Employees Who Supply Equipment or Helpers in Louisiana Workers Compensation
In Louisiana workers compensation law, the term “wages” means the amount earned by an employee through his own efforts or labor, rather than the profits earned on any rental of equipment or helpers which he or she may provide.
So when an employee provides the employee’s own equipment or helpers, an adjustment is ordinarily made in workers compensation when determining the employee’s Average Weekly Wage, so as to exclude any amounts paid by the employer for this equipment or these helpers.
Two methods have typically been used by Louisiana workers compensation courts in making this adjustment when determining the Average Weekly Wage:
- Some courts select the “prevailing wage” of another similarly experienced worker who was doing the same work on a wage basis; and
- Other courts simply subtract the reasonable rental value of the equipment and the amount paid to helpers from the full per unit price or the gross wages paid.
After determining the gross wages, Louisiana workers compensation courts will then apply the correct statutory formula to the wages.
The point is to distinguish between “wages,” which should be included in Average Weekly Wage, and “return on capital,” which should not be included in average weekly wage.
INDEPENDENT CONTRACTORS WHO SUPPLY EQUIPMENT OR HELPERS IN LOUISIANA WORKERS COMPENSATION
This includes subcontractors and independent contractors who supply equipment and helpers as part of the job.
EFFECT OF EMPLOYING HELPERS
Typically, the fact that an injured worker employs helpers to assist with his or her work indicates that the injured worker is an independent contractor, and therefore unable to receive workers compensation benefits from the principal/employer.
This is because, usually, an independent enterpriser will combine the labor of others, the furnishing of equipment, monetary capital, and overall know-how in performing his contractual service. And these actions are tell-tale signs that a separate business enterprise is present.
However, there are instances where an injured worker who employs helpers is actually considered an employee and thus entitled to workers compensation benefits.
Typically, these cases are situations involving the hauling of lumber and other commodities. In these cases, the injured worker is almost always without appreciable capital (apart from the truck and some tools which he usually owns), and the rate of pay for this work is fairly well standardized. Also, the hauler’s job is integrated into the principal/employer’s enterprise on a fairly stable basis, and thus the worker cannot really set a price that will cover the risk of injury.
So even though haulers frequently hire helpers and pay them from the per-unit price he receives, Louisiana courts almost always classify haulers as employees or as independent contractors engaged in manual labor, and thus entitled to compensation.
EFFECT OF SUPPLYING EQUIPMENT
The fact that an injured worker supplies his or her own equipment (apart from the regular tools customarily provided by all manual laborers) is a factor indicating that he was operating a separate business enterprise, and thus will likely be regarded as an independent contractor, and therefore will not likely be able to recover workers compensation benefits from the principal/employer.
But again, there are instances where an injured worker who supplies his or her own equipment is actually considered an employee and thus entitled to workers compensation benefits. And again, these cases typically involve haulers.
But the issue of whether an injured work supplies his or her own equipment is not going to fully decide whether workers compensation benefits will be awarded. Instead, Louisiana courts typically just consider this as one of many factors in cases in which the entire picture indicates that a separate business enterprise is present.
THE BASIS FOR COMPUTING COMPENSATION OF INDEPENDENT CONTRACTOR
Even if a person is classified as an independent contractor, he could be entitled to compensation under the same conditions as an employee if, for example, he spends a substantial portion of his time in manual labor in carrying out the contract.
But how should the Average Weekly Wage of such an independent contractor be calculated, if this independent contractor supplies equipment or helpers?
Typically, an independent contractor fixes a lump sum or a per-unit price, which includes his operating costs (such as wages of his helpers and use of his equipment) plus his overhead and a computed profit.
But this independent contractor’s lost wage benefits should not be based upon the profit of the job, but rather the wages for the manual work which the independent contractor performs himself or herself.
Like the employee who provides the equipment or helpers, an adjustment is ordinarily made in workers compensation when determining the Average Weekly Wage of an independent contractor who provides equipment or helpers, so as to exclude any amounts paid by the employer for this equipment or these helpers.
Again, two methods have typically been used by Louisiana workers compensation courts in making this adjustment when determining the Average Weekly Wage:
- Some courts select the “prevailing wage” of another similarly experienced worker who was doing the same work on a wage basis; and
- Other courts simply subtract the reasonable rental value of the equipment and the amount paid to helpers from the full per unit price or the gross wages paid.
After determining the gross wages, Louisiana workers compensation courts will then apply the correct statutory formula to the wages.
Again, the worker’s “return on labor” (the portion of gross earnings, which are really wages) should be the basis for the Average Weekly Wage calculation, not the worker’s “return on capital” (the furnishing of helpers or equipment).
GENERAL CALCULATIONS OF THE AVERAGE WEEKLY WAGE IN LOUISIANA WORKERS COMPENSATION
In order to calculate any type of lost wage benefit, an injured employee must determine his or her Average Weekly Wage, using the employee’s gross wages.
Louisiana law provides for a variety of ways of calculating an Average Weekly Wage, depending upon whether the injured worker was paid by the hour, the month, the year, or on a unit, commission, or other basis.
This Average Weekly Wage serves as the basis for calculating the actual lost wage benefit; if a total disability award is involved, for example, 66 2/3% of the Average Weekly Wage would equal the weekly benefit, subject to applicable maximums and minimums.
No fringe benefits or other compensation are to be included in calculating the Average Weekly Wage unless these benefits or compensation are taxable as income.
And the “gross earnings” of the employee during the period preceding the accident are to be used in the calculation of an Average Weekly Wage.
If the employee had an illness, instead of an accident or injury, the date of the accident is considered to be the last day the employee worked or had harmful exposure.
GROSS WAGES
Gross wages are defined as the total amount of an employee’s earnings before deductions – such as deductions for taxes, social security, health insurance, or retirement plans – are taken from the paycheck.
If an injured worker is a salaried employee, the gross wages are the amount of his or her annual salary.
Under Louisiana workers compensation, gross wages may also include taxable fringe benefits, such as the payment of some business expenses or amounts taken out of an employee’s income and deposited into a pre-tax retirement account such as a 401(K).
A good rule of thumb is that, if an employee is required to pay income tax on something, then likely it should be counted as gross wages for purposes of determining a Louisiana workers compensation Average Weekly Wage.
THE AVERAGE WEEKLY WAGE IS SET AS OF THE DATE OF ACCIDENT
No matter what basis the employee is paid, the employee’s average weekly wage is set as of the date of the accident.
So, for example, even if the employee’s salary or pay rate was temporarily higher or lower than usual at the time of the accident, the employee’s Average Weekly Wage is based on this hourly rate at the time of the accident.
MAXIMUM AND MINIMUM LIMITS
Lost wage benefits are subject under Louisiana law to both a maximum compensation rate and a minimum compensation rate.
The maximum and minimum rates are determined and adjusted each year, but the compensation rate is determined at the time of injury.
So, unfortunately, some injured workers – who are employed in middle or high paying jobs – will not receive full lost wage benefits based on their entire Average Weekly Wage.
PRESENT MAXIMUM RATE LIMITS ON INDEMNITY BENEFITS
For example, as of 2019, Louisiana law caps the maximum benefit amount based on an Average Weekly Wage of $886.30.
So if an employee actually earns more than $886.30 per week, sadly, this employee will only receive benefits based on the $886.30 wage rate.
Also, as of 2019, Louisiana law caps the maximum indemnity benefit amount at $655.00.
So, for an accident or injury that occurred in 2019, no matter how much the employee earned before the accident or injury, the employee will not receive a weekly indemnity check for more than $655.00.
This maximum amount will remain the same throughout the injured worker’s claim.
PRESENT MINIMUM RATE LIMITS ON INDEMNITY BENEFITS
If the Average Weekly Wage of an injured employee falls below the minimum compensation rate, the compensation rate for that employee is the employee’s actual average weekly wage.
But the minimum compensation does not apply to Supplemental Earnings Benefits (SEBs) and Permanent Partial Disability (PPD) benefits.
So, for example, as of 2019, Louisiana law caps the minimum indemnity benefit amount at $177.00.
So, for an accident or injury that occurred in 2019, no matter how little the employee earned before the accident or injury, the employee – if totally disabled – will not receive a weekly indemnity check for less than $177.00.
This minimum amount will remain the same throughout the injured worker’s claim.
THE LOUISIANA STATUTE FOR CALCULATION OF LOST WAGE (INDEMNITY) BENEFITS FOR EMPLOYEES WHO SUPPLY EQUIPMENT OR HELPERS IN LOUISIANA WORKERS COMPENSATION
The Louisiana statute outlining calculations for lost wage benefits is La. R.S. 23:1021. In pertinent part, this statute reads as follows:
(13) “Wages” means average weekly wage at the time of the accident. The average weekly wage shall be determined as follows:
(f) Income tax. In the determination of “wages” and the average weekly wage at the time of the accident, no amount shall be included for any benefit or form of compensation which is not taxable to an employee for federal income tax purposes; however, any amount withheld by the employer to fund any nontaxable or tax-deferred benefit provided by the employer and which was elected by the employee in lieu of taxable earnings shall be included in the calculation of the employee’s wage and average weekly wage including but not limited to any amount withheld by the employer to fund any health insurance benefit provided by the employer and which was elected by the employee in lieu of taxable earnings shall be included in the calculation of the employee’s wage and average weekly wage.
(g) Date of accident. In occupational disease claims the date of the accident for purposes of determining the employee’s average weekly wage shall be the date of the employee’s last employment with the employer from whom benefits are claimed or the date of his last injurious exposure to conditions in his employment, whichever date occurs later.
