Under the Pennsylvania Workers’ Compensation Act, when an injured worker in PA is disabled from his or her job due to a work injury, the injured worker is entitled to workers’ compensation wage loss benefits. This rate is based on the earnings the injured worker had prior to the injury. Those earnings are called the Average Weekly Wage (AWW).
Assuming the injured worker had been working for his or her employer for more than a year before the work injury, the AWW is calculated by taking the average earnings of the injured worker for each of the four 13-week quarters immediately before the injury. The lowest quarter is disregarded and an average is taken of the remaining three quarters. The resulting number is the AWW. The workers’ compensation rate is typically two-thirds of the AWW (if the AWW is very low, the rate could be as high as 90%, if the AWW is very high, the rate is capped at a certain level each year).
Sometimes, these calculations result in a terrible injustice. The most egregious example was fixed by the Supreme Court of Pennsylvania in their decision in Hannaberry HVAC v. Workers’ Compensation Appeal Board (Snyder Jr.) in 2003. There, the injured worker was a part-time employee for most of the year preceding the injury. Shortly before the accident, the injured worker had graduated school and become a full-time employee, earning a wage four times what he had been earning. The accident (in which he was pinned under a forklift) left the injured worker a quadriplegic.
The Supreme Court of PA found that the normal wage calculation, as described above, would not work in this case. That calculation, said the Court, would not reflect the “economic reality” and would not “provide a fair ascertainment of wages.” The Court stated that the calculation as provided in the PA Workers’ Compensation Act “does not control the calculation in a circumstance where it would lead to a grossly and demonstrably inaccurate measure of a worker’s weekly wage.” This decision certainly was consistent with the humanitarian objectives of the PA Workers’ Compensation Act.
Unfortunately, the Hannaberry decision is read strictly by lower Courts and that reasoning is rarely used. Take, for example, the recent decision by the Commonwealth Court of Pennsylvania in Pike v. Workers’ Compensation Appeal Board (Veseley Brothers Moving).
For two of the three quarters immediately preceding the work injury, Mr. Pike was an hourly employee, earning $306.23 and $368.15 per week (The decision does not make clear what the earnings were in the other quarter, though it appears that must have been lower and the quarter that was dropped from the calculation). In the last quarter prior to the work injury, Mr. Pike had been promoted to a new position and earned $1,559.54. The Workers’ Compensation Judge averaged $306.23, $368.15 and $1,559.54, divided by three, and came up with AWW of $744.64 (resulting in a workers’ compensation rate of $496.67).
The injured worker appealed, citing Hannaberry, alleging that his promotion made the AWW unfair and that the AWW did not accurately reflect his earnings. The Court, as has become common practice, limited Hannaberry to its facts and affirmed the WCJ. First, said the Court, the request to use the highest quarter is the exact change the legislature removed in the 1996 amendments to the Act, and the reason to use this quarter was not as moving as in Hannaberry. Second, there was not enough evidence that the earnings would continue to be at that level (and this, of course, stands as a practice hint to those of us representing injured workers!). As such, the Court found that the WCJ did not err, and the AWW was properly calculated.
To attorneys who represent injured workers in PA, though, this calculation certainly seems unfair. Certainly looks like the calculation here “lead(s) to a grossly and demonstrably inaccurate measure of (the) worker’s weekly wage.” But, that’s just our opinion.