Calculating Your Average Weekly Wage Under the Defense Base Act, and Longshore & Harbor Workers’ Compensation Act.

The most critical factor influencing the prospective value of your claim for compensation benefits under the DBA/LHWCA is the manner in which you calculate your Average Weekly Wage (“AWW”). Establishing a fair and accurate AWW at the outset of your claim will ensure that you maximize your entitlement to all available compensation under the law.

By way of example, below you will see a chart showing the value of a claim for death benefits brought by a widow under the DBA/LHWCA based upon four different AWW calculations. As you can see, even a small difference in the AWW calculation will result in a very significant change in the claim’s overall value. Hence, it is critical to retain an attorney early in your claim to ensure that you are receiving all available benefits by establishing a fair AWW.

 

A Sample Death Claim's Un-discounted Present Value By AWW Amount

Example includes a death claim brought by a 26 year American old widow, and is un-discounted.
 

Section 10 of the LHWCA, as extended by the DBA, establishes three methods for determining your average annual earnings, which are then divided by 52 to arrive at an AWW. This section states in pertinent part:

Except as otherwise provided in this Act, the average weekly wage of the injured employee at the time of the injury shall be taken as the basis upon which to compute compensation and shall be determined as follows:  (a) If the injured employee shall have worked in the employment in which he was working at the time of the injury, whether for the same or another employer, during substantially the whole of the year immediately preceding the injury, his average annual earnings shall consist of three hundred times the average daily wage or salary for a six-day worker and two hundred and sixty times the average daily wage or salary for a five-day worker, which he shall have earned in such employment during the days when so employed. (b) If the injured employee shall not have worked in such employment during substantially the whole of such year, his average annual earnings, if a six-day worker, shall consist of three hundred times the average daily wage or salary, and, if a five-day worker, two hundred and sixty times the average daily wage or salary, which an employee of the same class working substantially the whole of such immediately preceding year in the same or similar employment in the same or neighboring place shall have earned in such employment during the days when so employed. (c) 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.

33 U.S.C. §910(a)-(c). 

To summarize, Section 10(a) examines your actual wages to determine your AWW. This provision applies only if you worked substantially the whole year leading up to the date of your injury at the same job. By way of example, if you earned $68,000.00 in the year preceding your injury, your average weekly wage will be approximately $1,307.69 ($68,000.00 / 52 weeks). Your resultant weekly compensation rate is then calculated by taking 2/3'rds of your AWW. In the above example, your compensation rate would be $871.79 per week.

In the event that Section 10(a) cannot be applied because you did not work in the same or similar employment during substantially the whole of the year preceding your injury, then an analysis must be performed under Section 10(b).  As a practical matter, the application of Section 10(b) usually involves examining the wages of your co-workers and colleagues who perform the same or similar job as you. Section 10(b) does not take into account individual performance or accolades that may affect your rate of compensation. Therefore, Section 10(b) is only useful in determining a worker's wages when their salary is rigidly set by a government or union mandated pay scale. 

Under circumstances where there is insufficient evidence in the record to make a determination of your average daily wage under Section 10(a) or Section 10(b), the courts will look at Section 10(c) as a potential method of calculating your AWW.  Insurance companies oftentimes utilize Section 10(c) as a tactic to depreciate your earning potential, reduce your AWW, and maximize their profits. Don’t fall into this trap. Retain an attorney now who will advocate on your behalf to obtain the highest AWW afforded by law.

DBA workers challenge the classic framework established in the LHWCA, as they are compensated at a much higher rate due to the dangers inherent in their employment. With great risk, comes great reward. Factored into the high profits of selling DBA insurance policies to employers operating in a warzone is a fundamental understanding that overall claim costs will be higher. Attempting to argue that Section 10(c) of the LHWCA should apply in any DBA matter is an attempt to pervert the intent of the law, and discount the sacrifice and risks taken by the average defense contractor. Nonetheless, the courts have been more open to the application of Section 10(c) since the issuance of the Hamidzada decision, and the United States District Court for the Southern District of Texas' holding that the Benefits Review Board abused their discretion in vacated Judge Kennington's ruling in K.S. v. Service Employees International, Inc. 43 BRBS 18 (2009).

Please feel free to contact Diamond Law Practice, PLLC now to discuss the calculation of your AWW under the Defense Base Act, or Longshore & Harbor Workers’ Compensation Act.

New October 1, 2015 Section 10(f) Cost of Living Adjustment ("COLA") for Longshore and Defense Base Act Claimants

 
DBALongshoreAttorney
 

If you are receiving Permanent Total Disability ("PTD") compensation benefits, or death benefits under the federal Longshore and Harbor Workers' Compensation Act or Defense Base Act, you are entitled to annual increases in your benefit rate each October 1st. Starting Thursday, October 1, 2015, the applicable Section 10(f) COLA will increase your compensation rate by 2.1%. For example, if you are receiving compensation benefits at the rate of $980.00 per week, your new benefit rate will increase to $1,000.00, and will payable through September 30, 2016. Thereafter, you will be entitled to annual increases in your benefit rate every October 1st for the remainder of your claim. 

If you have not received an increase in your compensation rate, call us immediately and we will recover these unpaid benefits retroactive to the date of injury inclusive of all potential penalties and interest. This occurence is all too common as some inexperienced insurance adjusters simply forget to apply the statutorily mandated rate increases, or cannot adjust each claim in their enormous case list in a timely fashion.  

Section 10(f) COLA by Year

Maximum Comp Rate Per Year DBA/LHWCA

In addition, effective October 1, 2015, the maximum benefit rate increases to an all time high of $1,406.00 per week. In order to improve your chances of obtaining benefits at the maximum rate, please consult with an attorney now.

As a former defense attorney, I know the tactics insurance companies use to decrease your benefit rate, deny you benefits, and cut costs in the long run. Some basic tactics include:

  1. Perverting your average weekly wage by factoring in earnings from previous jobs,
  2. Forcing alternative calculations to compute the rate of permanent disability payments, and
  3. Arguing suitable alternative employment that does not exist. 

Diamond Law Practice, PLLC can offer you and your family a free consultation regarding all Section 10(f) COLA questions under the Defense Bast Act, and Longshore & Harbor Workers' Compensation Act. 

Diamond Law Practice, PLLC, One World Trade Center, Suite 8500, 85th Floor, New York, New York 10007

Office: (212) 220-7134

Cell: (518) 269-9233

Fax: (646) 304-6009

Email: JDiamond@DiamondLawPractice.com