Calculating Average Weekly Wage
One of the first things that a payor (employer or insurer) must do once a workers’ compensation claim has been accepted as compensable is to correctly calculate the claimant’s average weekly wage and compensation rate in connection with the payment of indemnity benefits. If this is done incorrectly, the payor faces the imposition of penalties and attorney’s fees. When calculating the average weekly wage, it is vital to establish whether the employee was a full-time employee, part-time employee, or seasonal employee, as this will have a direct impact on the calculation.
The 40-hour Presumption
If the employee is a full-time employee, then the Workers’ Compensation Act, specifically LSA-R.S. 23:1021(13)(a)(i), grants him or her a “40-hour presumption.” In other words, when calculating the average weekly wage, you must either pay the employee the greater of his or her rate of pay multiplied by the average actual hours worked in the four full weeks preceding the date of the accident or forty hours at his or her hourly rate. Because of this presumption, if the employee is full-time and works an average of 36 hours per week for example rather than 40 hours, he or she will still have the benefit of the 40-hour presumption when calculating the average weekly wage.
A part-time employee for workers’ compensation purposes is defined as “an employee who as a condition of his hiring knowingly accepts employment that (a) customarily provides for less than forty hours per work week, and (b) that is classified by the employer as a part-time position.” LSA-R.S. 23:1021(11). As stated in Johnson v. Travelers Ins. Co., 509 So.2d 519, 521 (La. App. 3 Cir. 1987), writ denied, 510 So.2d 378 (La. 1987), it “is incumbent upon employers to define “part-time” status of certain employees and to establish some procedure to satisfy the criterion that the employee had knowingly taken a part-time job.” The Johnson Court went on to state that an employer could protect itself very easily by drafting a simple agreement for an employee to sign which indicated that the employee was accepting future employment with the company on a part-time bases while providing an explanation of what that part-time status entailed.
Following this logic, Louisiana courts have denied the classification of part-time status whenever there was no evidence in the record to establish that the employee’s position provided for less than forty hours, nor was there evidence to establish that the employee knowingly accepted a part-time position. See Jeffers v. Kentucky Fried Chicken, 2008-1380 (La. App. 3 Cir. 4/1/09), 7 So.3d 812, 819; Clark v. Schwegmann Giant Supermarket, 96-2301 (La. App. 4 Cir. 1/13/99), 740 So.2d 137, 144; Ortiz v. King & Co., Inc., 555 So.2d 471 (La. 1990). Thus, it is imperative for an employer to ensure that an employee knowingly accepts a part-time position by having them sign a part-time acknowledgment. Without doing so, the employer risks giving the employee the 40-hour presumption for workers’ compensation purposes regardless of whether they intended to hire them as part-time.
This same acknowledgment should be applied to seasonal employees as well. A seasonal employee for workers’ compensation purposes is defined as “any employment customarily operating only during regularly recurring periods of less than forty-four weeks annually.” LSA-R.S. 23:1021(13)(a)(v)(aa). With the large seafood industry in Louisiana, one can see how seasonable employment could benefit an employer because the average weekly wage is calculated by dividing the employee’s annual income by 52 weeks. In order to have the benefit of proving that the employee knowingly accepted the position as a seasonal employee, an employer should have the employee sign a seasonal employment acknowledgment.
As a best practices suggestion, I advise employers to have an employee sign a part-time or seasonal employment acknowledgment when hired. The acknowledgment should state that his or her employment status shall remain in effect until such a time as the employer notifies the employee in writing. This will prevent an argument from the employee that his or her employment status changed since the signing of the original acknowledgment. As a more effective way to prevent this from happening, I advise employers to have employees sign an acknowledgment once per year. Keeping multiple acknowledgments in an employee’s personnel file will provide strong evidence against an employee who states that he is a full-time employee.
Examples of part-time and seasonal employment acknowledgments can be found below. If an employer chooses to draft their own acknowledgment forms, it is advised that they ensure that all necessary requirements as discussed herein are met.
Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.