The Covid-19 Pandemic and the Temporary End of Modified Work: an Earnings Capacity Approach

• Jurisdiction: California,United States
• Citation: Vol. 33 No. 1
• Publication year: 2020
• Author: James Rossi, Esq. Simi Valley, California
• topic: Business of Law,Labor Law,Workers Compensation

The COVID-19 Pandemic and the Temporary End of Modified Work: An Earnings Capacity Approach

James Rossi, Esq. Simi Valley, California

As we live through the COVID-19 pandemic, we are all having to find ways to cope with the massive restrictions placed on our lives. One of the most significant issues at this time is the countless number of people who are out of work due to layoffs and business closures. As a result, an area likely to result in significant litigation in workers' compensation is liability for TTD benefits of those who, due to the pandemic, were laid off while working modified duties. This article asserts that an earning capacity framework is a viable way to address the situation, where individuals on modified duties may not, due to the circumstances of the economy the shelter-in-place measures have brought on, have an earning capacity associated with their layoff.

The Issue

The litigation over TD liability will not be limited to claims involving an industrially caused COVID-19 injury. The impact of the disease will likely extend well beyond COVID-19 injuries. In particular, the question arises as to whether injured workers who were working modified duty until their employer had to shut down due to-stay-at-home orders are entitled to have their TTD benefits continue. After all, the employer is no longer able to accommodate the restrictions they had been accommodating. In this scenario, the nonindustrial COVID-19 stay-at-home order may be the sole reason the employer is no longer accommodating applicant's restrictions.

Legal Authorities

Earning Capacity Generally

Labor Code sections 4453(c)(1)-(c)(4) refer to several ways to calculate TTD. This article focuses on Labor Code section 4453(c)(4), which is generally a catchall provision for calculating TTD in unusual cases where earning capacity is the most appropriate indicator and the first three methods do not yield a fair result.

Labor Code section 4453(c)(4) states:

[W]here the employment is for less than 30 hours per week, or where for any reason the foregoing methods of arriving at the average weekly earnings cannot reasonably and fairly be applied, the average weekly earnings shall be taken at 100 percent of the sum which reasonably represents the average weekly earning capacity of the injured employee at the time of his or her injury, due consideration being given to his or her actual earnings from all sources and employments. (Emphasis added.)

Case Law

A number of cases have offered important pieces of law relevant to this topic:

• "Generally speaking, in matters pertaining to temporary disability only, the issue of 'incapacity' or 'wage loss' is of dominant importance" (Allied Compensation Ins. Co. v. IAC (1963) 211 Cal.App.2d 821, 831.

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• "[T]he determination of earning capacity is a prediction of what the employee's earnings would have been but for the injury" (Ingraham v. WCAB (1997) 62 Cal. Comp.Cases 17, 21 (Court of Appeal, unpublished)).

• In making an award for temporary disability, the WCAB will ordinarily be concerned with whether an applicant would have continued working at a given wage for the duration of the disability (Argonaut Ins. Co. v. Industrial Acc. Com. (Montana) (1962) 57 Cal.2d 589, 595).

• Any method described in Labor Code section 4453(c) is valid only to the extent the result accurately reflects actual earning capacity at the time of injury (West v. Industrial Acc. Com. (1947) 79 Cal.App.2d 711, 722, 725).

• "For a temporary...