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Industrial Commission Ordered to Consider Job Search Efforts of Seasonal Worker During Period of Unemployment

In Calculating ‘Average Weekly Wage’ For The Year Preceding Injury

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2010-1283.  State ex rel. Warner v. Indus. Comm., Slip Opinion No. 2012-Ohio-1084.
Franklin App. No. 09AP-841, 2010-Ohio-2476.  Judgment affirmed in part and reversed in part.
O'Connor, C.J., and Pfeifer, Lundberg Stratton, O'Donnell, Lanzinger, Cupp, and McGee Brown, JJ., concur.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2012/2012-Ohio-1084.pdf

(March 22, 2012) The Supreme Court of Ohio held today that, in calculating  the “average weekly wage” (AWW) of a workers’ compensation claimant during the year before his injury, the Industrial Commission of Ohio must decide whether to include or exclude a period of unemployment based on the commission’s independent determination of whether the claimant made a reasonable attempt to find other work during that period. 

In a 7-0 per curiam decision, the court affirmed the Tenth District Court of Appeals’ remand of the case to the Industrial Commission for further proceedings.  However, the court overruled the Tenth District’s holding that the Industrial Commission should have counted state unemployment benefits the claimant received during the year before his injury in calculating his AWW for workers’ compensation purposes.

The case arose from a workers’ compensation claim filed by Rick Warner for an injury he suffered in September 2007 while working on a road paving crew in the course of his employment by Central Allied Enterprises Inc. After Warner was found eligible for benefits, he sought an award of temporary total disability, for which the Industrial Commission calculates a claimant’s weekly benefit based on his AWW during the year before his injury. 

The commission generally calculates a claimant’s AWW by dividing the total wages he earned  during the preceding year by 52 weeks. However, the law provides exceptions to this general rule. One of those exceptions, set forth in R.C. 4123.61, states that in calculating a claimant’s AWW, the commission should not count “any period of unemployment due to sickness, industrial depression, strike, lockout, or other cause beyond the employee’s control.”

Evidence presented to the Industrial Commission showed that during the 52 weeks preceding his injury, Warner had earned wages from his employer for 30 weeks and had collected unemployment compensation for the other 22 weeks due to seasonal layoffs typical in the paving industry. Warner proposed that the commission establish his AWW by one of two formulas: 1) by dividing the wages he earned during his 30 weeks of employment by 30 and not counting the period of seasonal unemployment; or  2) by adding the 22 weeks of unemployment benefits he had collected to his wages from work, and dividing the resulting total by 52.

An Industrial Commission staff hearing officer (SHO) rejected both formulas suggested by Warner and instead calculated his AWW by counting only his pay for work on the paving crew as  “wages” during the preceding year, and dividing that amount by 52 weeks. 

In his opinion, the SHO found that unemployment payments were not “wages” that may be included in the calculation of a workers’ AWW for workers’ compensation purposes. He also held that the weeks Warner was unemployed during the year preceding his injury should not be excluded from the calculation of his AWW as a period of unemployment “beyond his control” because Warner had worked for several years in the paving business, was aware that it involved predictable seasonal layoffs, and by continuing in that line of work had made a deliberate “lifestyle choice” to be unemployed for extended periods of the year. The SHO also found that Warner had not presented any evidence that he searched for other work during the 22 weeks he was unemployed.

After further administrative review was refused, Warner filed suit in the Tenth District Court of Appeals seeking a writ of mandamus that would compel the Industrial Commission’s to recalculate the AWW on which his benefit had been based. The court of appeals issued the requested writ, holding that the commission had abused its discretion in failing to include the dollar amount of Warner’s unemployment compensation because it was federally taxable income under the Internal Revenue Code. The court also criticized the commission’s finding that there was no evidence that Warner had looked for other work during the seasonal layoff, citing Warner’s receipt of unemployment compensation, which, under state unemployment laws required proof of a job search.

The Industrial Commission and Central Allied exercised their right to appeal the Tenth District’s judgment to the Supreme Court.

In today’s unanimous decision, the justices partially affirmed and partially reversed the court of appeals.

In affirming the Tenth District’s holding that Warner’s continuation in a seasonal job did not necessarily render his unemployment voluntary, the court cited its 2004 decision in State ex rel. Baker Concrete Construction v. Industrial Commission. “Foreseeability of job loss does not necessarily render seasonal unemployment voluntary. Certainly, seasonal unemployment can be considered voluntary when it is the result of a worker’s choice to enjoy the time off rather than look for another job during the off-season. On the other hand, many seasonal employees want to work during the layoff but, despite diligent efforts, cannot find other employment. In those situations, unemployment may be considered to be beyond the individual’s control.” 

“Warner cites his receipt of unemployment compensation as proof that he looked for work during the winter layoff. Baker Concrete, however, declared that a claimant’s receipt of unemployment compensation did not, for workers’ compensation purposes, automatically establish that postlayoff unemployment was beyond the individual’s control. It acknowledged that receipt of those benefits required an ongoing search for work, but it also recognized that a job search had a qualitative component. Given the independence of the workers’ compensation and unemployment-compensation systems, we noted, ‘A job search sufficient to satisfy OBES [Ohio Bureau of Employment Services] might not satisfy the commission.’” 

“In this case, the commission never addressed the adequacy of Warner’s job search because it wrongly believed that he had not presented any evidence of a search for other employment. The court of appeals was accordingly correct in ordering further consideration of this issue, and that portion of its judgment is hereby affirmed.”

With regard to the Tenth District’s ruling that the Industrial Commission must include Warner’s unemployment benefits in calculating his AWW, the court cited its 2000 opinion in State ex rel. McDulin v. Industrial Commission: “The court of appeals ordered the commission to include the amount of Warner’s unemployment benefits based solely on its status as federally taxable income.  McDulin, however, declared federal taxability to be irrelevant in determining what to include in the AWW wage total. Inclusion of unemployment compensation, moreover, could create an impermissible windfall in situations where the commission has determined that weeks of unemployment were beyond the claimant’s control and omitted those weeks from the AWW calculation.  Accordingly, that portion of the court of appeals judgment is reversed.”

“We hereby return the cause to the commission to determine whether Warner’s weeks of unemployment were beyond his control and to include or exclude those weeks from the AWW calculation consistently with R.C. 4123.61.”

Dana M. Debski, 330.762.0280, for Rick Warner.

Gerald H. Waterman, 614.466.6696, for the Ohio Industrial Commission.

James W. Ellis III, 440.867.9998, for Central Allied Enterprises Inc.