Method 5 of Calculating the Average Weekly Wage as the Last Resort

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Nay v. Cornerstone Staffing Solutions, No. COA19-262, 2020 WL 5000765, at *1 (N.C. Ct. App. Aug. 18, 2020)

Plaintiff sustained a compensable injury when he was working in a “temp-to-perm” position for Cornerstone Staffing Solution, an employment staffing agency. “Temp-to-perm” employees are placed with client companies that offer the possibility of full time, long-term employment that can potentially turn into permanent employment. 95% of the Cornerstone’s employees were “temp-to-perm.” At the time of the injury, plaintiff was assigned to do landscaping work for a client company, earning $11 per hour. Due to a dispute over the modification of Plaintiff’s weekly temporary total disability benefits, the Commission considered the appropriate method in calculating plaintiff’s average weekly wage (“AWW”).  

AWW is determined by calculating the amount the injured worker would be earning but for his injury. The calculation is governed by N.C.G.S. § 97-2(5), which sets out five distinct methods for calculating an injured employee’s AWW. The five methods are ranked in order of preference, and each subsequent method can be applied only if the previous methods are inappropriate. 

Here, the methods at issue were Method 3 and Method 5. Method 3 calculates the AWW by dividing plaintiff’s earnings by the number of weeks he worked prior to his injury. Method 5 calculates the AWW by using “such other method” that will most nearly approximate the amount which the injured employee would be earning were it not for the injury. Since there was no length of the particular assignment, or specific wage rate, and he was assigned to a client account whose work was seasonal, the Commission found Method 3 unfairly inflated plaintiff’s AWW and applied Method 5 instead. 

The Court of Appeals reversed and remanded the Commission’s decision, explaining that Method 3 was fair and therefore appropriate. Even though Method 3 does not take into account the likelihood of Plaintiff obtaining full-time employment with another company client and produces wages that exceed Cornerstone’s typical long-term payments to employees, Method 3 allows the calculation of plaintiff’s AWW to be on actual earnings rather than a hypothetical 52-week period. Importantly, if not for the injury, Plaintiff could have continued working for Cornerstone indefinitely as there was no end date of employment nor was there a guarantee of receiving an offer from a company client. The fact that Method 5 may produce a fairer AWW than Method 3 has no bearing on the Court’s determination. If Method 3 is fair, then Method 5 is not considered. 

Practice Point: Although N.C.G.S. § 97-2(5) allows the Court to use unconventional methods to calculate an AWW that is fair and just to both parties, the Court may resort to such methods only if the methods listed in the statute are deemed as unfair and therefore inappropriate to use. In cases where the employee’s position seems temporary, the Court will look to concrete terms of the position for definitive indicators of what the employee would be earning if not for the injury. This includes gross earnings, length of employment, and whether the employee was guaranteed a job change. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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