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Workers' Compensation Law Update

On May 6, 2015, the South Dakota Supreme Court issued an important opinion that significantly changes how worker's compensation carriers calculate an injured employee's Average Weekly Wage (AWW). In Patricia Wheeler v. Cinna Bakers LLC d/b/a Cinnabon & Hartford Casual Insurance Company, Wheeler worked at the Cinnabon Store in the Empire Mall in Sioux Falls, South Dakota. Wheeler also held two other jobs in addition to the Cinnabon job.

Wheeler sustained a work related injury while working for Cinnabon. As a result of her injuries at Cinnabon, she was unable to work at Cinnabon and her two other concurrently held jobs. Wheeler claimed that all three of her jobs should be aggregated to calculate her AWW. The Employer and Insurer disagreed, and the South Dakota Department of Labor, Division of Labor and Regulation, sided with the Employer, determining that only Wheeler's wage from Cinna Bakers could be utilized to calculate her AWW. Wheeler appealed to the circuit court, which affirmed.

On appeal, the Supreme Court disagreed with the decisions of the Department and the circuit court, ruling that a worker's compensation claimant is entitled to use all wages from any current employment to calculate the AWW. The Court relied upon a statutory ambiguity for its ruling, finding that the phrase "for the employment in which the employee was engaged at the time of his injury" in SDCL 62-1-1(6) was ambiguous and should be construed in favor of the employee. It held that the AWW statutes - SDCL 62-4-24, SDCL 62-4-25, and SDCL 62-4-26 indicate a worker's total earnings should be used to calculate the AWW. Wheeler's total earnings included the wages she received from all of her concurrently held jobs, not just her wages from Cinnabon.

In reaching this decision, the Supreme Court adopted the "growing minority rule" which allows for aggregation of wages from all concurrently held employments, not just similar or related employments. Aggregation of wages is now allowed in South Dakota when an injury at one employment renders the worker incapable of performing his or her other concurrently held employments.

The Court's decision further strengthens employees' claims for loss of income-earning ability. Watch for further guidance on this issue from the South Dakota Department of Labor website in the coming months. In the meantime, Employers and worker's compensation carriers should collect as much information as possible about other jobs held by an employee in light of this decision.

August 11, 2015