“No B.S. straight forward answers with no legal mumbo-jumbo, lawyer talk.”
DBA Lawyer Straight Talk: Defense Base Act Average Weekly Wage
If you are a seriously injured Defense Base Act claimant (meaning you have a Defense Base Act claim) - you need to know the facts of life. Here, we give it to you straight. No sugar added. Just good old fashioned truth. In other words, DBA lawyer straight talk.
The DBA Is Wages Driven
The Defense Base Act is a wages driven workers' compensation scheme. Your temporary disability and your permanent disability benefits are driven by your wages. Generally, the higher your wages the more your temporary and permanent disability benefits will be. This is because under the DBA it is a wage loss concept.
Because of this, the Defense Base Act insurance company will try and calculate your average weekly wage (AWW) as low as possible. In effect, denying you, and your family much deserved compensation benefits. Quite literally, taking food off your family's table.
If you worked overseas for less than a year before you were injured, how this plays out in the real world is in one of two ways. Either the DBA insurance company will try and calculate your AWW using only your overseas earnings or using both overseas earnings and your State-side earnings.
If you are a seriously injured Defense Base Act worker, this is one of the many reasons why you need to hire the best DBA Attorney you can find. If you're concerned about hiring a lawyer for your DBA case, I suggest you check out this article on the Top 10 DBA questions.
The current maximum compensation rate is $1510.76.
Earnings For The 52 Weeks Before Your Injury
The Defense Base Act falls under the Longshore and Harbor Workers' Compensation Act. Or the "Longshore Act" or "LHWCA." Generally, under the Longshore Act and Defense Base Act a Claimant's (read: injured worker's) average weekly wage is determined by their earnings 1 year or 52 weeks before their date of injury. If you have worked overseas as a DBA worker for over a year, this may not be an issue in your Defense Base Act case.
However, if you have worked overseas for less than a year than this may be a huge issue in your case. In this article I explain why this can be a huge issue for you.
Average Weekly Wage For DBA Workers
Truth be told, average weekly wage is probably the most heavily litigated issue under the Longshore Act/ Defense Base Act. And there are special rules for DBA workers' that don't apply to Longshore workers.
Under the DBA - in some circumstances - your average weekly wage can be based solely on your overseas earnings. Courts have held that where a DBA worker has a one year contract and is injured before they have completed the one year contract, the injured DBA workers' AWW can be calculated solely on the overseas earnings.
Going to the heart of the average weekly wage issue (listen up, this is important because we're talking about your money here...)
The higher your average weekly wage (AWW) the better it is for you. So make no mistake about it - you want as high of an average weekly wage as possible.
Conversely, the Defense Base Act insurance company wants to make your average weekly wage as low as possible. When push comes to shove, the DBA insurance company will come up with all kinds of arguments - many times bogus arguments - in order to get the Judge in your case to lower your average weekly wage.
What the AWW fight is all about
When you work overseas for a year or more before your injury there are few arguments that the DBA insurance carrier can make in order to decrease your average weekly wage. As I discuss below, there may be an argument over incentive vs. bonus - but that’s usually a limited argument.
Where the fight comes in is if you have worked overseas for less than a year. When this is the case, the DBA insurance company will battle you BIG TIME over your average weekly wage. You can depend on it.
“Tails I win, heads you lose”
This is all about the DBA insurance carriers dealing from the bottom of the deck, so to speak. They charge DBA insurance premiums based upon your employer’s payroll. The more dangerous the job is that you do, the more premium that is charged from your employer.
So, when the DBA insurance carrier is able to successfully argue that your average weekly wage is lower than the weekly wage that you were really paid - the DBA insurance company gets to pay you less DBA weekly benefits and they get to keep the rest of what should be your money in their pocket.
Thus, the “tails I win, heads you lose,” statement I made.
In other words, the DBA insurance company gets to keep the profits. Meanwhile, you get screwed.
K.S., Proffitt, Miranda and such
Long story short, there was a decision called K.S. that basically said the when you worked overseas for less than a year, then you take your earnings and divide them by the number of weeks that you worked overseas. K.S. [Simons] v. Serv. Employees Int’l, Inc., 43 BRBS 136 (2009) (en banc), aff’g on recon. 43 BRBS 18 (2009). Also, see Proffitt v. Serv. Employers Int’l, Inc., 40 BRBS 41 (2006).
Here are some examples of using the simple K.S. method of calculating average weekly wage.
Example No. 1
Thus, if you worked overseas for 16 weeks and you earned $48,000 your average weekly wage is $3,000:
$48,000 divided by 16 = $3,000
Example No. 2
Or, if you worked overseas for 40 weeks and you earned $100,000 then you average weekly wage is $4,800:
$168,000 divided by 40 = $2,500
Ding dong the witch is dead
The K.S. decision was vacated by the District Court in Texas. Serv. Employees Int’l, Inc. v. Director, OWCP, Civ. Act. No. H-11-01065, 2013 WL 943840 (S.D. Tex. Mar. 11, 2013).
According to the DBA insurance company’s it was like the Wizard of Oz where the munchkins sing “Ding dong the witch is dead.” The witch being the K.S. decision, of course.
Not so fast. First, the Proffitt decision and the Miranda decisions are still “good law.” Second, the District Court in the K.S. didn’t say that the Judge couldn’t use this simple method of dividing the total earnings by the weeks worked overseas.
What the District Court in K.S. actually said is that the Judge has discretion to determine your average weekly wage.
Thus, I suggest that the K.S. type approach be one of your alternative contentions if you worked less than a year overseas before you were injured. Your other contention will be the "substantially similar employment" contention, that I discuss later in this article.
What the DBA insurance carrier is going to argue in your case - if you worked overseas for less than a year
So, let’s look at this with a “real world” application. Let’s look at our previous two examples.
Example No. 1 - the DBA insurance company’s contention
If you worked overseas for 16 weeks and you earned $48,000. The DBA insurance carrier is going to take the $48,000 that you earned and divided it by 52:
$48,000 divided by 52 = $923.07
Thus the DBA insurance carrier is going contend that your average weekly wage is $923.07. Meaning, that your paid temporary total disability benefits at the compensation rate of $615.37 a week. As opposed to the current maximum compensation rate of $1510.76.
With permanent disability, you may very well not be entitled to any money because the DBA insurance company may be able to show suitable alternative employment earning more than $923.07 per week. Obviously, this is a disaster for you.
Example No. 2 - the DBA insurance company’s contention
If you worked overseas for 40 weeks and you earned $100,000. The DBA insurance carrier is going to take the $100,00 that you earned and divided it by 52:
$100,000 divided by 40 = $1,923.07
Thus the DBA insurance carrier is going contend that your average weekly wage is $1,923.07. Meaning, that your paid temporary total disability benefits at the compensation rate of $1,281.92 a week. As opposed to the current maximum compensation rate of $1510.76.
With permanent disability, if the DBA insurance carrier is able to show suitable alternate employment with earnings of $1,000 a week, with the insurance company’s calculation of average weekly wage, your permanent disability award would be as follows:
$1,923.07 - $1,000 = $923.07
$923.07 x 2/3 = $615.31
Thus, you will receive $615.31 per week in permanent partial disability monies.
If you use the simple K.S. method, the calculation is as follows:
$2,500 - $1,000 = $1,500
$1,500 x 2/3 = $1,000
Thus, using the K.S. method you will receive $1,000 per week in permanent partial disability monies. Thus, there is a difference of $384.69 a week. Per year that comes out to $20,003 per year in disability benefits. Which, of course, is a big deal.
Section 10 of the Act provides for the calculation of a claimant’s average weekly wage
Section 10 provides three alternative methods for determining an employee's average annual earnings, which serve as the basis for determining the "average weekly wage." Under § 910, the Judge bases the calculation of average annual earnings on:
(a) the employee's earnings from the previous year, if the employee worked in the field in which he was injured for "substantially the whole of the year immediately preceding his injury";
(b) if (a) does not apply, the average daily wage of a similarly situated employee in the year preceding the employee's injury; or
(c) if (a) or (b) "cannot reasonably and fairly be applied," a combination of factors, namely the employee's previous earnings in the job at which he was injured, his other employment, and previous earnings of similarly situated employees.
Healy Tibbitts Builders, Inc. v. Dir., 444 F.3d 1095, 1102 (2006).
Thus, if you worked overseas for substantially the whole year before you were injured, then your actual wages will be used to determine your average weekly wage under 10(a).
5 and 6 day a week workers average weekly wage calculations
If you have worked for substantially the whole of the year and you work 5 days week or 6 days a week your average weekly wage calculation is as follows.
For 5 day a week workers your average daily wage is multiplied by 260 days (260 is the number of days a 5 day a week worker would work in one year). For 6 day week workers your average daily wage is multiplied times 300 days (300 is the number of days a week a 6 day a week worker would work in one year).
Then your average annual earnings are divided by 52 weeks to calculate your average weekly wage (AWW).
Claimant earned $110,000 in the 52 weeks prior to his injury. He is a day a week worker.
Take the total actual earnings and divide by the number of days he actually worked. In this instance he worked 250 days.
$110,000 divided by 250 days = $440 average daily wage
Then, under Section 10(a) you multiply the average daily wage by 260 days, which gives you the annual earnings.
$440 times 260 = $114,400 annual earnings
Then, divide the annual earnings by 52 weeks.
$114,400 divided by 52 week = $2,200 average weekly wage
However, the DBA insurance company will still probably contend that your AWW is as follows:
$110,000 divided by 52 weeks = $2,192.30
Not a huge difference, but it is what it is.
What is substantially the whole of the year?
The Ninth Circuit has adopted a bright line rule that Section 10(a) must be applied where claimant works 75 percent of the available workdays in a year. General Constr. Co. v. Castro, 401 F.3d 963, 39 BRBS 13(CRT) (9th Cir. 2005), cert. denied, 546 U.S. 1130 (2006); Stevedoring Services of America v. Price, 382 F.3d 878, 38 BRBS 51(CRT) (9th Cir. 2004), cert. denied, 544 U.S. 960 (2005); Matulic v. Director, OWCP, 154 F.3d 1052, 32 BRBS 148(CRT) (9th Cir. 1998).
However, other courts have since indicated that Section 10(a) must be applied where claimant meets the “substantially the whole of the year” requirement and the evidence supports application of its formula. See Price, 382 F.3d 878, 38 BRBS 51(CRT) (presumption that 910(a) or (b) applies rather than 910(c)); SGS Control Services v. Director, OWCP, 86 F.3d 438, 30 BRBS 57(CRT) (5th Cir. 1996).
“Similarly situated employees”
If you have not worked substantially the whole year then you can provide evidence of the average daily wage of other similarly situated employees of the company in the year preceding your date of injury. Section 10(b).
Thus, you need to determine (using discovery methods allowed under the law) what other employees were earning in the same job title or classification during the year before you were injured.
Calculating AWW under Section 10(c)
Section 10(c) is a catch-all provision when Section 10(a) or (b) cannot reasonably and fairly be applied. 33 U.S.C. §910(c); Matulic v. Director, OWCP, 154 F.3d 1052, 32 BRBS 148(CRT) (9th Cir. 1998). Under Section 10(c), an administrative law judge is afforded broad discretion to arrive at a sum that “shall reasonably represent the annual earning capacity of the injured employee.” 33 U.S.C. §910(c); Rhine v. Stevedoring Services of America, 596 F.3d 1161, 44 BRBS 9(CRT) (9th Cir. 2010).
If you are given incentive pay or increases in daily wages due to the employer having a shortage of employees, that is included in your average weekly wages. 33 U.S.C. §902(13);15 see generally Wausau Ins. Companies v. Director, OWCP [Guthrie], 114 F.3d 120, 31 BRBS 41(CRT) (9th Cir. 1997). See Denton v. Northrop Corp., 21 BRBS 37 (1988) (overseas post allowances and incentive compensation are properly included in average weekly wage as they are readily calculable).
The administrative law judge has broad discretion in crafting a calculation under Section 10(c). 33 U.S.C. §910(c); Rhine, 596 F.3d 1161, 44 BRBS 9(CRT). The goal of Section 10(c) is to approximate claimant’s annual earning capacity. Healy Tibbitts Builders, Inc. v. Director, OWCP, 444 F.3d 1095, 40 BRBS 13(CRT) (9th Cir. 2006). Dividing claimant’s total earnings by the number of weeks he worked achieves this goal. Healy Tibbitts Builders, Inc. v. Director, OWCP, 444 F.3d 1095, 40 BRBS 13(CRT) (9th Cir. 2006).
Section 10(c) of the Act states:
If either of the foregoing methods of arriving at the average annual earnings of the injured employee cannot reasonably and fairly be applied, such average annual earnings shall be such sum as, having regard to the previous earnings of the injured employee in the employment in which he was working at the time of the injury, and of other employees of the same or most similar class working in the same or most similar employment in the same or neighboring locality, or other employment of such employee, including the reasonable value of the services of the employee if engaged in self employment, shall reasonably represent the annual earning capacity of the injured employee.
The bottom line
If you worked overseas for a year or more before you were injured, there probably will not be a big battle over your average weekly wage. If there is a disagreement, it probably will not be a huge one.
If you worked overseas for less than a year before you were injured, you can expect a big battle over your average weekly wage.
I suggest you gather evidence of other substantially situated employees. Then you can contend that the Judge should use this evidence or the K.S. type of approach with is within the Judge’s discretion.
What are "wages?"
The term “wages” means the money rate at which the service rendered by an employee is compensated by an employer under the contract of hiring in force at the time of the injury, including the reasonable value of any advantage which is received from the employer and included for purposes of any withholding of tax under subtitle C of title 26 (relating to employment taxes). The term wages does not include fringe benefits, including (but not limited to) employer payments for or contributions to a retirement, pension, health and welfare, life insurance, training, social security or other employee or dependent benefit plan for the employee’s or dependent’s benefit, or any other employee’s dependent entitlement.
Permanent Total and Temporary Total Disability
Under the DBA, compensation is two-thirds of the your average weekly wage, subject to a maximum amount. The maximum rate payable for temporary total disability changes each October 1, based on the current National Average Weekly Wage for the affected period. Compensation for permanent total disability is adjusted each October 1, based on the percentage change in the national average weekly wage from the previous year, subject to a maximum adjustment of 5%.
The current maximum compensation rate is $1510.76. It will be adjusted again October 1 of each year.
It's All About Danger And Risks
The basis for this is the Defense Base Act courts have recognized the danger and risk faced by DBA workers. The reality is DBA employer's pay higher wages in order to provide incentive for DBA workers to encounter these hazards and risks. When a DBA worker is injured after being enticed to work in a dangerous environment in return for higher wages, it is disingenuous to suggest that his earning capacity should not be calculated based upon the full amount of the earnings lost due to the injury.
Telephonic Emergency Informal Conference
If you aren't receiving temporary disability benefits or permanent disability benefits at the proper compensation rate you need to request the Defense Base Act insurance carrier provide you benefits at the proper AWW/ compensation rate. Be sure to also ask for retroactive benefits you are owed at the proper compensation rate. As always, you need a proof of service.
If, or rather, when the insurance company doesn't change your compensation rate - including providing your retroactive benefits at the proper compensation rate - request a Telephonic Emergency Informal Conference with the U.S. Department of Labor. As always when you are communicating with the Department of Labor, be sure to copy the insurance company adjuster and use a proof of service.
A Final Word To The Wise
Finally, as of the date of this article, the issue of DBA average weekly wage when the Claimant has worked considerably less than a year is currently pending with the Court of Appeals. Thus, caution is advised pending the Court of Appeals decision(s).
Remember the DBA insurance company is not your friend
I strongly suggest you order a free copy of my book, Win Your Defense Base Act Case: The Ultimate Straight Talk Roadmap To The Medical Treatment and Money You and Your Family Deserve. I will send it to you for free and cover shipping.
The book has plenty of 5 Star reviews on Amazon, and it is a guide to only help you succeed in your case.
Be sure to claim your free copy of the 5 Star Book - Win Your Defense Base Act Case
This is an eye-opening book that gives you an insider's view of the Defense Base Act and how to beat the DBA insurance company. This book will take you step by step on how to avoid the DBA insurance company tricks and traps that are designed to destroy your DBA claim.
If you do one thing - you owe it to yourself to read the 5 Star reviews of the book on amazon.com!!
I suggest you read my book - Win Your Defense Base Act Case before you talk to the insurance adjuster, give a statement, sign any forms or even hire the wrong lawyer.
Check out all of the 5 Star Reviews on amazon.com
5.0 out of 5 stars
The best way to get the Defense Base Act facts is ...
July 23, 2015
The best way to get the Defense Base Act facts is this book. A ‘Must Have’ for any person who is currently or thinking of working in any overseas contractor position. Written for those who are not familiar with DBA, this book shows how to go through the process from reporting to conclusion of benefits. Mr. Turley has put this whole process into a readable and understandable format that shows step by step the process needed for a positive outcome. I would recommend everyone to read the book before you take that job oversees as a contractor so you have a better understanding of your rights and expectations. Mr. Turley gives you the facts needed to have a successful conclusion should you have the misfortune of being injured. Be armed with the best information available so you and your family can be protected.
5.0 out of 5 stars
A Must Read from a Veteran and Retired Fire Chief! - Chief Bradley (Baghdad Fire Department, Iraq)
July 27, 2015
When the odds are against you and there is nowhere else to turn then call the Turley Law Firm!!! This book is a very informative guide to help you thru your case and it provides more than adequate information on your rights. I recommend this for anyone that has served and has been thru what I've been thru. As a veteran and public servant I suggest you buy this book and take in the knowledge.
5.0 out of 5 stars
This book was a great help guiding me through the defense base act process
February 8, 2017
This book was a great help guiding me through the defense base act process. I would recommend it to everyone who has the misfortune to really need the help of a good law firm to aid them in securing what is rightfully due them. It was a good reference for explaining what to do and what to expect next. Read this book and 'Win Your Defense Base Act Case'
5.0 out of 5 stars
DBA case: It's a Chess game, not checkers.
December 1, 2016
Bill Turley and his staff have gotten this process down, and there book is your only starting point. I highly suggest you start reading this ASAP to get familiar with what’s going to happen. And if you’re smart acquire them to represent you. I honestly believe you need them on your side if you really want to win this thing. The staff is amazing, to the point, and sharp. So start digging in!
Need help right now?
Call us today at 619-304-1000 or you can fill out the contact form on this web page.
Disclaimer: Please understand these discussions and/or examples are not legal advice. All legal situations are different. This testimonial, endorsement and/or discussion does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter, your particular case/ situation and/or this particular case/ situation. Thanks, Bill Turley