A. Pre-Tax Average Weekly Wage
The purpose of the average weekly wage calculation is to arrive at an estimate of the employee's future earning capacity as fairly as possible. The methods of calculating average weekly wage are described below, in the order that each method should be considered. In other words, if section 102(4)(A) can be applied fairly and reasonably, section 102(4)(B) may not be used.
A) If an employee worked 200 full working days during the year immediately preceding the injury and wages did not vary significantly, use the gross weekly amount the employee was receiving at the time of the injury which constitutes a "regular full working week" (Section 102 (4)(A)).
B) If either the employee did work for the employer for 200 full working days but wages varied (unless the variance was due to missed work for personal reasons), or the employee did not work 200 full working days during the year immediately preceding the injury, an averaging method is used. To calculate the average weekly wage, you divide the entire gross wages from the employer for the 52 weeks immediately preceding the injury by the number of weeks that the employee actually did some work. Paid vacation weeks are included. You must delete the first week if the employee was hired during that week, and/or the week that the injury occurred, if inclusion of either of those weeks would reduce the average weekly wage (Section 102(4)(B)).
C) "Seasonal Workers". The average weekly wage of a "seasonal worker" is calculated by dividing the employee's total earnings, wages or salary during the prior "calendar year" by 52. (Section 102(4)(C)). To be considered a seasonal worker, the employee must work in a job that is inherently seasonal, such as a ski instructor or summer camp counselor. An employee is not a seasonal worker if he or she is customarily employed by one or more employers, full or part time, for more than 26 weeks in a calendar year. That exclusion does not apply if the person is employed directly in agriculture or in the harvesting or initial hauling of forest products. Those people are seasonal workers regardless of how many weeks per year they work. The term agriculture is broadly defined to include operations of farm premises, including planting, cultivating, production, and work incident to or in conjunction with farm operations such as packing, storing for the market, etc., as long as the work incident to farm operations is for the same employer and not provided as a service to other farm operations.
D) If the methods defined above cannot be reasonably and fairly applied, the average weekly wage is the sum "that reasonably represents the weekly earning capacity of the injured employee in the employment in which the employee at the time of the injury was working," using the employee's previous wages and the wages of "comparable employees" as guides (Section102(4)(D)).
There are some situations where the employee is not seasonal, but would still obtain a windfall if methods A or B were used. For example, the school cafeteria worker who regularly works 42 weeks per year and vacations during the summer. Using methods A or B would result in a windfall, because you would divide her gross earnings only by 42 even though she is entitled to 52 weeks of benefits a year. In essence she will be receiving a paid vacation while on workers' compensation. The only fair way to measure her earning capacity is to divide by 52 weeks. Our position is that you should divide by 52, and if questioned, cite subsection D.
If the employer litigates the average weekly wage issue, it must be prepared to offer evidence of earnings from comparable employees to support its position. Bossie v. School Administrative Dist. No. 24. Furthermore, if an employee's relationship with the job market is "consistently intermittent," and sections A, B, and C cannot be fairly applied, the employer should present evidence of what comparable employees are making in similar jobs. The typical example is the Union carpenter or pipe fitter who works temporary shut downs throughout the year but does not work for any one Employer year round. The employer should also obtain tax records from the employee establishing his earnings over the previous years in order to present an historical picture of the employee's relationship with the job market. Such evidence should be applied to reduce the employee's average weekly wage when he is injured in a short-term job, earning high wages. Alexander v. Portland Natural Gas.
The Law Court has also ruled that subsection B does not apply when the variations in wages result from personal reasons. In Fernald v. Dexter Shoe Co., the Law Court precluded use of subsection B when variations in wages resulted from personal reasons. According to the Court, in order to use subsection B, the variable nature of an employee's wages must depend on the type of employment. Since you cannot use subsection B in this situation, you may try using subsection D. Unfortunately, you may then also have to obtain earnings from comparable employees. Obviously, in this situation you would want the employer to give you wages from other employees who miss a lot of work because of personal reasons.
E) An employee who works at more than one job at the time of injury is entitled to have the wages from all employers added together to calculate AWW. These are known as "concurrent earnings" (Section102(A)(4)(E)). To arrive at the appropriate figure, you must calculate the average weekly wage in each employment separately and then add the figures together.
F) Under certain circumstances fringe benefits (as defined by case law and Board Rule Chapter 1.5) may be included in the calculation of the Average Weekly Wage.
1. What is a Fringe Benefit?
In general, a fringe benefit is defined as anything of value to an employee paid by the employer. It does not include a sum paid to cover special expenses necessitated by the nature of the employment, such as costs associated with travel. It would include payment of expenses not necessitated by the nature of the employment. Examples: personal use of company vehicle if no reimbursement by the employee is necessary, the fair market value of employer provided meals and/or housing, and life, group health, dental or disability insurance.
The manner in which you calculate the value of insurance benefits depends on whether or not the employer is self-funded.
If an employer is Self-Funded:
- Health and Dental are equal to the weekly cost to the employer at the time of the injury for maintaining such coverage under C.O.B.R.A., less the employee's pre-injury weekly contributions.
- Disability. Since disability is not offered under C.O.B.R.A., the value to be added to the average weekly wage is the employer's weekly cost to provide disability benefits, less the employee's weekly contribution.
If the employer is not Self-Funded:
2. When are Fringe Benefits included?
Pursuant to Title 39-A M.R.S.A. §102(4)(H), you must include fringe benefits in the employee's average weekly wage if the following conditions are met:
- The fringe benefit has been discontinued during the employee's disability;
- The benefit is included only to the extent that it does not result in a weekly benefit that is greater than two-thirds of the "state average weekly wage" at the time of the injury.
If the employee's average weekly wage, without fringes, yields a weekly benefit for total disability that is greater than two-thirds of the state average weekly wage at the time of the injury , but later on when he is reduced to some level of partial disability the benefit falls below two-thirds of the state average weekly wage, the employee is then entitled to inclusion of fringes to the extent that it brings his weekly partial disability compensation rate up to two-thirds of the state average weekly wage at the time of the injury. O'Neal v. City of Augusta.
B. After-Tax Average Weekly Wage
The standard weekly benefit under the 1992 Act is 80% of the "after-tax" AWW, which is the AWW less federal and state income tax withholding and FICA (Social Security) withholding (see TOTAL INCAPACITY). "After-tax" AWW is based on the number of dependents available to the employee in her federal tax returns on the year of the injury rather than the number she chooses to claim to the Employer for withholding purposes. (39-A M.R.S.A. §102(1)). A "Weekly Benefit Table" published by the Board and available on its website for each year (beginning in 1993) calculates the appropriate compensation rate; be sure to use the Table for the year of the date of injury--not the year you are making payments.
