Key Average Weekly Wage Case Heads to the NC Supreme Court
Oral Arguments Set for October 4, 2021, in Nay v. Cornerstone Staffing Solutions
Plaintiff, Luon Nay, injured his back while working as a temporary employee for Cornerstone. Mr. Nay was performing landscaping work at the time of his back injury on November 25, 2015. Mr. Nay’s employer was a staffing agency. At the time of his compensable injury by accident, Mr. Nay was working on assignment performing landscaping work with FieldBuilders. Mr. Nay’s assignment with FieldBuilders involved cutting grass, patch/repair work, and general landscaping tasks. He generally worked from 7:00 a.m. through 4:00 p.m. for a total of eight hours per day; however, he would occasionally work as few as six hours and as many as nine or 10 hours in a given day.
Mr. Nay worked four to five days per week, on average, and earned $11.00 per hour. Mr. Nay timely filed a claim for his back injury against the staffing agency. The insurance carrier admitted the compensability of the claim and initiated temporary total disability benefits at the rate of $258.03 per week. Six months later, the carrier adjusted Mr. Nay’s weekly compensation rate down to $74.43. Mr. Nay filed a Request for Hearing to dispute the reduction.
In the hearing, both parties stipulated that Methods 1, 2, and 4 were inapplicable. As a reminder, in North Carolina, there are five methods for calculating an injured employee’s average weekly wage.
- Method 1: Is to be used when the employee worked for the employer 52 weeks prior to the date of injury and did not miss more than seven (7) consecutive days at one or more times. The average weekly wage is simply calculated by dividing the total wages over 52 weeks by 52.
- Method 2: The employee worked for the employer 52 weeks prior to the date of injury, but missed seven (7) consecutive days at one or more times over those 52 weeks. To calculate the average weekly wage under Method 2, calculate the total wages over 52 weeks and divide by the number of weeks remaining after subtracting one week for each seven-day period missed.
- Method 3: Is to be used when the employee worked for the employer less than 52 weeks prior to the date of injury. To calculate the average weekly wage under Method 3, divide the total wages of the employee by the total number of weeks the employee worked for that employer.
- Method 4: Is to be used when the employee has worked for employer for only a short period of time or employment has been casual intermittent and it is impractical to use Method 1, 2 or 3. To calculate the average weekly wage under Method 4, you would use a similar situated employee with the same grade paid in a similar position during the 52 weeks prior to the date of injury.
- Method 5: Is the “catch-all” provision that may only be used when the prior Methods produced an unjust result to either party. There is no prescribed Method to calculate the average weekly wage under Method 5.
Mr. Nay argued that of the five methods available pursuant to Section 97-2(5) of the General Statutes for calculating his average weekly wage, the Commission should use the third method, which takes the wages earned and divides by the number of weeks worked. He argued that the results of this calculation were fair and just to both parties. Defendants argued that this method was unfair to them because there was no evidence that Mr. Nay would continue to be employed by the agency. Defendants argued that the Commission should instead use the fifth method and divide the wages earned by 52 weeks, resulting in a much lower compensation rate.
The Commission accepted Defendants’ argument, citing Tedder v. A & K Enters., 238 N.C. App. 169, 767 S.E.2d 98 (2014) and Thompson v. STS Holdings, Inc., 213, N.C. App. 26, 711 S.E.2d 827 (2011), as well as Joyner v. A. J. Carey Oil Co., 266 N.C. 519, 146 S.E.2d 447 (1966). The Commission found that using method three in this claim would produce an inflated average weekly wage that was not fair to Defendants because Mr. Nay was employed in a temporary capacity with no guarantee of permanent employment, length of a particular assignment, or specific wage rate, and he was assigned to a client account whose work was seasonal. Mr. Nay appealed. The Court of Appeals reversed and remanded the case to the Full Commission for a recalculation of Mr. Nay’s average weekly wage using method three. Defendants filed a Petition for Discretionary Review with the Supreme Court, which was granted.
The North Carolina Advocates for Justice filed an Amicus Brief. The North Carolina Association of Defense Attorneys (NCADA) and the North Carolina Association of Self-Insureds (NCASI) also filed an Amicus Brief. The NCADA and NCASI brief outlined for the Supreme Court why the Court of Appeals erred by using a de novo standard of review and carefully pointed out there was competent evidence to support the Commission’s Opinion and Award. The NCADA and the NCASI also pointed out that allowing this decision to stand would undermine the role of the Commission as the finder of fact and inject uncertainty into the Workers’ Compensation System and create significant additional litigation costs for the Appellate Courts and increased costs to employers. The case is set to be heard on October 4, 2021.
The Supreme Court’s decision on this issue could potentially have long lasting and costly effects for employers in North Carolina if the Court of Appeals’ decision is upheld. Teague Campbell will continue to monitor this case and provide updates as necessary. In the meantime, if you have questions, feel free to reach out to a member of our workers’ compensation team.