Workers' Compensation Claim Benefits (7:XI)

A. Benefits

In a sense, BC has two Workers’ Compensation Systems that work in tandem. One system pertains to injuries which occurred before June 30, 2002 and the other to injuries which occurred on or after June 30, 2002. The following section will discuss injuries that occurred on or after June 30, 2002. If your client was injured prior to June 30, 2002, be aware that different rules apply. Refer to the Rehabilitation Services and Claims Manual for more information. Volume I of the Manual applies to most injuries that occurred prior to June 30, 2002, while Volume II applies to injuries that occurred on or after June 30, 2002.

B. Average Earnings

A key element of all benefit calculation is the worker’s “average earnings”, i.e. the amount of income the worker received over an appropriate period of time before the injury. This is calculated as 90 percent of the worker’s net (take home) pay. The Board must use the exact previous one-year earnings of the worker, with narrowly defined exceptions. Actual employment income is averaged over the whole preceding year. This can make it difficult for some workers to receive a fair benefit rate if they had irregular earnings prior to their injury.

If the worker received employment insurance (EI) benefits for part of the preceding year, these may be relevant to the calculation of benefits. Under s. 33(3.2) of the Amendment Act 2002, EI benefits are included in the calculation of the worker’s earnings for the year if the worker was, in the Board’s opinion, employed in “an occupation or industry that results in recurring seasonal or recurring temporary interruptions of work”.

WCB benefits are adjusted annually according to inflation, at a rate 1 percent less than the actual inflation rate. There is also a 4 percent cap on inflation adjustments, regardless of whether the actual inflation rate is higher. This applies to all workers, including those injured before June 30, 2002.

It is also important to note that under s. 35.1(8) of the WCA, a recurrence of an injury is treated as a new injury for any new period of temporary disability. Thus, if a worker was injured before June 30, 2002, and then had a recurrence at some point after this date, the wage loss benefits would be paid at the newer rate for the new period of disability.

However, a “recurrence” must be distinguished from a “deterioration”. In Cowburn v Worker’s Compensation Board of British Columbia, 2006 BCSC 722, the court found that it was patently unreasonable to treat a deterioration in a worker’s disability as a recurrence of an injury. Accordingly, when a worker’s permanent disability that began before June 30, 2002 becomes worse, the increased benefits are based on the older provisions that were in force when the disability first arose.

C. Short Term and Long Term Wage Rates

During the “initial payment period”, the first 10 weeks of compensation, the wage loss rate is determined by looking at what the employee was actually earning at the time of the injury.The Board does not consider the worker’s actual income tax, EI or CPP deductions in determining benefits in the first 10 weeks of the claim. Instead, benefits for all workers are based on 1.5 times the basic personal deduction allowed under the Income Tax Act, RSC 1985, c 1 (5th Supp.) for a single taxpayer, plus the standard EI and CPP contributions. For single workers, this results in benefits during that period of only 90 percent of the worker’s take home pay. Workers who have several dependants and hence much lower actual tax deductions, who would otherwise be entitled to a higher level of benefits, are instead assessed the same way as single workers.

The Act allows the Board to determine average earnings differently if a worker’s pattern of employment at the time of injury was “casual in nature”. Where this is found to be the case, the worker’s earnings over the immediately preceding 12 months of employment are considered a more accurate reflection of the lost wages. Consequently, the average earnings calculated at the outset of the claim will be the same as those calculated as long-term earnings later in the process. Practice Directive #C9-9 describes a two-step investigation procedure to determine whether a worker's pattern of employment is casual in nature. This can be found on the WorkSafeBC website under the “Regulation and Policy” heading, “Practices” subheading, “Rehabilitation and Compensation Services” link. If the job at the time of injury is scheduled to last for three months or longer, the worker will not be considered a casual worker. If the job is scheduled to last for less than three months, the employee may be considered a casual worker if he or she has a history of short term jobs (less than three months in length) with significant absences from employment between them (greater than the time spent employed). The result is that a “casual worker”, who may have been earning a good wage at the time of the accident, is likely to be eligible for less compensation during the initial payment period than his or her counterpart in a “permanent” job.

The Board reviews the wage rate after 10 weeks of benefits, and recalculates a long-term wage rate. The process of calculating long-term wage rates is far more rigid than it was under the previous system. Section 33.1 of the Act sets the immediate preceding one year earnings as the default time span with which to calculate the long-term wage rate, with few exceptions. The wage rate is the basis for all temporary, permanent and rehabilitation benefits that are paid under the claim, and as a result the Board has far less authority to establish a fair rate that truly reflects the worker’s lost earnings. For example, a worker who earned $3000 per month take-home pay at the date of the injury may have been laid off for six months of the previous year due to local economic conditions. If the worker is in what the WCB considers a “highly seasonal” occupation, any EI benefits the worker received while laid off would add to the earnings; otherwise, only the wages the worker received during the six months of actual employment would count. The Board is required to divide this income over 12 months, so the worker’s average earnings would be reduced to $1500 per month and the benefits would be based on 90 percent of that amount, or $1350 if the worker is totally disabled. The Act does allow the Board to determine average earnings differently in “exceptional”circumstances if the one-year average would be “inequitable” (s. 33.4). This provision does not apply in the case of “casual” workers (in which case the 12 month average is rigidly applied) or “permanent”workers who have been employed for less than 12 months (in which case s. 33.3 is used). See Practice Directive #C9-12; an exceptional case has been interpreted to mean one that is “truly extraordinary”, “unusual”, or “irregular”, such that “the worker’s circumstances in the year prior to the injury fail to provide any meaningful measure of their employment history”. Examples might include a non-compensable illness or injury, or maternity/paternity obligations. To arrive at the long-term average earnings figure that better reflects the worker’s loss of earnings, officers may: i) exclude a significant atypical disruption (i.e. one lasting more than six weeks) from the calculation of the worker’s long-term average earnings; and/or ii) base the worker’s long-term average earnings on a longer period of time (e.g. 24 months) or on a shorter period of time. In the case of a worker who has been working, on a “permanent” basis, less than 12 months for the pre-accident employer, section 33.3 of the WCA allows earnings to be calculated based on what a person of similar status employed in the same type and classification of employment would earn in 12 months. Section 33.3 is not applicable where the employment is determined to be temporary. Temporary Wage Loss Benefits (TWL) D.The WCA does not define “disability” although it uses this term throughout the Act. Section 29(1) of the Act states that if a worker has a temporary total disability (TTD), the Board must pay full TWL benefits (calculated as above), also referred to as “s. 29 benefits”. Section 30 states that if a worker has a temporary partial disability (TPD), the Board must pay the difference between the worker’s average net earnings before the injury and either their average net earnings after the injury OR the average net earnings in some deemed “suitable” occupation. These are referred to as “s. 30 benefits”. If a worker has an injury but can perform the full duties of the pre-injury job, the claim is accepted for health care benefits only (see below). If the injury is such that the worker cannot perform full duties, the Board makes an entitlement decision on an accepted claim regarding additional benefits, especially wage loss (#34.10). For most claims, the Board finds that there is some type of temporary disability: