July 18, 2012
Calculating Average Weekly Wage

by Justice Paul E. Pfeifer

This case involved a man named Rick Warner, who began working for Central Allied Enterprises – a company that paves roadways – in 2004. Rick had worked on paving crews before, and he knew when he started with Central Allied that the work was seasonal. In the past, Rick had applied for unemployment compensation during the winter layoff, and he continued this practice with Central Allied.

On September 7, 2007, Rick was injured at work. His initial claim for workers’ compensation was allowed, but he later sought temporary-total-disability compensation. At that time Rick asked the Industrial Commission of Ohio – which handles such matters – to establish his average weekly wage (“AWW”) for the purpose of awarding the temporary-total-disability compensation.

Typically, the Commission calculates AWW by dividing total wages for the year prior to the injury by 52 weeks. But the AWW law contains exceptions to this general formula, one of which requires the Commission to exclude from the calculation “any period of unemployment due to sickness, industrial depression, strike, lockout, or other cause beyond the employee’s control.”

In the year prior to the injury, Rick had worked for 30 weeks and had been unemployed for 22 weeks due to the seasonal layoff; he had received wages for the weeks he worked, and unemployment compensation for the ones that he didn’t.

Rick proposed two different figures for his AWW. The first excluded his 22 weeks of unemployment benefits from the calculation. The second included in the formula both the number of weeks that he was unemployed and the dollar amount of his unemployment compensation.

But a staff hearing officer for the Commission  rejected both proposals. Instead, the hearing officer used a formula that excluded the unemployment money, but included the number of weeks Rick didn’t work. Put another way, the formula took Rick’s total earnings from 30 weeks and divided them by 52 weeks, which significantly reduced his AWW.

In his report, the hearing officer wrote that the layoff wasn’t unforeseen, and Rick had presented no evidence that he sought a job during the layoff. The hearing officer determined that the period of unemployment was a “lifestyle choice,” and not beyond Rick’s control. Thus, the hearing officer did not exclude that time from the AWW calculation.

Rick next filed a complaint with the court of appeals. The court ordered the Commission to further consider Rick’s request, concluding that the Commission had abused its discretion in failing to include the dollar amount of Rick’s unemployment compensation because it was federally taxable income.

The court also criticized the Commission’s finding that there was no evidence that Rick had looked for other work during his layoff, citing Rick’s receipt of unemployment compensation – because in order to receive that compensation, he was required to provide proof of a job search.

After the court of appeals issued its judgment, Rick’s case came before us – the Supreme Court of Ohio – for a final review.

The AWW is intended to “find a fair basis for award for the loss of future compensation.” The figure must do substantial justice to the claimant, but it can’t create a windfall. Because seasonal unemployment isn’t listed among the exceptions for setting AWW, Rick could prevail only if he established that those weeks of unemployment were beyond his control.

The Commission and Central Allied asserted that Rick’s unemployment wasn’t beyond his control – he was aware of the cycle of work and layoff, but chose to remain at that job. They argued that the layoff wasn’t an unanticipated circumstance, nor was the period of unemployment that followed.

Rick disagreed. The yearly layoff was foreseeable, but he claimed that during the layoff he tried to find other employment – his receipt of unemployment compensation was proof. Thus, while he may have assented to a winter layoff, he didn’t voluntarily choose to remain unemployed – and that, according to Rick, made his unemployment beyond his control.

In a case from 2004, we determined that foreseeability of job loss does not necessarily render seasonal unemployment voluntary. Seasonal unemployment can be considered voluntary when it’s the result of a choice to enjoy the time off rather than look for work during the off-season. On the other hand, many seasonal employees want to work during the layoff, but can’t find employment. In those situations, unemployment may be considered to be beyond the individual's control.

Rick cited his receipt of unemployment compensation as proof that he looked for work during the layoff. But that 2004 case also declared that a claimant’s receipt of unemployment compensation did not, for workers’ compensation purposes, automatically establish that post-layoff unemployment was beyond the individual’s control.

In Rick’s case, the Commission never addressed the adequacy of Rick’s job search because it wrongly believed that he hadn’t presented evidence of it. The court of appeals was therefore correct in ordering further consideration of this issue, and we affirmed that portion of its judgment by a seven-to-zero vote.

The court of appeals also ordered the Commission to include in the AWW formula the amount of Rick’s unemployment money based solely on its status as federally taxable income. But we have declared federal taxability to be irrelevant in determining what to include in the AWW total. Accordingly, we reversed that portion of the court of appeals judgment.

We thus returned the case to the Commission to determine whether Rick’s weeks of unemployment were beyond his control. In doing so, we clarified that the Commission should total only Rick’s Central Allied wages from the year prior to his injury and divide by 52, unless Rick shows that he was not able to be employed during any of the 22 weeks during which he was laid off. Any week during the layoff in which his unemployment was beyond his control should be excluded.

Thus, if all his unemployment time satisfies the AWW law, Rick’s total wages would be divided by 30 to produce an AWW that arrives at “a fair basis” for the loss of compensation that resulted from his injury.

EDITOR'S NOTE: The case referred to is State ex rel. Warner v. Indus. Comm., 131 Ohio St.3d 366, 2012-Ohio-1084. Case No. 2010-1283. Decided March 22, 2012. Opinion Per Curiam.