Time, Equity and the Average Weekly Wage
| Publication year | 1994 |
| Pages | 1831 |
1994, August, Pg. 1831. Time, Equity and the Average Weekly Wage
Calculation of a workers' compensation claimant's average weekly wage is critical to the amount of benefits payable. The average weekly wage influences temporary disability benefits under CRS § 8-42-105(1), permanent medical impairment benefits under CRS § 8-42-107(8)(d) and permanent total disability benefits under CRS § 8-42-111(1). Due to the significance of the average weekly wage calculation, it is important for practitioners to consider new case law which significantly affects the traditional rule that the average weekly wage is to be determined based on the claimant's earnings at the time of the injury.
Two recent cases, Coates, Reid & Waldron v. Vigil(fn1) and Campbell v. IBM Corp.,(fn2) explore the tension between § 8-42-102 (2) and § 8-42-102(3) (discretionary section). Section 8-42-102(2) states that the claimant's average weekly wage is to be determined based on the "remuneration which the injured ... employee was receiving at the time of the injury." This provision is consistent with the definition of "wages," found at § 8-40-201(19), which refers to the money rate at which services are recompensed "at the time of injury." In contrast, § 8-42-102(3) permits an administrative law judge ("ALJ") to depart from the enumerated statutory methods of calculating the average weekly wage and use a method that "fairly" calculates the wage under the particular circumstances of the individual case.
Coates is foremost among the recent cases addressing the tension between the statutes currently codified at § 8-42-102 (2) and 102(3). In Coates, the claimant was employed as a maid when she sustained a compensable injury in 1987. At that time, the claimant earned $418 per week. Subsequently, she returned to light-duty employment with the same employer and sustained a second compensable injury in 1988 while earning $290 per week.
The claimant reached maximum medical improvement from both injuries in August 1990. The ALJ found that she was permanently and totally disabled from the combination of the two injuries and that 80 percent of the disability was caused by the first injury. Under these circumstances, the ALJ concluded that the claimant's average weekly wage, and consequently her permanent total disability benefits, should be based on her earnings of $290 per week at the time of the second injury.
The Colorado Supreme Court set aside the ALJ's order and remanded with directions that the ALJ recalculate the claimant's average weekly wage in a manner that fairly compensated her under the discretionary section. In so doing, the court "presumed" that the ALJ's calculation of Vigil's wage was predicated on former CRS § 8-47-102(1) [now codified with changes at § 8-42-104(1)]. This statute, prior to 1991 amendments discussed below, provided that where the claimant suffers from a prior disability and experiences a second injury, the average weekly earnings should be calculated so as to represent the claimant's "average weekly earning capacity at the time of the later injury," but "subject to the limitations in § 8-47-101 [now § 8-42-102]." [Emphasis added.]
The Supreme Court concluded that one of the limitations set forth in former § 8-47-101 is the ALJ's authority to calculate fairly the average weekly wage, under the discretionary section, when the enumerated statutory calculations "work a gross inequity." The court determined that the ALJ's calculation of the claimant's wage created an inequity because of the "unique circumstances" of the Coates case. In particular, the court cited the claimant's concurrent injuries, her higher earnings at the time of the first injury, the fact that the first injury was the greater cause of her permanent total disability, her inability to receive permanent partial disability benefits for the first injury and her sustaining both injuries while working for the same employer.
The most striking aspect of the Coates decision is the Supreme Court's willingness to abandon, in the name of equity, two statutory prescriptions indicating that the claimant's average weekly wage should have been determined based on her earnings at the time of the second
injury. CRS § 8-47-102, cited by the court as the basis of the ALJ's order, mandated determination of the average weekly wage at the time of the claimant's later injury, subject to the limitations of former § 8-47-101. One limitation of § 8-47-101(2) is the requirement that the wage be based on earnings at the "time of the injury." Nevertheless, the court concluded that the discretionary section required the ALJ to determine that the claimant's average weekly wage was something other than what she was earning at the time of her second injury.
The court's interpretation of the statutes did not consider an alternative construction that harmonizes the "time of the injury" requirement with the discretionary section. Former § 8-47-101(2) [currently § 8-42-102(2)], requires that the average weekly wage be based on the "monthly, weekly, daily, hourly, or other remuneration" being received "at the time of injury, and in the following manner." The statute then establishes specific mechanisms for calculating wages earned by monthly, weekly, per diem, hourly and piecework employees. The discretionary section then provides that where the "foregoing methods of computing the average weekly wage" produce an unfair calculation, the ALJ may use discretion to compute the wage "in such other manner and by such other method" as will fairly calculate the wage. [Emphasis added.]
The Coates decision also did not consider that the discretionary section may be read as granting ALJs the authority to alter the rigid statutory methods of calculating the average weekly wage, without abandoning the distinct and separate requirement that the ALJ remain focused on determining a fair wage as it existed at the time of the disabling injury. Put another way, § 8-42-102(2) may be read as establishing a rule that the claimant's earnings at the time of the injury are paramount in determining the wage, while the discretionary section...
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