RICHARD MARK CHRISTENSEN, Employee/Cross-Appellant, v. NOKKEN FARMS, INC., and STATE FUND MUT. INS. CO., Employer-Insurer/Appellants, and DAKOTA CLINIC, LTD., Intervenor.
WORKERS= COMPENSATION COURT OF APPEALS
FEBRUARY 8, 2007
WAGES - IRREGULAR; WAGES - MULTIPLE EMPLOYMENTS; WAGES - SEASONAL WORK; WAGES - CALCULATION. Where the employee=s wages were irregular and seasonal, the compensation judge did not err in calculating the employee=s weekly wage for the employer by dividing the total wages earned by the employee by the total number of days worked (15), and multiplying this daily wage by five. On the facts of this case, where the number of days worked by the employee for the second employer was unknown, the compensation judge appropriately calculated the employee=s weekly wage by dividing, by 26, the employee=s total earnings from the second employer during the 26 weeks prior to the injury.
PENALTIES. Where the employer and insurer presented a colorable legal defense, the employee is not entitled to an award of penalties.
Determined by: Johnson, C.J., Wilson, J., and Pederson, J.
Compensation Judge: Danny P. Kelly
Attorneys: Jeffrey R. Hannig, Hannig & Associates, Fargo, ND, for the Cross-Appellant. Steven T. Scharfenberg, Lynn, Scharfenberg & Associates, Minneapolis, MN, for the Appellants.
THOMAS L. JOHNSON, Judge
The employer and insurer appeal the compensation judge=s finding of the employee=s weekly wage and the employee cross-appeals the compensation judge=s denial of the penalty claim. We affirm.
Richard Mark Christensen, the employee, sustained a personal injury on October 19, 2005, while employed as a seasonal farm laborer for Nokken Farms, Inc., the employer, then insured by State Fund Mutual Insurance Company. The employer and insurer admitted liability for the employee=s personal injury.
The employee began working for the employer in 2001, and worked only during the sugar beet harvest. In 2005, the employee commenced working for the employer on Monday, September 26, 2005, and his employment ended on the date of his injury, Wednesday, October 19, 2005. The employee worked 15 days and his total earnings for the employer in 2005 were $2,025.00. On the date of injury, the employee also worked as a waiter at the Timberlodge Steak House where he had worked since 2001. During the 26 weeks prior to October 19, 2005, the employee earned $5,066.99 at Timberlodge from salary, reported tips and performance bonuses. The employee testified an average shift was about five hours. A manager at Timberlodge stated an average shift for a waiter was between four and five hours. The employee earned $14,225.56 at Timberlodge and $1,995.00 at Nokken Farms in 2003, and $14,021.47 at Timberlodge and $2,040.00 at Nokken Farms in 2004.
The employee was disabled from October 19, 2005, through April 20, 2006, as a result of his personal injury. The insurer paid temporary total disability benefits to the employee at the rate of $180.23 per week, based upon a computed weekly wage of $270.35. In December 2005, the employee filed a claim petition asserting a weekly wage of $842.38. The employee later amended the claim petition seeking penalties. In July 2006, the employer and insurer paid the employee for an underpayment of total disability benefits based upon a recomputed weekly wage of $297.30.
Following a hearing, the compensation judge found the employee=s weekly wage with the employer was $675.00, and the weekly wage at Timberlodge was $194.88 yielding a total weekly wage of $869.88. The compensation judge found the employee=s weekly wage exaggerated his future wage loss as evidenced by his earnings in 2003 and 2004. The judge further found, however, the weekly wage of $869.88 was an accurate representation of the employee=s earning capacity on October 19, 2005, and ordered the employer and insurer to pay temporary total disability benefits based upon that wage. Finally, the compensation judge denied the employee=s penalty claim. The employer and insurer appeal and the employee cross-appeals.
1. Weekly Wage
The parties agree the employee=s earnings with the employer and Timberlodge were irregular and difficult to determine. In such a case, Minn. Stat. ' 176.011, subd. 3 provides,
[T]he daily wage shall be computed by dividing the total amount of wages, vacation pay, and holiday pay the employee actually earned in such employment in the last 26 weeks, by the total number of days in which such wages, vacation pay, and holiday pay was earned, provided further, that in the case of the construction industry, mining industry, or other industry where the hours of work are affected by seasonal conditions, the weekly wage shall not be less than five times the daily wage.
To compute the employee=s weekly wage, the compensation judge divided the employee=s total earnings with the employer in 2005, ($2,025.00) by the total number of days in which the wages were earned (15), which yielded a daily wage of $135.00. The judge found the employee=s job with the employer was affected by seasonal conditions and multiplied $135.00 by five which yielded a weekly wage of $675.00 with the employer. Next, the compensation judge took the employee=s total earnings at Timberlodge over a 26-week period ($5,066.90) and divided that total by 26 which yielded a weekly wage of $194.88. The judge then combined the two wages for a total weekly wage of $869.88.
The appellants assert the method used by the compensation judge to calculate the employee=s weekly wage exaggerates his probable future earning power. They contend the correct method of calculating the employee=s weekly wage is to divide the wages from both jobs by the total number of days worked for both employers. The appellants acknowledge the daily wage computation for Timberlodge is Asomewhat problematic@ because there is no record of the number of days the employee worked at Timberlodge during the 26-week period. The appellants contend, however, the number of days worked can be ascertained by dividing the hours worked by an average of 4.5 work hours per shift. Using this method, the appellants compute the employee worked 73.25 days at Timberlodge from May 4 through October 19, 2005. Adding 73.25 days at Timberlodge to the employee=s 15 days of work with the employer, yields a total number of days worked of 88.25. The employee=s total wages with both employers during the 26-week period was $7,091.90. Dividing that figure by 88.25 days yields a daily wage of $80.36 which, when multiplied by five, yields a weekly wage of $401.80. This weekly wage, the appellants contend, more accurately reflects the employee=s probable future earning capacity which was impaired by the injury.
An alternative method of computing the employee=s weekly wage, the appellants contend, would be to divide the employee=s total earnings from the two employers by 26 which yields a weekly wage of $256.89. This method has been used, the appellants assert, in other cases where the information was insufficient to determine the daily wage, citing Straley v. World Book Educ. Prods., 50 W.C.D. 370 (W.C.C.A. 1994). Another alternative suggested by the appellants is to divide the employee=s total earnings during 2005 by the total number of weeks worked in 2005 (41.6) for a weekly wage of $256.66. This method, the appellant argues, is somewhat similar to that used in Newbauer v. Pepsi Bottling, 43 W.C.D. 339 (W.C.C.A. 1990).
We cannot agree with the methods of wage calculation proposed by the appellants. Assuming the employee worked only for the employer, the wage calculation would be straight forward. There is no dispute the employee worked 15 days for the employer during which period he earned $2,025.00. This yields a daily wage of $135.00. Because the employee=s work for the employer was affected by seasonal conditions, Minn. Stat. ' 176.011, subd. 3, requires that the weekly wage shall not be less than five times the daily wage. Thus, the employee=s weekly wage for the employer is $675.00. Under the appellants= methods of wage calculation, however, the employee=s weekly wage is lower for two jobs than for one. Since the employee was injured while working at his seasonal job, we cannot agree with such a result. We, therefore, affirm the compensation judge=s finding that, at minimum, the employee=s weekly wage was $675.00.
The computation of the wage for Timberlodge is less straightforward. Minn. Stat. ' 176.011, subd. 3, provides that if the employee was regularly employed by two or more employers at the time of the injury, Athe employee=s earnings in all such employments shall be included in the computation of daily wage.@ In this case, however, there is no documentation of the number of days actually worked by the employee at Timberlodge during the 26 weeks prior to his injury. The appellants argue it is possible to approximate the number of days the employee worked at Timberlodge. The compensation judge, however, specifically rejected this method of computing the number of days worked, and concluded the record was insufficient to calculate the daily wage at Timberlodge. AWhere the evidence necessary to comply with the statutory directives concerning calculation of weekly wage is not available, the compensation judge may use another method as long as that method reasonably reflects the employee=s injury-related loss of earning power.@ Hansford v. Berger Transfer, 46 W.C.D. 303, 309-10 (W.C.C.A. 1991). To compute the wage, the compensation judge divided by 26 the employee=s total earnings at Timberlodge during the 26 weeks prior to the injury yielding a weekly wage of $194.88. This method is consistent with our decision in Straley v. World Book Educ. Prods., 50 W.C.D. 370 (W.C.C.A. 1994).
Even were the number of days worked for Timberlodge during the 26 weeks prior to injury known, we would still reject the method of computation proposed by the appellants. We reject this method because it assumes the employee worked for Nokken Farms over a 26-week period rather than for only 15 days. By increasing the number of days worked over 15, the employee=s daily wage with the employer is reduced. Such a result is contrary to the statute. Further, as previously noted, such a method yields a weekly wage for the two jobs which is less than the employee=s weekly wage based on the Nokken Farms job alone. We conclude the compensation judge=s method of computing the weekly wage for the two jobs separately is appropriate on the facts in this case, and is affirmed.
The compensation judge found the employer and insurer interposed a good faith defense on the weekly wage issue, found there was a real controversy as to the appropriate method of calculating the weekly wage and denied the employee=s claim for a penalty. The employee appeals the judge=s decision and asserts the appellants= method of computing the employee=s weekly wage was unreasonable, legally unwarranted and not asserted in good faith. The employee contends the appellants simply ignored Minn. Stat. ' 176.011 and asserts there is no real controversy as to the method of computing the weekly wage. Accordingly, the employee contends the compensation judge erred in failing to award a penalty.
The employer and insurer assert, and the compensation judge found, a weekly wage of $869.88 exaggerates the employee=s future wage loss. The computation method adopted by the compensation judge, the appellants assert, violates the underlying object of wage determination which is to arrive at a fair approximation of the employee=s probable future earning power which has been impaired or destroyed by the injury. Knotz v. Viking Carpet, 361 N.W.2d 872, 37 W.C.D. 452 (Minn. 1985); See also, Johnson v. D.B. Rosenblatt, Inc., 265 Minn. 427, 122 N.W.2d 31, 22 W.C.D. 468 (1963). The employer and insurer contend their intent was not to deprive the employee of his rights under the act but merely to determine a fair approximation of the employee=s probable future earning capacity which had been impaired by the work injury. The fact that they did not ultimately prevail on their defense does not necessarily create a basis for the imposition of penalties. Greene v. Independent Sch. Dist. #202, 36 W.C.D. 601 (W.C.C.A. 1984). Accordingly, the employer and insurer assert the judge=s denial of a penalty should be affirmed.
The supreme court has concluded Minn. Stat. ' 176.011, subd. 3, Aimputes a full-time wage basis to workers in certain industries.@ Berry v. Walker Roofing Co., 473 N.W.2d 312, 314, 45 W.C.D. 125, 127 (Minn. 1991). In Palkowski v. Lakehead Constructors, 57 W.C.D. 21 (W.C.C.A. 1997), the employee=s wage was irregular or difficult to determine and was affected by seasonal conditions. The compensation judge calculated the employee=s weekly wage by following the provisions of Minn. Stat. ' 176.011, subd. 3. On appeal, the employer argued the statutory method of calculation should be rejected because it resulted in a weekly wage corresponding to a level of annual earnings far greater than the employee ever received working for the employer. The employer contended the statutory method of calculation should not be mechanically applied when the resulting weekly wage does not reasonably reflect the employee=s true loss of earning capacity. In rejecting this argument, the court stated Athe statutory formula in this case represents the legislature=s choice with respect to how that result is to be achieved in the case of workers whose hours are irregular and difficult to determine, and who are employed in industries affected by seasonal conditions.@ Id. at 24. The Palkowski court went on to state,
Although the wage calculation required in this case results in an imputed yearly earning potential significantly higher than the employee=s actual annual earnings, it is transparently obvious that application of the statutory formula to a seasonal worker will always produce an imputed wage greater than the employee=s actual earnings. . . . The statutory calculation represents the legislative intent to Afactor out@ the periods of seasonal unemployment or underemployment and to compensate such workers as though they were year-around employees.
Id. at 27; see also Kmett v. Central Specialties, Inc., 59 W.C.D. 185 (W.C.C.A. 1999).
The employer and insurer argue the Palkowski and Kmett decisions are distinguishable because neither involved an employee who was regularly employed by two employers at the time of the injury. In such a case, Minn. Stat. ' 176.011, subd. 3, requires the employee=s earnings in both employments be included in the computation of the daily wage. The appellants argue the methods of computation of daily wage they proposed did exactly that whereas the method used by the compensation judge utilizes two separate daily wage calculations. The appellants further contend their calculation methods are reasonable because the employee=s regular job was at Timberlodge while the Nokken Farms employment was temporary and never lasted more than four or five weeks a year. Finally, the appellants cite Kozoilek v. Aconite Corp., 49 W.C.D. 498 (W.C.C.A. 1993), in which this court approved a deviation from the strict application of the statutory method for computing a weekly wage for a seasonal worker when an alternative calculation better met the intent of the statute. They argue a deviation is appropriate because the statute was not intended to apply to an employee whose seasonal job was not the employee=s primary job. For these reasons, the employer and insurer contend a penalty is not warranted in this case.
Minn. Stat. ' 176.225, subd. 1(a), provides for a penalty when an employer or insurer has interposed a defense which does not present a real controversy. An award of penalties is not appropriate where the employer and insurer interpose a good faith defense. See Heise v. Honeywell, Inc., 48 W.C.D. 523 (W.C.C.A. 1993). The fact that the employer and insurer did not ultimately prevail on their defenses, does not necessarily create a basis for the imposition of a penalty. Greene v. Independent Sch. Distr. #202, 36 W.C.D. 601, (1984). An employer cannot be penalized for refusing to pay benefits which are the subject of a real controversy. Grover v. City of St. Paul, 55 W.C.D. 397 (W.C.C.A. 1995).
The compensation judge found the employer and insurer interposed a good faith defense to the employee=s wage claim. We acknowledge the equities of the appellants= arguments and agree they constitute a colorable legal defense. Given the unique facts of this case, we cannot conclude the compensation judge=s denial of penalties was unreasonable or clearly erroneous. The judge=s decision is, therefore, affirmed.