By John P. Kamin
Monday, April 11, 2022 | 0
When calculating the average weekly wage, it can quickly become complicated to decide whether daily allowances and reimbursements should be included.
Fortunately, there are several panel decisions that interpret the Labor Code and boil it down to a simple litmus test: if it counts as compensation and not just reimbursement, it must be included in the AWW calculation. If it is a simple refund, it should not be included in the AWW.
Labor Code 4454 states that AWW calculations must include the market value of all benefits that count as compensation, but AWWs must not include “any amount the employer pays to or for the injured employee for cover special expenses incurred by the employee by the nature of his employment.
The Workers’ Compensation Appeal Board considered this topic in the May 2008 decision in Lisa Burke v. Winterland Productions. In the case, WCAB closely examined LC 4454 and dissected it to determine that:
- Remuneration must be accounted for in the AWW.
- Reimbursement of expenses should be excluded from the AWW.
Some per diems fall under remuneration, while others are more akin to a simple reimbursement.
In the Burke case, the WCAB cited a 1989 court decision (Olds v. WCAB, 1989), which held that a per diem of $540 per month was not included in the calculation of a AWW. Why not? The WCAB determined that the per diem was not a “negotiated economic benefit”. Instead, the per diem of $540 per month was intended to offset expenses incurred while the plaintiff worked as a truck driver.
Now let’s compare that to a “Mad Men” hypothesis. Let’s say Don Draper’s employer gives him $200 a day for his infamous liquid lunches to, among other things, make sure he properly feeds his marketing firm’s clientele. That $200 is obviously far more than the average person – in the 1960s and 1970s, or even by today’s standards – would spend on lunch. And since most per diems work, if Draper only spent $150 on Tuesday lunch, he could pocket the remaining $50.
It would be more like a negotiated benefit that would be considered compensation.
Returning to the Burke decision, the WCAB determined that the expenses reimbursed by plaintiff Lisa Burke for lodging, gas and food did not constitute earnings because “plaintiff only incurred these expenses when a tour and reimbursement of expenses by his employer provided no negotiated economic benefit. benefit to the plaintiff”. These expenses did not put additional money or benefits in Burke’s pockets; they were just giving her back for what she had spent on travel expenses. Thus, they were not part of the AWW because they were not paid.
Some would say this leaves the door open to an argument that:
- The part of the daily allowance which actually reimburses expenses is not subject to the AWW.
- The “extra” portion of the per diem that the applicant pockets is included in the AWW calculations.
However, it might be a bit difficult to prove exactly how much the claimant spent on expenses with the per diem, especially without anticipating having to keep track of how it was spent.
When evaluating whether to include a per diem in an AWW calculation, ask yourself, “Was that a per diem too good?” Was it more than the average person would spend? »
If so, then it should be included in the AWW. If not, or if it is simply a strict reimbursement of costs, this should not be taken into account in the calculations of the AWW.
John P. Kamin is a workers’ compensation defense attorney and partner at Bradford & Barthel’s Woodland Hills location. He is the former legal editor of WorkCompCentral. This Bradford & Barthel blog entry appears with permission.