In calculating a claimant's average weekly wage, §309(d) applies when the claimant is a long-term employee. The workers' compensation judge properly subtracted depreciation from commission earnings in calculating the claimant's average weekly wage.

In this case, a workers' compensation judge issued a decision concerning the calculation of the claimant's average weekly wage (AWW). In calculating the AWW, the judge included substantially lower earnings from periods prior to the time the claimant received a promotion to a much higher paying position and subtracted expenses the claimant listed on a federal income tax return, such as depreciation and home office business use deductions, rather than only those expenses actually paid. The deduction taken by the judge in calculating the claimant's average weekly wage represented the total amount claimed as business expenses on the claimant's income tax return. The judge also rejected the claimant's contention that the business expenses he declared for deductions should actually be added back onto his income for purposes of calculating the pre-injury AWW. The Appeal Board affirmed the calculation of the AWW, and the claimant appealed to the Commonwealth Court. On appeal, the claimant argued that his AWW should have been calculated based on §309 (d.1), since his fourth quarter was most reflective of his new economic reality in light of his promotion. The claimant also argued that the judge improperly subtracted tax return deductions, which artificially lowered his earnings. The Commonwealth Court rejected these arguments and affirmed the decision of the judge. According to the court, §309 (d.1) did not apply because the claimant was a long-term employee for whom a look-back period was appropriate. The court also held that there was no evidence that the claimant's earnings in the fourth quarter were indicative of what he would earn in commissions in the future. Finally, the court held that the judge properly subtracted depreciation from commission earnings in calculating the claimant's AWW and rejected the claimant's argument that depreciation deductions should be added to the total AWW calculation.

Case Law Alert - 4th Qtr 2011