- Merits and justice
- Loss of earnings {LOE} (deemed earnings)
- Loss of earnings {LOE} (review) (final)
- Earnings basis (commission income)
The issue to be determined in this appeal was the correct determination of the worker's Loss of Earnings (LOE) benefits as of August 3, 2018, the effective date for the final LOE benefit review.
The appeal was denied.In Decision No. 447/20, the Vice-Chair determined that the SO of Real Estate Agent was appropriate for the worker. The decision also confirmed that the worker's loss of earnings benefits as of the Final LOE Review (effective August 3, 2018) was appropriately based on that SO. Using the SO of Real Estate Agent at the Final LOE Review, the Board used the median annual income figure for Real Estate Agents in the worker's geographical area. That amount was $51,103.00. This was considered to be the worker's deemed earning capacity. His LOE benefits from August 3, 2018 to age 65 were set based on this earning capacity. It was noted that this SO would fall under the category of an independent contractor and not employee.The worker appealed this decision. He submitted that the annual income figure for Real Estate Agents was not representative of his earning capacity as a real estate agent, and that his earning capacity was significantly lower than this. The Vice-Chair noted that 43(2)(b) of the WSIA stipulates that the amount of a worker's LOE benefit is based on the difference between the worker's pre-injury earnings and "the net average earnings he or she earns or is able to earn in suitable and available employment." The Vice-Chair then determined that there was no evidence that the worker's back restrictions would have had a meaningful impact on his earning capacity. Notably, in one of the years reported, 2015, the worker significantly exceeded the median earnings, earning an annual income of $86,345. This indicated to the Vice-Chair that the worker had the capability of earning the median wage, and more. The Vice-Chair recognized that there is variability in the income of this type of commission work; however, there was no linkage between the worker's low back injury and his claimed inability to earn the median wage in certain other years (2013, 2014, and 2016), nor was there evidence regarding the worker's inability to earn the median wage in the years after the Final LOE Review.Furthermore, the Vice-Chair noted that using "actual earnings" in the SO at the Final LOE Review was never intended to apply to this type of highly variable, self-employed commission income. The Vice-Chair noted that the policy section was intended for circumstances in which the worker was employed in a SO that involved fixed, regular, and generally unvarying income. The SO in this case was therefore an exceptional type: it was a commission-only income in an industry known for its high variability, and one in which the commission is taken on a very large value item – a house or property, with relatively few actual transactions per annum (as ascertained). The Vice-Chair also recognized that the variance in real estate agent income can be impacted by a myriad of factors including, but not limited to, economic factors which shift over time, the hours and effort of the real estate agent, and luck and timing. None of these variables are present in jobs with fixed employment income.The Vice-Chair then made reference to the application of the "Merits and Justice" policy (OPM Document No. 11-01-03). With respect to the Final LOE Benefit Review Policy, the Vice-Chair concluded that the circumstances of this case constituted such an exception: The Vice-Chair noted that applying, or attempting to apply, the portion of the policy which requires the use of actual earnings in the SO at the Final LOE Review, would produce results the policy did not intend. The Vice-Chair stated that this principle was not intended to apply to the circumstances of a case like this one, or in this particular type of SO.The Vice-Chair noted that any policy which covered earnings from commission income or self-employment income at the Final LOE Review was not provided. The Board used the median annual income for Real Estate Agents in the worker's region. This was fair and reasonable in the circumstances. As the ARO correctly pointed out, the worker already had experience as a realtor, and had many years left in the workforce in which he could continue to gain experience and build his business, giving him the opportunity to meet or exceed the median annual income. As noted, the worker had already shown an ability to exceed the median wage in at least one post-accident year.For these reasons, the Vice-Chair concluded that the Board's use of the median annual income for Real Estate Agents in the worker's region, $51,103, as the basis for determining the worker's LOE benefits at the Final LOE Review, was appropriate.