What happens when the injured employee is also the owner? How are wage loss benefits calculated? Like many a legal question, it depends. However, without providing a clear path to predictability, a recent decision from the Minnesota Workers’ Compensation Court of Appeals (“WCCA”) provides at least some guidance on handling these claims and the permissibility of imputed wages.
The primary issue before the court in Gilles v. Paul Bunyan Tree Service, Inc., slip op. (W.C.C.A. August 19, 2014) was how to determine the weekly wage of an injured owner/operator of a seasonal tree trimming and removal business. While the owner/operator’s injury was admitted, his claimed wage, $1,000.00 a week, was rigorously disputed. In filing its Notice of Intention to Discontinue Benefits, the employer and insurer maintained that the employee failed to provide documentation supporting his claimed wage. After hearing testimony and reviewing the exhibits, Compensation Judge Marshall found that $1,000.00 a week was an appropriate calculation of the owner/operator’s wage as it was the amount he was forced to pay a new employee to perform the job he no longer could. Judge Marshall wrote: “The employee has demonstrated that the negotiated wage for the hired tree trimmer is an accurate measurement of the impaired earning power of the employee….”
The WCCA affirmed Judge Marshall’s decision holding that “[a]n imputed wage may not be used if the business earnings are insufficient to pay that wage” but may be used if the business is able to document net earnings. The Court further held that when evidence is inadequate to compute an employee’s weekly wage pursuant to Minn. Stat. § 176.011, subds 8a and 18, a “[compensation] judge may use another method that reasonably reflects the employee’s loss of earning capacity.” The Court noted that Judge Marshall “perhaps could have used a different method to reach a different result,” (which is a little unsettling as it does little to provide predictability), but that they would not overturn his decision based on the method he decided to use.
So what can be learned from Gilles? First, if the employee/owner/operator is claiming a wage that has been imputed based on what is being paid a new employee, the employer and insurer should do all they can, including requesting business income/expense reports, to establish negative net earnings. Second, like good scouts, the employer and insurer should be prepared to dispute loss of earning capacity/wage calculation arguments utilizing multiple methods as the discretion provided the Compensation Judge to find a wage that “reasonably reflects the employee’s loss of earning capacity” is immense.
If you have any questions about imputed wages, indemnity benefits or any other workers’ compensation matter, please feel free to call or e-mail any one of our many experienced attorneys – www.hansendordell.com / 651-482-8900.