As per NY Workers’ Compensation Law § 14(1), a “claimant’s average daily wage is used in determining his or her annual average wage only when such claimant has worked in the same job for substantially all of the year preceding his or her injury.”
So what happens when the employee has worked for less than 52 weeks or if it is a brand new company? Let’s explore.
In today’s economy it is very rare to find employees working in the same company, or even in the same industry for prolonged periods of time. There is a lot of mobility, where employees are constantly jumping from company to company in search of different working conditions and better career opportunities. So when your new employee is injured, how do you find an appropriate payroll substitute for purposes of submitting similar worker payroll the Board?
The “Similar Worker.”
Let’s start by defining “similar worker.”
NY Workers’ Compensation Law § 14 (2) provides some insight:
If the injured employee shall not have worked in such employment during substantially the whole of such year, his average annual earnings, if a six-day worker, shall consist of three hundred times the average daily wage or salary, and, if a five-day worker, two hundred and sixty times the average daily wage or salary, which an employee of the same class working substantially the whole of such immediately preceding year in the same or in a similar employment in the same or a neighboring place shall have earned in such employment during the days when so employed;(emphasis supplied)
As, such, it appears the similar worker must be of the same “class”, working in the same or similar employment, in the same geographical location, and working the same number of days.
As an example, your only full-time janitor, whom you hired a week ago, is injured. The employer will need to provide the payroll of another full time employee working in similar job, perhaps in the maintenance, labor and repair department, working in the same geographical vicinity as your injured worker.
It should be noted that New York Workers’ Compensation Law § 14 (2) is not intended for employees whose salary is based almost exclusively on earned commissions, since the income from commissions of one employee does not reasonably represent the annual earning capacity of an injured employee earning commissions. As such, a similar worker payroll cannot be found to be representative of the earning capacity of an injured employee whose earnings were based on commissions, and the injured employees wages cannot be based on the “similar worker” payroll in these circumstances. See Matter of Sacco v Mast Adv./Publ., 71 AD3d 1304, 1307 [3rd Dept. 2010].
What do you do if you are a new company and do not have any employees who have worked for a full 52 weeks prior to the date of accident of your injured employee?
Workers’ Compensation Law § 14 (3) directs that, where neither of the methods set forth in subdivisions (1) and (2) can “reasonably and fairly be applied,” a claimant’s average weekly wage must be computed based on “such sum as … shall reasonably represent the annual earning capacity of the injured employee in the employment in which he [or she] was working at the time of [his or her] accident.” Matter of Sacco v Mast Adv./Publ., 71 AD3d 1304, 1307 [3rd Dept. 2010].
Under this subdivision, the Board has discretion to interpret what represents the reasonable annual earning capacity of the injured employee. The Board may use claimant’s own limited wages to determine earning capacity by applying a multiplier. Case law suggests that in some instances the Board combined claimant’s wages for the year prior to the accident with an amount earned by another in similar employment during the time the claimant did not have earnings. See Hall v Nell Bros. & Kern, 246 A.D. 875, 284 N.Y.S. 900, 1936 N.Y. App. Div. LEXIS 9941 (N.Y. App. Div.), aff’d, 272 N.Y. 540, 4 N.E.2d 726, 272 N.Y. (N.Y.S.) 540, 1936 N.Y. LEXIS 1034 (N.Y. 1936).
It is important to note that the Board has previously held the employer responsible for submitting a similar worker payroll when the injured employee has worked for less than 52 weeks. The Court has applied the standard of “known or should have known” to the employer when discussing employer’s responsibility of providing a similar worker’s payroll. In Matter of Holloway v. West St. Trucking, , where the claimant did not seek modification of his average weekly wage for nearly 15 years, the Court held that the delay did not prejudice the employer (who has since destroyed the records of employee payroll from 15 years prior), since the employer knew or should have known at the outset of the claim that the claimant had worked for less than 52 weeks prior to the date of the accident. Also, see Matter of Sacco v Mast Adv./Publ., 71 AD3d 1304, 1307 [3rd Dept. 2010] citing the Holloway v. West St. Trucking 14 AD3d at 817).