NEW GUIDANCE IN IOWA INCLUDES FREQUENT “ZERO” WEEKLY EARNINGS IN AVERAGE WEEKLY WAGE CALCULATION
In Lutz v. Consolidated Refrigerated Services, an Iowa Deputy Workers’ Compensation Commissioner provided guidance on how to calculate an employee’s average weekly wage when that employee frequently submits pay logs with “zero” weekly earnings due to an irregular pay schedule.
Section 85.36 of the Iowa Code provides that the basis of compensation for an employee’s injury is the employee’s weekly earnings at the time of his or her injury. If an employee is paid on an hourly or output basis, then weekly earnings are calculated by dividing the employee’s earnings from the last 13 consecutive weeks preceding the injury by 13.
However, any week that does not fairly reflect an employee's customary earnings shall be replaced by the closest previous week that is a fair representation of the employee's customary earnings.
In Lutz, the employee, an injured truck driver, was not paid on a regular basis. Rather, the employee was paid based on when his trip documents were received by the defendant, his employer. During some weeks, the employee would continue to work where his pay logs would show a “zero,” as the employee was still hauling cargo.
While Section 85.36 states that any week not fairly reflecting an employee’s customary earnings should be replaced with a week that does, the Deputy Commissioner found that weeks with “zero” earnings on the employee’s pay logs do reflect the employee’s customary earnings because of his irregular pay schedule.
Therefore, the Deputy Commissioner held that the weeks where the employee had “zero” weekly earnings in the previous 13 consecutive weeks preceding his injury should be kept in the calculation of the employee’s average weekly wage.
That is not to say all pay periods with “zero” earnings will be included in average weekly wage calculations. The ruling suggests that the determination will be on a case-by-case basis, depending on the employee’s pay schedule and frequency of “zero” weekly earnings. Furthermore, this is a Deputy Commissioner ruling, so it is not binding precedential authority on the agency. It is possible that the Commissioner will disagree with the Deputy’s analysis. For now, this is best described as guidance.
This post was drafted by Faith Kowalski, a law clerk at Baylor Evnen. If you have questions regarding calculation of an average weekly wage, please call Paul Barta or Micah Hawker-Boehnke at 402-475-1075.