39-71-123, MCA

MONTANA SUPREME COURT CASES
Sturchio v. Wausau, 2007 MT 311 The only interpretation of § 39-71-123, MCA, which furthers the legislative policy of § 39-71-105(1), MCA, (that wage-loss benefits “bear a reasonable relationship to actual wages lost”) is to interpret § 39-71-123(3), MCA, as applying to each concurrent employment and then using the resulting figures to calculate the employee’s aggregate average actual wage.
Sturchio v. Wausau, 2007 MT 311 Section 39-71-123 focuses on determining an injured employee’s proper wages. The statute provides alternate calculation methods for situations in which the four-pay-period method inadequately approximates an employee’s average actual earnings, and provides that employees working for multiple employers also receive a wage-loss benefit based on their average actual wages. The statute instructs that the methods applicable to single employment also apply to concurrent employment. While only one of the methods described in § 39-71-123(3), MCA, can apply to individual employments, a reasonable reading supports applying the calculation methods of § 39-71-123(3), MCA, to each individual employment comprising concurrent employments in the same manner they apply to single, individual employments.
[1997] Flink v. American Alternative Ins. Co., 2000 MT 224 WCC erred in concluding that overtime hours claimant would have worked if not injured were speculative where employer did not guarantee overtime or hire her to work a scheduled number of overtime hours. The WCC should have determined the amount of overtime hours claimant would have worked based on circumstantial evidence. Those additional hours should have been included in her wage rate for purposes of determining benefits.
[1991] King v. State Fund, 282 Mont. 335, 938 P.2d 607 (1997) Supreme Court affirmed WCC conclusion that where claimant worked four pay periods prior to injury, the insurer was not required to base wages on fewer than four pay periods in order to increase her wage rate. Under section 39-71-123(3), MCA (1991), the insurer is directed to use the average actual earnings for the four pay periods preceding the injury, with two exceptions, neither of which supports claimant's request to use fewer than four pay periods.
 
WORKERS' COMPENSATION COURT CASES

Peters v. American Zurich Ins. Co. [02/11/14] 2014 MTWCC 4 Citing Sturchio v. Wausau Underwriters Ins. Co., 2007 MT 311, ¶ 15, the Court rejected Petitioner’s argument that the average weekly wage of a single employment may be divided into “components” and calculated under both § 39-71-123(3)(a) and -(3)(b), MCA.

Nelson v. Montana Schools Group Ins. Auth. [01/09/14] 2014 MTWCC 1 Although Petitioner held two job positions with the same employer, governed by two separate employment contracts, § 39-71-123(1), MCA, defines wages as “all remuneration paid for services performed by an employee for an employer.”  Section 39-71-123(4)(c), MCA, provides that compensation for concurrent employments is based on the aggregate of average actual wages.  Therefore, whether Petitioner’s two positions are considered one employment or two concurrent employments, the average weekly wage calculation remains the same.

Peters v. American Zurich Ins. Co. [07/31/13] 2013 MTWCC 16 Since Petitioner did not receive his annual bonus within the last four pay periods preceding his industrial injury, using § 39-71-123(3)(a), MCA, to calculate his average weekly wage would disregard the bonus and therefore his average weekly wage calculation would not bear a reasonable relationship to his actual wages lost.  Therefore, good cause exists to calculate Petitioner’s average weekly wage under § 39-71-123(3)(b), MCA.

Marjamaa v. Liberty Northwest Ins. Co. [07/03/12] 2012 MTWCC 23 While periods of idleness are correctly included in average weekly wage calculations under § 39-71-123(3), MCA, the resulting average weekly wage must nonetheless comport with the policy of § 39-71-105(1), MCA, and bear a reasonable relationship to the actual wages lost.
Marjamaa v. Liberty Northwest Ins. Co. [07/03/12] 2012 MTWCC 23 For calculating the average weekly wage under § 39-71-123(3)(b), MCA, the statute allows the use of any time period not to exceed one year prior to the date of injury.

Gundermann v. Montana State Fund [06/04/12] 2012 MTWCC 18 The language of § 39-71-123, MCA, recognizes the validity of using different calculation methods for different employment situations to arrive at a wage loss benefit that bears a reasonable relationship to actual wages lost.  Where a seasonal employee worked for the same employer for 16 years, it is appropriate to use an average weekly wage calculation under § 39-71-123(3)(b), MCA, by taking the total earnings for the year prior to the injury divided by the number of weeks the wages were earned, including periods of idleness or seasonal fluctuations.  Because Petitioner was not idle during those weeks he worked for a second employer, those weeks should not be used in the calculation. 

Holmes v. Safeway Inc. [03/06/12] 2012 MTWCC 8 Where a Petitioner was injured his second week of work and worked 28 hours his first week; he was scheduled to work 28 hours his second week; the position was typically a 24- to 30-hour-per-week position; and Petitioner put down on his application that he could work 30 hours a week, the Petitioner’s average weekly wage was correctly computed by the insurer under § 39-71-123(3)(a), MCA, based on the Petitioner being hired to work a 28 hour work week, not a full-time position as Petitioner claimed.
Leigh v. Montana State Fund [12/21/10] 2010 MTWCC 37 Although in Brodie v. Liberty Northwest Ins. Co., 2001 MTWCC 30, this Court interpreted § 39-71-123(3)(b), MCA, to preclude consideration of wages a claimant earned prior to a termination, the statute’s language simply requires that the calculation accurately reflects the claimant’s employment history with the employer.  An ongoing, multi-year relationship in which the claimant is periodically terminated and rehired is certainly part of the “employment history,” and Brodie fails to take into account the Montana Supreme Court’s decision in Gregory v. Michael Bailey & Sons Logging, 255 Mont. 190, 194, 841 P.2d 525, 527-28 (1992), in which the court concluded that the pre-termination history must be taken into account.

Leigh v. Montana State Fund [12/21/10] 2010 MTWCC 37 Where Petitioner had to be “rehired” after each lay off period and where he had no guarantee or rehire, his case is indistinguishable from the claimant in Brodie v. Liberty Northwest Ins. Co., 2001 MTWCC 30, in which this Court’s determination relied on the pivotal fact that the claimant was not guaranteed re-employment after her termination.  However, this lack of guarantee was also present in Gregory v. Michael Bailey & Sons Logging, 255 Mont. 190, 194, 841 P.2d 525, 527-28 (1992), in which the Montana Supreme Court held that a seasonal employee’s average weekly wage must be calculated under § 39-71-123(3)(b), MCA.  The Court found no compelling distinction between Petitioner’s case and Gregory which would allow it to deviate from the method endorsed in Gregory.
Leigh v. Montana State Fund [12/21/10] 2010 MTWCC 37 Where sporadic seasonal work is at issue, it is reasonable to calculate on a larger scale than four pay periods.  Fairness demands that sporadic, seasonal employment be determined in a way which accurately reflects the claimant’s employment history with the employer as dictated by § 39-71-123(3)(b), MCA.  Relying on § 39-71-123(3)(a), MCA, for determining average weekly wage in a seasonal employment situation is unreasonable and unfair.  Gregory v. Michael Bailey & Sons Logging, 255 Mont. 190, 194, 841 P.2d 525, 527-28 (1992).  Notwithstanding this Court’s bench ruling to the contrary in Brodie v. Liberty Northwest Ins. Co., 2001 MTWCC 30, an ongoing, multi-year relationship in which a worker is periodically terminated and rehired is part of the “employment history with the employer.”

Wombold v. Montana State Fund [12/29/09] 2009 MTWCC 40 Under § 39-71-123(1)(a), MCA, an injured worker’s average weekly wage is calculated by using his regular-time wage instead of his overtime rate of pay.
Briese v. Ace American Ins. Co. [02/20/09] 2009 MTWCC 5 Where Petitioner artificially created two classes in his equal protection challenge, Petitioner’s challenge must fail. Two classes do not exist where every claimant is treated equally. While it is true that § 39-71-123, MCA, identifies certain fringe benefits that will be included in a wage calculation and others that will not, the mere fact that certain fringe benefits are or are not included does not create distinct classes of workers.
Briese v. Ace American Ins. Co. [02/20/09] 2009 MTWCC 5 Where Petitioner received employer contributions to his 401(k) plan for the four pay periods preceding his injury and Petitioner withdrew funds from the 401(k) post-injury, the Court determined that § 39-71-123 (2)(b)(I), MCA, unambiguously excludes funds paid to a retirement or pension by an employer for an employee from the definition of “wages.”
Briese v. Ace American Ins. Co. [02/20/09] 2009 MTWCC 5 Where Petitioner accrued vacation pay prior to his injury that was paid post-injury, the definition of “wages” located in § 39-71-123, MCA, excludes vacation benefits not paid prior to the injury.
Kramer v. Montana Contractor Compensation Fund [10/27/08] 2008 MTWCC 48 Section 39-71-123(3)(b), MCA, provides that a method for calculating an employee’s wages other than using the four pay periods immediately preceding the injury may be used “for good cause shown.” A claims adjuster cannot simply “decide” that a particular type of job is seasonal without taking the facts of that particular claimant’s employment into consideration.
Kramer v. Montana Contractor Compensation Fund [10/27/08] 2008 MTWCC 48 While Petitioner argued the standard calculation method in § 39-71-123(3)(a), MCA, was appropriate, Respondent argued that the alternate calculation method of § 39-71-123(3)(b), MCA, was appropriate because Petitioner was a construction worker and construction work is seasonal. However, the evidence at trial demonstrated that Petitioner’s particular job was not seasonal, and he had full-time, year-round employment. Therefore, the correct calculation method for Petitioner’s average weekly wage is the statutorily-preferred method found in § 39-71-123(3)(a), MCA.
Cardwell v. Uninsured Employers' Fund [05/16/08] 2008 MTWCC 24 Where the employer’s payments to Petitioner varied widely in both time and amount, the payments were not made every two weeks or on any other set time frame, and Petitioner was paid a percentage of the amount the employer received for a given job causing the pay to fluctuate accordingly, the Court concludes that the UEF has shown good cause for utilizing § 39-71-123(3)(b), MCA, in calculating Petitioner’s average weekly wage.
Montana Municipal Insurance Authority v. Roche [11/14/07] 2007 MTWCC 47 Whether or not a business is profitable has no bearing on whether the proprietor received a wage from the business. What determines “wages” is not whether something was treated as income for federal tax purposes. The determining fact is whether the recipient experienced real economic gain. In the present case, the claimant paid for his personal automobile insurance, a cell phone he uses for both business and personal use, and made payments on personal loans using the business’ checking account. This constitutes a wage as defined in § 39-71-123(1)(d), MCA.
Hand v. UEF [07/26/07] 2007 MTWCC 33 Where Petitioner was given twenty-five head of breeding cattle in lieu future wage increases, and provided pasture year round, hay in the winter, medical supplies, veterinary services and breeding bulls for the cattle, the Court concludes that the value of the calves born from the twenty-five head of cattle are not wages for the purpose of determining Petitioner’s total disability rate. Although Petitioner benefitted economically from the sale of the calves, this was the result of Petitioner’s own efforts and wisdom in managing the cattle, just as if he had prudently chosen to invest a cash bonus rather than spending it in the year it was received. However, the value of the year-round pasture, winter hay, medical supplies, veterinary services, and breeding bulls provided by Petitioner’s employer are considered wages because they constitute a substitute for money.
Heckel v. UEF and LaFever [03/07/07] 2007 MTWCC 11 Where Petitioner received a $200 per month rent reduction in exchange for collecting the rent of other tenants, keeping common areas clean, and other work he performed for his landlord, Petitioner was performing services for a “wage” pursuant to § 39-71-123(1)(e), MCA, which states that wages includes rent if it constitutes a part of the employee’s remuneration and is based on actual value. Therefore, Petitioner was an employee of his landlord.
Sturchio v. Liberty [01/30/07] 2007 MTWCC 4 Section 39-71-123, MCA, sets forth the calculation methods by which one may achieve the reasonable relationship to actual wages lost as mandated by § 39-71-105(1), MCA. Although the majority of employments may allow the four-pay-periods calculation method to determine a wage-loss benefit which bears a reasonable relationship to actual wages lost, the legislature recognized that not all employment situations will fit within this formula. Occasionally, the wages of the previous four pay periods do not bear a reasonable relationship to actual wages lost.
Sturchio v. Liberty [01/30/07] 2007 MTWCC 4 Where a claimant has multiple concurrent employments, each employment is to be considered individually and the average weekly wage of each employment is to be calculated by whatever method found in § 39-71-123, MCA, best suits the facts of that particular employment.
Negethon v. Montana State Fund [12/14/06] 2006 MTWCC 40 Petitioner's constitutional challenge of § 39-71-123, MCA, on the grounds that the statute violates his right to substantive due process when he lost his full-time unemployment benefits in exchange for reduced workers' compensation benefits, failed because Petitioner did not convince the Court beyond a reasonable doubt that the statute was unconstitutional.
Negethon v. Montana State Fund [12/14/06] 2006 MTWCC 40 Petitioner's unemployment benefits cannot be considered wages under § 39-71-123, MCA, and therefore cannot be used in calculating his average weekly wage for purposes of workers' compensation benefits.

[2001] State of Montana v. Terry Weyer [05/31/06] Lewis and Clark County District Court [WCC Headnotes] Section 39-71-123(1), MCA, defines “wages” in pertinent part as all remuneration paid for services performed by an employee for an employer, or income provided for in subsection (1)(d). Subsection (1)(d) applies to a sole proprietor or partner. The owner and sole shareholder of an S corporation is not a sole proprietor and thus subsection (1)(d), which includes income in the form of a draw, does not apply to the defendant, who, as the owner and sole shareholder of an S corporation, received TTD benefits and also received draws from the corporation without performing any services for the corporation. Thus, these draws are not considered “wages.”

[2001] State of Montana v. Terry Weyer [05/31/06] Lewis and Clark County District Court [WCC Headnotes] The definition of “wages” found in § 39-71-123(1), MCA, is disjunctive.

[2001] Sandru v. Rochdale Ins. Co. [6/07/04] 2004 MTWCC 49 Tips are considered wages only if they are documented and reported to the employer for tax purposes. 39-71-123(1)(c), MCA
[1999] Woodworth v. Liberty NW Ins. Co. [4/16/04] 2004 MTWCC 35 Pursuant to section 39-71-703(5)(c), MCA (1999), wage loss for purposes of permanent partial disability benefits must be determined at the time the claimant reaches maximum medical improvement. If he returns to work at that time, and the insurer offers no evidence that his actual wage upon return to work is less than he is capable of earning, wage loss should be measured by the difference between his average weekly wage at the time of his injury and his average wage for the four pay periods immediately following his reaching maximum medical improvement and return to work. See § 39-71-123(3), MCA (1999). In the event that the claimant's disability thereafter increases and he suffers a further wage loss, then his benefits must be recomputed based on the additional wage loss. § 39-71-739, MCA (1979-2003).

[1995] Siaperas v. State Fund [1/15/04] 2004 MTWCC 4 Where the claimant, who was injured in September 1996, received substantial quarterly bonuses on a regular basis, and those bonuses are not reflected in her last four pay periods, her year-to-date earnings should be used in computing her average weekly wage. § 39-71-123(3)(b), MCA (1995).

[2001] McLaughlin v. Liberty NW Ins. Corp. [12/9/03] 2003 MTWCC 6 Where claimant was receiving $14 an hour and $5 of that amount was characterized as travel reimbursement, the $5 cannot be excluded in computing his wages where he would have received the same $14 an hour even if he had not agreed to characterizing part of the compensation as travel pay. To be excludable travel pay, the amount must not replace the employee's customary wage. ARM 24.29.720(1)(d).
[1999] Greene v. UEF [4/9/03] 2003 MTWCC 27 For purposes of determining the claimant's compensation rate, any back pay the claimant is entitled to on account of the employer's failure to comply with minimum wage and overtime pay requirements must be included. § 39-71-123(1)(b), MCA (1999).
[1995] Chapel v. MACO [12/14/01] 2001 MTWCC 63 Volunteer ambulance workers are not entitled to temporary total disability benefits based on concurrent self-employment where they have not elected workers' compensation coverage with respect to the self-employment. § 39-71-123(4)(c), MCA (1995).
[1997] Brodie v. Liberty NW Ins. Corp. [6/01/01] 2001 MTWCC 30 Where claimant had been employed on a seasonable basis for several years, but her employment had been terminated at the end of each season and she was forced to reapply for employment with no guarantee of re-employment, her wages must be computed using her latest employment only. Wages for prior employments may not be considered. § 39-71-123(3).
[1997] Lindskog vs. State Fund [9/13/00] 2000 MTWCC 61 Evidence of significant fluctuation in claimant's pre-injury wages provided good cause under section 39-71-123(3)(b), MCA (1997) to use more than the four pay periods preceding injury in calculating average weekly wages. Court looked to the entire prior year's wages to avoid impact of seasonal wage fluctuation.
[1993] Huffman v. Twin City Fire Ins. Co. [11/16/98] 1998 MTWCC 83 A 48-year old driver in the movie and television industry hurt his shoulder while working on the production of Lonesome Dove in Montana. With regard to wage loss benefits, the appropriate period to assess wages is the full year post-injury, given evidence that claimant's first post-injury job was not representative of his post-injury wages. See, section 39-71-123(3), MCA (1993). WCC was satisfied that since claimant returned to work, he has experienced periods of unemployment he would not otherwise have experienced. He was also forced to accept lower-paying, less physically demanding jobs when higher-paying, more physically demanding jobs, would have been available to him but for his injury. On a long term basis – one year and more – claimant has suffered a wage loss exceeding $2.00 an hour because of his injury.
[1995] Dunnington v. State Fund [11/5/98] 1998 MTWCC 80 Claimant did not prove he had "concurrent employment" within section 39-71-123(4), MCA (1995) requiring the aggregation of wages. Although the second company had close ties to the first, claimant's employment with the second company had terminated prior to his hire by the company where he was injured. Aggregation of wages is authorized under the statute only where a claimant is actually employed by another entity at the time of the injury.
[1995] Dunnington v. State Fund [11/5/98] 1998 MTWCC 80 Claimant was injured while working for company with close ties to second company for which claimant had previously worked. Claimant argued the insurer should aggregate his earnings from both companies when calculating wage rate for purposes of permanent partial disability benefits. The Court refused. Under section 39-71-123(3), MCA (1995), the insurer is required to use the average actual earnings for the four pay periods immediately preceding injury unless the use of the last four pay periods does not accurately reflect the claimant's employment history with the employer and good cause requires use of additional weeks up to one year. Contrary to claimant's argument, the two companies were not the same employer where they were separate corporations and separate legal entities, kept separate accounts, paid their employees out of separate accounts, had their own employees – most of whom were not shared – and provided different services. The fact of common ownership is not sufficient to disregard the corporate veil where there was no evidence that one company was the alter ego, instrumentality or agent of the other or that one corporate entity was a subterfuge. The fact that, after injury, claimant was employed by one entity in a job created to accommodate him, and infrequently did work for the other entity, does not prove commingling where pre-injury he had been laid off by one company prior to beginning exclusive work for the other company.
[1987] Pittsley v. State Fund [7/31/98] 1998 MTWCC 61A ARM 24.29.720, an administrative rule adopted by DOL to specify employee expenses which are not wages, was by its own terms effective only commencing January 1, 1993. Where sawyer's injury, and the relevant four pay periods preceding injury, occurred before the rule's effective date, the rule's specification that rental value of timber falling equipment not exceeding $22.50 per day could be excluded from wage rate was not applicable to computation of his wage rate.

[1995] Ardesson v. Legion Ins. [1/15/98] 1998 MTWCC 2 Under section 39-71-123, MCA (1995), wages include the "actual value" of board constituting part of an employee's remuneration. "Actual value" is the equivalent of "market value." Market value is the amount a willing buyer would pay and a wiling seller would accept where neither is acting under duress. Based on common experience of the cost of meals generally and in institutional settings, the Court values the meals received by a cook for a nursing home at $4.50 for purposes of setting the TTD rate.

Lugo v. Mont. Hosp. Assoc., Workers' Compensation Trust [11/01/95] 1995 MTWCC 86] Unemployment benefits received by part-time worker are not included in his average weekly wage where statute defines wages as gross remuneration "for services rendered by an employee."
[1991] King v. State Fund [7/16/96] WCC No. 9602-7490 Where claimant worked four pay periods prior to injury, the insurer was not required to base wages on fewer than four pay periods in order to increase her wage rate. Under section 39-71-123(3), MCA (1991), the insurer is directed to use the average actual earnings for the four pay periods preceding the injury, with two exceptions, neither of which supports claimant's request to use fewer than four pay periods. [Note WCC affirmed in King v. State Fund, 282 Mont. 335, 938 P.2d 607 (1997).]
Robertson v. State Compensation Ins. Fund [01/23/95] 1995 MTWCC 4 When an employee’s term of employment for the same employer is less than four pay periods, the employee’s wages for purposes of workers’ compensation benefits “are the hourly rate times the number of hours in a week for which the employee was hired to work.” Although contract for temporary job stated that project could last 5 to 6 days, and shifts were 12 hours in length, claimant was told he would work for the duration of the project. Where no employee working on the project in fact worked more than 47 hours, claimant’s request for weekly wage based on 72 hours per week was rejected, with Court determining his benefits should be calculated on the basis of a 47-hour work week. Affirmed in Robertson v. Aero-Power Vac, Inc. and Montana State Fund, 272 Mont. 85 (No. 95-089).