Do I Have to Include That? . . . Calculating AWW

04/03/2014

Must you include non-Longshore wages when calculating the pre-injury Average Weekly Wage (AWW) for a claim pursuant to the Longshore & Harbor Workers’ Compensation Act (LHWCA)? In a nutshell – YES.

The scenario is not at all uncommon when it comes to Longshoremen and other maritime workers who qualify for LHWCA benefits following an industrial injury. It is a cyclical, transient, even sporadic way to earn a living for many. In the year preceding an injury, an employee may work for several different employers, both in Longshore and non-Longshore jobs. So how do we calculate the pre-injury AWW for purposes of determining or paying benefits for lost wages?

Under Section 10 of the LHWCA, there are three methods of calculating AWW. The first method applies to workers who have worked for most or all of the previous year in the Longshore employment. The second method applies to workers who have not worked most of the previous year, but the employer has the records of a similar employee upon which it can base a wage calculation. If neither of the first 2 methods fairly or reasonably approximate the actual pre-injury earning capacity of the injured worker, the judge will resort to the third method located in §10(c) of the LHWCA. This statute is sometimes referred to as the “catch all” provision.

Under §10(c), the judge considers many factors in attempting to approximate an entire year of work for the claimant. It is important to note that the judge has broad discretion under §10(c). For instance, he or she may go back in time beyond one year to determine the worker’s actual earning capacity at the time of the injury; and the judge may consider, among other things, the following:

  • Actual earnings of the claimant at the time of injury
  • Average annual earnings of other similar employees
  • Earning pattern of the claimant over a period of years prior to the injury
  • Claimant’s typical wage rate multiplied by a time variable
  • All other sources of income, including earnings from non-longshore employment
  • Probable future earnings of the claimant
  • Any other fair or reasonable alternative

Using the above factors, the ALJ will arrive at a figure approximating claimant’s annual earnings. That figure will then be divided by 52 to reach the AWW. In the case where a claimant has worked both Longshore and non-Longshore employment sporadically for the past year, the ALJ almost certainly will include the non-Longshore wages in order to determine the claimant’s actual earning capacity.

One important caveat is that if the employee has wages earned in other employment that are unaffected by the claimant’s injury, those wages are excluded from the calculation of annual wage earning capacity. The ALJ must determine whether the injury disables the claimant from all sources of income, or only from his Longshore employment.

The calculation of the AWW is critical in determining the amount of compensation benefits a claimant may be entitled to receive. Therefore, it is important to carefully and accurately calculate the AWW as early as possible once a claim for benefits has been made.

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