by: Samantha Dudley
CHARLOTTE, NC- As we leave the 2024 holiday season behind, it is a good time to revisit the subject of seasonal employment and its impact on exposure for employers and carriers. For example, an employee who is hired to chop down Christmas trees during the month of December would be considered a seasonal employee. Another example of a season employee during the Spring and Summer months is a lifeguard. So, how does seasonal employment impact exposure?
N.C. Gen. Stat. § 97-2(5) provides five methods for calculating average weekly wages, in hierarchy format. Therefore, you should only consider method two if method one is not an option and method three if method two is not an option, etc. The five methods are set forth as follows:
Method 1: “[T]he earnings of the injured employee in the employment in which the employee was working at the time of the injury during the period of 52 weeks immediately preceding the date of injury . . . divided by 52.”
Method 2: “[I]f the injured employee lost more than seven consecutive calendar days at one or more times during such period, although not in the same week, then the earnings for the remainder of such 52 weeks shall be divided by the number of weeks remaining after the time so lost has been deducted.”
Method 3: “Where the employment prior to the injury extended over a period of fewer than 52 weeks, the method of dividing earnings during that period by the number of weeks and parts thereof during which the employee earned wages shall be followed; provided, results fair and just to both parties will be thereby obtained.”
Method 4: “Where, by reason of a shortness of time during which the employee has been in the employment of his employer or the casual nature or terms of his employment, it is impractical to compute the average weekly wages as above defined, regard shall be had to the average weekly amount which during the 52 weeks previous to the injury was being earned by a person of the same grade and character employed in the same class of employment in the same locality or community.”
Method 5: “But where for exceptional reasons the foregoing would be unfair, either to the employer or employee, such other method of computing average weekly wages may be resorted to as will most nearly approximate the amount which the injured employee would be earning if not for the injury.”
Returning to our lifeguard example, most public pools are open Memorial Day through Labor Day. If a lifeguard earns $5,600 working at the neighborhood pool between Memorial Day and Labor Day, Method 1 does not apply because the employee did not work for an entire year prior to the injury, nor does Method 2. One may argue that Method 3 is appropriate, but is Method 3 “fair and just to both parties?”
Under Method 3, the employee did not work for approximately nine months during the off- season. Thus, the employee’s gross earnings of $5,600 would be divided by approximately fourteen weeks only, which equals an average weekly wage of $400. Assume also that this employee’s injuries are so severe that the employee is out of work and receiving temporary total disability for at least a year. An average weekly wage of $400 renders a compensation rate of $266.68; therefore, the employee would earn $13,867.36 in indemnity benefits over a year. As this is more than double the amount the employee would earn had the employee returned to work as a lifeguard the following year, Method 3 is clearly not “fair and just” to the Employer/Carrier. In addition, Method 4 also does not apply because similar employees, i.e., other lifeguards earning similar wages, are also limited by the seasonal nature of the employment in that there is no work available during the off-season.
This ultimately leaves Method 5, known as the “catch all” method. Under this approach, the employee’s gross earnings of $5,600 are divided by a full fifty-two weeks, resulting in an average weekly wage of $107.69. Assuming again the employee is out of work and receiving temporary total disability for at least a year, a year of benefits at a compensation rate of $71.80 is lower at $3,733.60. Thus, unlike under Method 3, I would argue this method results in the employee earning “nearly approximate the amount which the injured employees would be earning if not for the injury,” i.e., the amount the employee would have earned if the employee returned to work as a lifeguard the following year. Therefore, Method 5 in this situation and others involving a seasonal worker is fair and just.
Calculating the average weekly wage of a seasonal employee can be incredibly fact-intensive. If you are unsure whether a particular employee qualifies as a seasonal employee and what the appropriate average weekly wage is, or if you have any other questions concerning North Carolina workers’ compensation claims, contact Samantha Dudley at (704) 247-9692 or [email protected].