Decision #71/24 - Type: Workers Compensation

Preamble

The worker is appealing the decision made by the Workers Compensation Board ("WCB") that their average earnings effective November 5, 2022 have been correctly calculated. A file review was held on July 18, 2024 to consider the worker's appeal.

Issue

Whether or not the worker’s average earnings effective November 5, 2022 have been correctly calculated.

Decision

The worker’s average earnings effective November 5, 2022 have not been correctly calculated.

Background

On August 23, 2022, the worker filed a report with the WCB claiming an injury to their left knee as the result of an incident at work on August 1, 2022. The worker sought medical care on August 21, 2022 and was diagnosed with a sprain and possible meniscal tear. The treating physician recommended one week of light duties and follow-up with a sports medicine physician. The worker saw a sports medicine physician on August 22, 2022 who suspected an osteochondral fracture or bucket handle tear of the worker’s left knee and requested an urgent MRI, placing the worker off work until September 16, 2022. The MRI study conducted on August 30, 2022 indicated a "Horizontal tear of the medial meniscus with associated parameniscal cyst." At follow-up appointment on October 12, 2022, the treating sports medicine physician referred the worker to an orthopedic surgeon.

Following review of the worker’s claim by a WCB medical advisor on October 24, 2022, the WCB advised the worker on October 25, 2022 that the initial decision to accept their claim was overturned and the claim was not acceptable as the WCB could not establish the worker injured their knee in the course of their employment. The WCB received additional information from the worker on January 23, 2023 in the form of an email from their supervisor indicating the worker had advised them of an injury to their knee due to an incident at work and that the worker was afraid of losing their employment if they reported the incident. The supervisor also advised that the employer would have had plenty of work for the worker for the next six months. On the same date, the WCB advised the worker the new information had been considered but there would be no change to the earlier decision.

The worker requested Review Office reconsider the WCB’s decision and on April 28, 2023, Review Office upheld the WCB’s decision the worker’s claim was not acceptable. The worker’s representative filed an appeal with the Appeal Commission on June 5, 2023 and on October 6, 2023, the Appeal Commission determined the worker’s claim was acceptable and returned the worker’s file to the WCB’s Compensation Services for further adjudication.

On October 11, 2023, the WCB advised the worker that medical reports would be gathered along with time and wage loss information from the employer. The worker confirmed they had left knee surgery on April 3, 2023 and had not worked since August 18, 2022. After the WCB reviewed the April 3, 2023 surgery report confirming a left knee arthroscopy with a partial medial meniscectomy, the WCB advised the worker on October 18, 2023 that they were entitled to wage loss benefits from August 18, 2022 until April 2, 2023, as the temporary aggravation of their pre-existing meniscal tear was repaired by that surgery.

On October 26, 2023, the WCB advised the worker that payment for wage loss benefits from October 19, 2022 to November 4, 2022 was available; however, further information from the employer was required to calculate an average earnings rate after that date. The worker confirmed they did not have any employment earnings in the prior 5 years to the date of accident. On November 6, 2023, the employer provided the WCB with the worker’s hours from July 22, 2022 to August 17, 2022 and the worker’s gross earnings in that period, advising that the worker was hired as a casual worker, to help the supervisor on an “as needed basis” and would have most likely worked 20 hours per week to approximately the end of August 2022 or mid-September 2022 at the latest. In reference to the January 2023 email from the supervisor indicating availability of work for the worker for at least six months, the employer disagreed and noted the supervisor was laid off in December 2022 due to lack of work and the employer confirmed they would have had work for the worker to mid-September 2022 at the latest.

The WCB determined the worker’s earnings based on the estimate of 20 hours per week to September 15, 2022 as noted in a memorandum to file dated November 7, 2023. The WCB provided a retroactive payment to the worker on November 9, 2023, with an explanation of the calculation, and on November 23, 2023, the WCB advised the worker they were not entitled to further benefits.

On December 11, 2023, the worker’s representative requested Review Office reconsider the WCB’s decision on the calculation of the worker’s average earnings, relying on the supervisor’s statement that the employer would have had at least six months of work for the worker, and indicating the supervisor’s position was to hire and schedule workers and as such, they had knowledge of the employer’s work projects and staffing requirements. The representative also noted the evidence that the worker’s hours were very consistent hours prior to the injury, with a minimum of 30 hours per week in August 2022 and a consistent 8-hours per day. The representative submitted that but for the workplace accident, the worker would have likely worked until January 2023 and as such, the worker should be entitled to benefits until that date.

When Review Office contacted the employer for further information on January 10, 2024, the employer confirmed they hired the worker as a casual labourer and that they would have had work for the worker until mid-September 2022. The employer also noted they had minimal work for the supervisor in November 2022 and December 2022, at which time the supervisor was laid off. The employer confirmed work resumed on that project in May 2023, but the worker would not have been rehired as the employer subcontracted the work and hired no workers. A copy of the memorandum of this discussion was provided to the parties on January 10, 2024 and the worker’s representative submitted a response on January 24, 2024. On January 26, 2024, Review Office determined the worker’s average earnings effective November 5, 2022 were correct.

The worker’s representative filed an appeal with the Appeal Commission on February 2, 2024 and a hearing was arranged.

Reasons

Applicable Legislation and Policy

The Appeal Commission and its panels are bound by the provisions of The Workers Compensation Act (the "Act"), regulations under that Act and the policies established by the WCB's Board of Directors. A worker is entitled to benefits under s 4(1) of the Act when it is established that a worker has sustained a personal injury arising out of and in the course of employment. Under s 4(2), a worker who is injured in an accident is entitled to wage loss benefits for the loss of earning capacity resulting from the accident, but no wage loss benefits are payable where the injury does not result in a loss of earning capacity during any period after the day on which the accident happens. When the WCB determines that a worker has sustained a loss of earning capacity, an impairment or requires medical aid as a result of an accident, compensation is payable under s 37 of the Act. Section 39(2) of the Act sets out that wage loss benefits are payable until the worker's loss of earning capacity ends or the worker attains the age of 65 years.

The Act outlines the method of calculation of a worker’s average pre-accident earnings in s 45, as follows:

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.

Average earnings includes all employment income 

45(2) In making a calculation under subsection (1), the board shall consider any employment income the worker has at the time of the accident from which the worker sustains a loss of earnings, whether or not the employment is in an industry to which this Part applies.

WCB Policy 44.80.10.10, Average Earnings (the “Policy”) outlines how the WCB will determine a worker’s average earnings at the time of a compensable injury. The Policy outlines three formulae to determine a worker’s average earnings and sets out that the formula used is the one that “best represents the worker’s employment and earnings pattern before the accident.”

The regular earnings formula calculates the worker’s average earnings based on the amount of earnings they would normally receive as remuneration in all occupation(s) in which they were employed on the date of accident, if their ability to earn income from each of these occupations was affected by the compensable injury. This formula normally excludes overtime, special reimbursements, allowances, and bonuses.

The average yearly earnings formula is used when a worker has an irregular earnings pattern due to the nature of their work, for example, as a seasonal worker, contract worker, pieceworker, or with fluctuating overtime. Average yearly earnings include any verifiable remuneration that the worker received from employment and employment insurance benefits, and includes overtime, special reimbursements, allowances, and/or bonuses. Under this formula, the WCB will generally rely on data from any consecutive 12-month period occurring during the one or two years before the date of the accident but may choose one or more consecutive 12-month periods from any of the previous five calendar years if doing so would produce a more accurate reflection of the worker’s employment and earnings pattern before the accident.

The probable yearly earning capacity formula forecasts what a worker might be expected to earn for a consecutive 12-month period after the day of accident. Although based on the worker’s earnings before the accident, this formula uses the worker’s regular earnings or average yearly earnings and adjusts them to reflect the worker’s probable employment and earnings pattern going forward, or alternatively, the employment and earnings pattern of a representative sample of similarly employed workers. It also may include presumed employment insurance benefits. This formula is used when the formulas for regular earnings and average yearly earnings do not accurately reflect what the worker’s average earnings likely would have been, but for the accident, and generally, the WCB will only use probable future earning capacity to calculate average earnings when there is a sufficient degree of certainty about what the worker’s average earnings likely would have been.

Worker’s Position

The worker was represented in the appeal by a worker advisor who provided a written submission outlining the worker’s position.

The worker’s position is that the worker’s average earnings effective November 5, 2022 have not been correctly calculated, in that the WCB failed to take into account the evidence that the worker was likely to have been employed for some six months following the accident and failed to take into account the worker’s average hours prior to the accident exceeded 20 hours weekly.

The worker’s position is that the best formula to calculate this worker’s average earnings is the probable yearly earnings formula, using the worker’s pre-accident earnings and projecting those earnings forward for six months, plus the worker’s probable employment insurance benefits. The worker advisor submitted that there is “no physical evidence of a pending layoff” and the panel should prefer and give greater weight to the evidence from the worker’s supervisor that there was work available for the worker for at least six months over the employer’s statement that the worker would have been laid off by mid-September, 2022. The worker advisor further submitted that there is no evidence to support a finding that the worker would have worked no more than 20 hours per week from the date of accident going forward, noting that the file evidence shows the worker was paid for a minimum of 30 hours weekly prior to the accident.

The worker advisor submitted that the delay in asserting there was a pending layoff, inconsistencies in the employer’s statements, the lack of physical evidence and the fact the employer has a vested interest in reducing claim costs should be considered when weighing the employer’s statements to the WCB in relation to this claim.

Further, the worker advisor submitted there is no evidence that the worker would not have sought other work, if laid off, noting the previous appeal panel found the worker to be “very motivated to keep working and earning an income.”

Employer’s Position

The employer did not participate in the appeal.

Analysis

The question on appeal is whether the WCB correctly calculated the worker’s average earnings effective November 5, 2022. For the worker’s appeal to succeed, the panel would have to determine that the WCB failed to apply the correct formula in calculating the worker’s average earnings, or that in applying the formula, the WCB erred in applying the provisions of the Average Earnings Policy. As detailed in the reasons that follow, the panel found that the WCB applied the correct formula but erred in determining the worker’s average weekly hours used in the application of that formula. Therefore, the worker’s appeal is granted.

The panel reviewed the evidence as to the nature of the worker’s employment prior to and following the workplace accident. We noted that the worker was hired as a casual labourer on July 22, 2022 and worked until August 17, 2022. In that period, the worker worked variable hours depending on work availability. The employer initially reported to the WCB that the worker had gross wages of $1840 from July 22 through August 2, 2022, with 80 hours worked in that period. The panel noted the worker reported to the WCB that they were hired for a fulltime permanent position, but this is not confirmed by the evidence. The worker’s supervisor reported on August 26, 2022 that the worker worked, after the injury until August 9, and then was “called back to work on August 16th and 17th, I did not have work for [them] until August 23rd ….” In an email dated September 6, 2022, the employer confirmed to the WCB that following the injury (reported as occurring on August 2, 2022) the worker worked August 3, 4, 5, 8, 9, 16 and 17, and that the worker had 32 hours from August 8-17, 2022. On November 6, 2023, the employer provided the worker’s payroll records indicating 80 hours paid in the pay period ending August 6, 2022, no hours paid in the pay period ending August 20, 2022 and 32 paid hours in the pay period ending September 3, 2022, for a total of 112 hours. The worker further advised that they had no employment earnings in the five years prior to the date of injury, as they were “going through a divorce and …could not get work due to the pandemic.”

Based on this evidence, the panel considered the application of the Policy and determined that the formula that “best represents the worker’s employment and earnings pattern before the accident” is the probable earnings formula, given the worker’s irregular earnings pattern in this employment and that they did not have any earnings in the five years prior to this employment.

The panel then considered the evidence upon which the WCB calculated the worker’s probable earnings. The employer stated that the worker would likely have worked 20 hours per week until the end of August or mid-September, 2022; however, the panel does not accept the employer’s estimate as the best representation of the worker’s pre-accident earnings pattern. Rather, the evidence indicates that the worker averaged 28 hours of work per week from the date of hire until the last day worked, based on a total of 112 paid hours over four weeks, at 8 hours per day, and that in the first two weeks of employment, the worker averaged 40 hours per week at 8 hours per day. The Policy requires that the worker’s pre-accident earnings pattern should be based on the worker’s actual average earnings, not a speculative estimate as offered by the employer, and that those average earnings may then be adjusted to reflect the probable earnings going forward. As such, the panel finds that the worker’s probable earnings should be based on 28 hours per week, rather than 20 hours per week.

In considering whether the worker’s average earnings at the time of the accident should be adjusted to reflect probable earnings going forward, the panel noted the worker’s supervisor statement that the employer would have had work for the worker for at least six months. The panel also noted the evidence that the supervisor was laid off in December 2022 and as such, we place less weight on their January 18, 2023 statement. While we accept that the supervisor may have believed at the time of hiring the worker that they could keep them busy for six months, the employer’s statement to Review Office contradicts that belief. The employer asserted that the job the worker was hired to assist with was at first postponed, and then later, subcontracted so that the employer had no workers onsite when the job continued. While the worker advisor queried the truth of this statement, there is not evidence to the contrary. The panel further noted that although the worker worked every day in their first pay period, by the second pay period there was only work on two days each week, and the supervisor noted that the following week, they did not call the worker in until August 23, suggesting that by that time there was not steady work available. In the absence of other reliable evidence to the contrary, the panel accepts and relies upon the employer’s evidence that the worker’s job would have continued into mid-September at the latest. The worker’s averaged earnings should therefore be adjusted to reflect this end date.

Based on the evidence before the panel and on the standard of a balance of probabilities, we are satisfied that the worker’s average earnings effective November 5, 2022 have not been correctly calculated and should be recalculated based on our findings as outlined in these reasons. The worker’s appeal is granted.

Panel Members

K. Dyck, Presiding Officer
R. Campbell, Commissioner
M. Payette, Commissioner

Recording Secretary, J. Lee

K. Dyck - Presiding Officer
(on behalf of the panel)

Signed at Winnipeg this 26th day of July, 2024

Back