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February 12, 2013
NOTE: A Board Panel Decision issued on 7-24-12 in the case Anderson v. Jaguar ADJ716686 on this issue. The Board determined that estimating future SAWW increases at 3% each year was in the best interest of the injured worker.
Labor Code Sec. 4453(a)(10) provides for certain increases to the statutory AWE structure for TD payments and Labor Code Sec.4659(c) provides for certain increases in life pension and total permanent disability payments based upon the "state average weekly wage" (SAWW). SAWW is a number compiled by the United States Department of Labor based on the average weekly wage of California employees covered by unemployment insurance for the 12 months ending March 31 of the calendar year (preceding the year in which the injury occurred).
As of March 31, 2006, the SAWW for the 12 months preceding was $880.00 per week. As of March 31, 2005, the SAWW was $838.42. This results in a 4.96% increase in SAWW from 2005 to 2006.
Labor Code Sec. 4453(a)(10) provides that for injuries occurring on or after 1-1-05, for purposes of computing temporary disability indemnity, earnings shall be taken at not less than $189.00, nor more than $1,260.00. (There was no change in this structure for injuries on or after 1-1-06) However, this subsection further provides:
"Commencing on January 1, 2007, and each January thereafter, the limits specified in this paragraph shall be increased by an amount equal to the percentage increase in the state average weekly wage as compared to the prior year."
The effect of this (4.96%) increase is that for injuries occurring on or after 1-1-07, for purposes of computing temporary disability indemnity, AWE shall be taken at not less than $198.37 (1.0496 x $189.00), nor more than $1,322.50 (1.0496 x $1,260.00). This results in a so-called "Minimum TD Rate" of $132.25 per week ($198.37 x 2/3), and a "Maximum TD Rate" of $881.67 per week ($1,322.50 x 2/3)).
The SAWW as of 3-31-07 was $914.60 reflecting a 3.93% increase over 3-31-06. This 3.93% increase becomes effective 1-1-08. As of then, for purposes of computing temporary disability indemnity rates, AWE shall be taken at not less than $206.18 (1.0393 x 198.37) and not more than $1,374.47 (1.0393 x 1,322.50). These changes result in so-called "Minimum TD Rate" of $137.45 / wk and a so-called "Maximum TD Rate" of $916.32.
Of course, these increases in the statutory AWE structure may affect temporary disability indemnity rates for "older" injuries also. See Labor Code Sec. 4661.5.
While the SAWW increased the statutory AWE structure in Labor Code Sec. 4453(a)(10), it actually increases the amount of the life pension or total permanent disability payment under Labor Code Sec. 4659(c).
This subsection provides:
"For injuries occurring on or after January 1, 2003, an employee who becomes entitled to receive a life pension or total permanent disability as set forth in subdivisions (a) and (b) shall have that payment increased annually commencing on January 1, 2004, and each January 1 thereafter, by an amount equal to the percentage increase in the "state average weekly wage" as compared to the prior year."
Past SAWW increases were 1.97% effective 1-1-05 and 4.01% effective 1-1-06. There was no SAWW increase effective 1-1-04.
As an example, assume an employee with real life earnings of $904.00 per week was injured 1-2-03. His statutory AWE for TD was $903.00/wk [Labor Code Sec. 4453(a)(8)], yielding a TD rate of $602.00/wk. If he was declared 100% PD as of 12-31-03, his permanent total disability indemnity rate would be $602.00 [L.C. 4453(a)(8)]. Note that if his injury had occurred prior to 1-1-03, this would have been his weekly rate for life. Crutcher v. WCAB 46 CCC 843. However, for this 1-2-03 injury, Labor Code Sec. 4659(c) applies.
As there was no SAWW increase effective 1-1-04, his weekly rate remained $602.00/wk throughout 2004. As of 1-1-05, the weekly rate would have had to increase to $613.86/wk (1.0197 x $602.00); as of 1-1-06, the weekly rate would have had to increase to $638.48 (1.0401 x $613.86); and as of 1-1-07, the weekly rate had to increase to $670.15/wk (1.0496 x 638.48). As of 1-1-08, the weekly rate will have to increase to $696.49 (1.0393 x 670.15).
For injuries after 1-1-03, where the permanent disability is less than 100%, but 70% or more, life pension payments would not yet have commenced.
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