the worker's five year break from the workforce, his having worked for the employer for only 16 days, and his termination for reasons which were not related to the compensable injury, the panel finds that the worker did not have an established work pattern. Accordingly, the panel finds that application of the probable yearly earnings formula would not accurately reflect the worker's loss of earnings and is not appropriate in this case.

The panel further finds, based on our review and consideration of all of the evidence before us, that the method which was used by the WCB to establish the worker's average earnings best reflects the worker's actual loss of earnings. The panel notes that the WCB accepted the determination by the Employment Standards Division of the wages which were owed by the employer to the worker for his 16-day period of employment. In the circumstances, and in particular, given the limited duration of the worker's employment, his voluntary withdrawal from the workforce from 2010 to 2015, and the lack of an established work pattern, the panel finds that averaging the worker's wages over 52 weeks was fair and just, and accurately and best reflected the worker's actual loss of earning capacity.

The panel has considered the worker's further position that he received additional employment remuneration during the 12-month period immediately prior to his workplace accident which should have been included in the calculation of his average earnings. With reference to the documentation he had provided in advance of the hearing, the worker stated at the hearing that he had worked for two other companies in 2015. The worker indicated that payment for his services had been made to a company in which he had shares, and he had then withdrawn all or a portion of the money from that company as a withdrawal against an outstanding loan which the company owed him.

The panel reviewed the worker's Income Tax and Benefit Return from 2015 which is on file. The panel notes that the total income and total taxable income on that return are both zero. There is no reference to any employment, self-employment, or other income on the worker's return. Given that it was not verified or reflected as income on the worker's 2015 income tax return, the panel is unable to find that any such remuneration should also be included in the calculation of the worker's average earnings.

Based on the foregoing, the panel finds that the method used by the WCB to establish the worker's average earnings best reflects the worker's actual loss of earnings and was properly applied. The panel therefore finds that the worker's average earnings have been correctly calculated.

The worker's appeal is dismissed.

Panel Members

M. L. Harrison, Presiding Officer
P. Challoner, Commissioner
P. Walker, Commissioner

Recording Secretary, B. Kosc

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

Signed at Winnipeg this 26th day of September, 2017