Petitt v. Sause Brothers, No. 12-70740 (9th Cir. Sept. 20, 2013)


When a worker who receives disability benefits under the Longshore and Harbor Workers’ Compensation Act (LHWCA) earns a scheduled wage increases unrelated to the merits of his performance, does it constitute an increase in his wage-earning capacity?  The Ninth Circuit said no.

In this case,  Petitt injured his back while working as a welder for Sause Brothers (Sause).  At the time of the injury, he earned $15/hr.  Sause paid Petitt permanent total disability benefits under LHWCA, 33 U.S.C.  §901-950 starting in 2004.

In 2007, Petitt began work for K&K as an electronics assembler.  He earned  $7.80/hr to start and his pay was increased by $0.25/hr every three months until it reached the cap of $13.50/hr.  When Petitt began work at K&K, Sause paid him only permanent partial disability benefits based on his starting salary and reduced the benefits to reflect each quarterly increase.  Petitt claimed Sause incorrectly factored the quarterly raises into the determination of his benefit.

Under the LHWCA, disability means the injury suffered impedes the worder’s ability to earn the wages he received at the time of the injury. 33 U.S.C. §902(10).  A disabled employee is entitled to 66 2/3 percent of the difference between his average weekly wages and his wage-earning capacity in the same or other employment.  Section 908(h) provides that if a partially disabled employee’s actual earnings do not fairly and reasonably represent his wage-earning capacity, the deputy commissioner may determine the reasonable wage-earning capacity.  The commissioner should consider the nature of the injury, the extent of impairment, his usual employment, or any other factor which may affect his ability to earn wages in his disabled condition.

The ALJ found that Petitt’s pay increases after the date of injury were reflective of his wage-earning capacity.  The ninth circuit disagreed and found the $0.25 increase was more like a general raise increase and not like a merits based increase because it was not indicative of Petitt’s true wage-earning capacity nor did it increase Petitt’s value on the open market.  It was automatically given to every employee.  Because Petitt had not learned a new sill or taken on additional responsibility, his service at K&K made him more valuable to K&K only.  The proper calculation of Petitt’s actual earnings should have been his starting salary of $7.80/hr because that is what he would make on the open market.