The Maryland Court of Appeals recently rendered an interesting decision in Beavers Construction v. Wagstaff, No 1977 (March 1, 2018).
Mr. Wagstaff was hired to work at a rate of $18.95 per hour, and the expectation was that he would work a 40-hour workweek. Because of the nature of the employer's business, he was instructed not to report to work "on days when it was raining or snowing." Thus, for the six weeks he worked, he "often worked full, eight-hour days. However, he "worked an average of only 16.75 hours per week" due to the weather exception described. He averaged $317.41 per week in earnings. I briefly worked in construction, and weather can be a real challenge.
On April 1, 2013, he was injured by accident. A serious fall resulted in a variety of injuries to his head, face, spine, shoulder, and knee. The employer paid his maximum wages (40 hours times $18.95) for a time. When the payments ceased, the claimant filed for workers' compensation, claiming his "gross weekly wages" as $758.00 (40 hours times $18.95).
The employer contended that the appropriate average weekly wage (AWW) was $317.41, the amount actually earned. The Maryland Workers' Compensation Commission initially agreed with that calculation. Later, the Commission held a hearing and concluded that the appropriate AWW was $758.00. The employer appealed that decision to the Circuit Court, contending that actual earnings should control. The Circuit Court affirmed the Commission. In the opinion cited above, the Appeals Court also affirmed that outcome.
In doing so, the Court noted that the Maryland Workers' Compensation Act "should not be strictly construed,” but instead "should be construed to carry out its general purpose.” That is, to "equitably distribute the burden of workplace accidents among the State, taxpayers, employees, and employers.” The Maryland law is one in which the balancing of equities is thus specifically referenced. Furthermore, the Maryland Court had previously held the law "is 'remedial' in nature and 'that it should be construed as liberally in favor of the injured employees as its provisions will permit in order to effectuate its benevolent purposes.’”
The Court also noted that "the current version of the" law does not include a "formal definition of" AWW. Instead, the law merely says that the AWW should be computed using the wages "when the covered employee is working full time" and "at the time of the accident." The Court also noted that existing precedent support that in Maryland, AWW "has always suggested, to some extent, a projection of what an employee would have gone on to earn if not for the accidental injury."
The employer argued that the Court should “endorse a uniform and predictable basis for calculating average weekly wage” to simplify the process and to afford the ability to anticipate liability. The "projecting," it argued, was speculative and hypothetical. The Court disagreed.
The Florida statute does not allow as much flexibility as Maryland's thus does. Florida requires that the calculation of an AWW is mandatory, in Section Fla. Stat. §440.14(1):
"Except as otherwise provided in this chapter, the average weekly wages of the injured employee on the date of the accident shall be taken as the basis upon which to compute compensation and shall be determined, subject to the limitations of s. 440.12(2), as follows:" (emphasis added).
There follow various methods for this calculation. The Courts have interpreted this statutory structure to require the Florida Judge to examine each section sequentially. Thus, if the first subsection can be appropriately used, the analysis ends. If not, then the second subsection is considered, etc.
The first consideration is whether the "employee has worked in the employment in which she or he was working on the date of the accident . . . during substantially the whole of 13 weeks immediately preceding the accident." If so, then the AWW "shall be one-thirteenth of the total amount of wages earned in such employment during the 13 weeks." Section 440.14(1)(a), F.S. Substantially the whole means "not less than 75 percent of the total customary hours of employment." So, if the Maryland claimant were in Florida, he could not utilize this section as he worked only about 6 weeks. Had he worked 13 weeks, the applicability might still be inappropriate if his weekly hours were consistent ("only 16.75 hours per week").
The second statutory alternative is not addressed unless the first is inapplicable (has not worked the substantial whole). The second alternative, when the worker has not worked "substantially the whole of 13 weeks" prior to the accident, is "the wages of a similar employee in the same employment who has worked substantially the whole of such 13 weeks shall be used." Section 440.14(1)(b), F.S. In Florida, the question would therefore next be whether there was some other "similar" employee with the same pay, hours, and responsibilities (generally) as the Claimant. The term "similar" can lead to long legal arguments and disagreement (am I "similar" to someone just because we each have two arms and two legs?).
The third alternative is used only if the first two cannot be used (did not work the substantial whole of the 13 weeks and there is no "similar employee"). And, for the third alternative to be used, the employee must be "a seasonal worker." In that instance, then the "employee may use . . . the calendar year or the 52 weeks immediately preceding the accident." Section 440.14(1)(c), F.S. There is nothing in the Maryland decision to suggest the claimant was "seasonal." Though this third option is provided it is apparently not employed very often.
The fourth alternative is used only if the first three "cannot reasonably and fairly be applied." In that event, then "the full-time weekly wages of the injured employee shall be used" unless the employee is "under 22 years of age" or is "a part-time worker" or had "adopted part-time employment as a customary practice." Section 440.14(1)(d), F.S. Those two exceptions are discussed more in Section 440.14(1)(e) and (f), F.S. Thus, the analysis in Florida would likely be under section (d). Under that section, the Florida Judge has "broad discretion" and "considerable latitude" in determining the AWW. See, Mauranssi v. Centerline Utilities Contract Co., 685 So.2d 66 (Fla. 1st DCA 1996). But, that section neither discusses "equity" nor proclaims a "benevolent purpose."
Thus, the analysis in this case might have been decided similarly had Florida been the jurisdiction, but much depends on that "similar employee" analysis in (2). Though the outcome could well have been similar, a prospective or "actual earnings" analysis, the path to that outcome is nonetheless markedly different in Florida. Florida does not have equity as its first stop on the AWW question. Legal definitions are considered and analyzed in Florida. Only when those legal parameters fail to allow a valid calculation does the more equitable, only then does the discretion and latitude become real.
The analysis from Maryland is instructive to the market. It is notable that those who take risks may struggle to quantify it (by selling a policy of insurance, a carrier receives income and takes upon itself the risk of a loss). An auto insurance carrier wants to know, in the event of an accident, whether it will be replacing a Ferrari or a Ford Fiesta. It will tend to charge more to insure the Ferrari, because the cost of replacement and likely repair, are higher. The risk assumed is higher, thus the premium is higher.
Equity is not always about mathematics. Equitable damages under the law are typically engaged when the legal remedies are seen as insufficient. The Maryland goal to "equitably distribute the burden" of workplace injury, thus introduces an element of uncertainty. When determining equity, courts are often deciding what is "fair," an uncertain standard that is often as dependent upon the observer's perspective or interest. Equity or fairness may be in the eye of the beholder, hard to quantify, and perhaps impractical to predict in advance.
As an aside, the Florida courts have eschewed equity, holding that "Workers' compensation is purely a creature of statute. McDade v. Palm Beach County Sch. Dist., 898 So.2d 126, 127 (Fla. 1st DCA 2005). However, equity has been discussed periodically by the courts. Crown Life Ins. Co. v. McBride, 517 So.2d 660 (Fla.1987); Rosenthal, Levy & Simon, P.A. v. Scott, 17 So.3d 872, 876 (Fla. 1st DCA2009).
But, actual risk is perhaps no more predictable in the Florida "legal" construct than in Maryland's equitable process. In Maryland's analysis, the carrier became equitably liable for a "promised" or "projected" earning amount, while in Florida it could likely have been liable for some other ("similar") employee's earning amount or a similar "projected" wage effected by "broad discretion" and "considerable latitude" in the Florida legal construct.
Thus, predictability may exist in either context, but may nevertheless be a challenge. That predictability may have to focus upon the "worst case," with a focus on the potential wages (everyone might be a ("Ferrari") that could be used in a later calculation, in the event of injury. True, this may extend beyond the mundane accounting of what is (today's actual payroll). However, that calculation is nonetheless capable of mathematical calculation (promised maximum weekly hours multiplied by promised rate).
What this discussion most aptly demonstrates is that various determinations in workers' compensation require factual determinations. Whether in a sequential legal analysis (Florida) or an "equitable" measuring of "fairness," factual findings regarding what was paid, what was promised, and what is, therefore, appropriate are required. And, it is worthy of note those factual findings depend upon the careful, competent presentation of evidence, and the patience and attention of focused adjudicators.
