Accurately calculating the claimant’s pre-injury average weekly wage is important in almost every case because it can have an enormous impact on the employer and carrier's exposure over the life of a claim, whether in the form of temporary total disability benefits (TTD), permanent partial disability benefits (PPD), temporary partial disability benefits (TPD), or even permanent and total disability. In cases where average weekly wage is in dispute, remember that “the reason for calculating the average weekly wage is to approximate the economic loss suffered by an employee or his [or her] beneficiaries when there is a loss of earning capacity because of work-related injury or death.” Bosworth v. 7-Up Distrib. Co., 4 Va. App. 161, 163, 355 S.E.2d 339, 240 (1987).
The default method for calculating pre-injury average weekly wage is to look at an employee’s earnings in the 52 weeks prior to their work accident. For most employees, their earnings in the prior year are the best estimate of their economic loss after their injury.
If an employee was hired a short time before their accident, it may not be appropriate to calculate their economic loss based upon their earnings in the prior year. As an alternative, the Commission allows the parties to calculate pre-injury average weekly wage by using the wages of a similar employee (i.e., an employee of “the same grade and character” of the injured employee). If a claimant or their attorney requests copies of earnings from a similar employee(s), make sure that you carefully select the other representative employee(s). It may not be as simple as choosing someone with the same job title, since earnings may be based on seniority, years of service or other employment details; the employer should also confirm that the similar employee’s earnings represent what the claimant would be earning, if not for his or her injury.
“[W]hen, for exceptional reasons” using the 52-week wages of the employee or a similar employee’s wages would be unfair to either the claimant or the defendants, the parties to a claim may develop their own method for calculating an employee’s average weekly wage. Seasonal employees frequently fall into this third category. The Commission has often held that a person employed in seasonal employment should have their gross wages divided by the number of weeks that they worked – not divided by 52 weeks. An extreme example of the Full Commission applying the seasonal employee principle can be found in the recent case of Lowe v. Marymount University, VA0000747683 (March 29, 2016).
The mantra of economic loss does not stop with the initial calculation of average weekly wage. When calculating temporary partial disability, the Commission also looks at economic loss. For example, if an employee is under a TTD Award, but is able to return to work for one day, it may not be appropriate to immediately reduce their compensation by 1 day, because their economic loss continues after that 1 day. The Virginia Workers’ Compensation Act recommends recalculating TPD on a quarterly basis, or every 13 weeks, if a claimant’s income is expected to vary, though quarterly recalculation is not required.