Seasonal Earnings Rate Issue AddressedPeggy Lui

The Court of Appeals in the 5^th District has issued a very narrowly drawn opinion on the issue of payment of TTD for some seasonal workers holding that where an employee would not have worked at all during the off season, there would be no entitlement to TTD benefits in spite of the reenactment of a minimum TTD rate in 2003 by the legislature.

In Signature Fruit Company v W.C.A.B. (Ochoa), the parties stipulated that applicant worked only during the season and did not have any off-season earnings.  The season itself was relatively short, July 29 to September 9.  The Court noted that:

".If she did (remain disabled for all of 2004: Ed Note)  the WCAB's award would result in her receiving well over 200 percent of her regular annual income for a time when there is no question that she would not have been working.  In enacting workers' compensation reform, we do not believe the Legislature intended this result."

The Injured worker in this case had an in season rate TD rate of $365.59 which was used by the employer to pay TD during the in season TTD period.  However when her TTD status continued during the off season, the employer took the position that she had no earnings in the off season and therefore was not entitled to any TTD.  After an expedited hearing, the WCJ awarded benefits during the off season based on the statutory minimum rate of $126.  The employer filed for Reconsideration and the W.C.A.B. issued its own award affirming the award of TD at minimum rates relying on the W.C.A.B. en banc decision in. Jimnez v San Joaquin Valley Labor, 67 Cal.Comp.Cases 74 .

The Court of Appeal granted defendants Petition for Writ of Review and reversed the W.C.A.B. decision.  The court noted:

"A temporary disability is an impairment reasonably expected to be cured or materially improved with proper medical treatment.  (Western Growers Ins. Co. v. Workers' Comp. Appeals Bd., supra, 16 Cal.App.4th at p. 235.)  Unlike permanent disability, which compensates an injured employee for diminished future earnings capacity or decreased ability to compete in the open labor market, temporary disability is intended as a substitute for lost wages during a period of transitory incapacity to work.  (Livitsanos v. Superior Court (1992) 2 Cal.4th 744, 753.)   That purpose "is inferable from section 4653, which requires temporary total disability be calculated as ?two-thirds of the average weekly earnings during the period of such disability."

The court reviewed the line of cases dealing with seasonal employment disability rates and the interpretation of those rates by the W.C.A.B. especially in the Jimenez v San Joaquin Valley Labor case as well as the purpose of TTD as a wage replacement benefit.  The court concluded that while the calculation of earnings was required to be set according to Labor Code § 4453, the actual payment of TTD benefits required the W.C.A.B. consider the employee's ability to compete in the open labor marker in awarding TTD.

After its review of the legal authorities in  situations where there is no evidence to support off season employment the court's conclusion is clear:

".Consistent with the legislative intent of section 4653, we conclude that temporary disability during a seasonal employee's in-season period of regular employment is payable based upon two-thirds of the employee's in-season average weekly earnings, subject to the minimum and maximum levels established under section 4453.  Where, however, an employee does not have any off-season earnings and does not compete in the open labor market during a portion of the year, the employee is not entitled to temporary disability payments during that season." 

The court was clearly concerned with the fact that applicant, if paid pursuant to the W.C.A.B. award, could potentially receive in TTD benefits an amount that was vastly greater than her full years earnings with no evidence of any additional actual wage loss.   

".She would therefore earn nearly 243 percent of her regular $3,290.28 annual income.  A system that rewards a seasonal employee for sustaining an industrial injury likely would create an economic incentive for employees to exaggerate their level of disability and encourage them to malinger on temporary disability.  We cannot condone this type of windfall to an injured employee where the Legislature has specifically mandated that an employee's ability to compete in the open labor market must be considered in calculating temporary disability."

While the court's statutory interpretation appears to be a bit of a stretch, the result does seem much more in keeping with the legislative intent than awarding the injured worker a substantial windfall in TTD for a period of time that she had no realistic anticipation of earning anything at all.

The court declined to comment on the rate at which benefits might be paid for an employee who did have earnings in the off season but a different rate.  While the rational of the court's language might suggest that TTD for such periods would be based on actual wage loss, such an interpretation would effectively gut the minimum TTD rate in Labor Code § 4453 and is therefore not likely to be the answer. 

In such circumstances this author would suggest that rather than look to Jimenez for guidance, the courts should look to Grossmont Hospital v W.C.A.B., 59 Cal.App.4th 1348, 69 Cal. Rptr. 2d 842, 62 Cal. Comp. Cases 1649  with its requirement to pay TTD at a single rate.  Following the holding in Grossmont would require an employer to annualize an employee\s earnings for the full year (or other appropriate time frame) and pay a single rate based on earnings capacity during the period to the actual disability.  While the rational of the Grossmont case was argued by counsel for applicant, the court discounted the The Court also noted that applicant was not requesting an annualized rate but wanted the full TTD rate during the in season period and minimum rates for the off season.  Such a result was not supported either by the case cited by applicant (the W.C.A.B. panel decision in Magana v Signature Fruit  or Grossmont Hospital which was cited as authority for the decision in Magana).  The court also noted that 2 of the panel commissioners in Magana has issued a different decision based on similar principles in Ochoa. (A similar situation that was commented on by another panel in the 5^th District in the Dykes v W.C.A.B. case)

To read a copy of the decision, please click on the case name above.

Richard M. Jacobsmeyer*