Wage Fairness to Oregon Workers

Your Silent Pay Cut: Wellstone’s Efforts to Restore Wage Fairness to Oregon Workers

When a worker sustains an on-the-job injury, workers’ compensation benefits hopefully bridge the financial gap between the injury and getting back to work. Make no mistake though. Workers’ compensation benefits do not come close to replacing a full paycheck. Under Oregon law, workers receive just two-thirds of their Average Weekly Wage (“AWW”). This may seem like a straightforward concept, but if handled improperly, it can be massaged to hurt workers. The most recent occurrence of this a disheartening, but effective illustration of how quietly and surreptitiously workers can have their safety net chipped away.

When calculating a worker’s AWW, Oregon law includes two requirements for insurers. First, insurers must calculate a worker’s AWW by examining what he or she earned in the 52 weeks preceding the work injury. ORS 656.206(11)(b)(A). And second, insurers must calculate the AWW in a way that reflects the worker’s wage “at the time of injury.” ORS 656.210(2)(d).

These two principles align well when a worker earns the same amount per hour over that 52-week period. What happens though if a worker received a raise during that 52-week period? Now the two principles contradict in that the wage “at the time of injury” is not reflected by all 52 weeks preceding the work injury.

Prior to January 1, 2017, the Workers’ Compensation Division (“WCD”) came up with a fairly simple way to answer that question. It told insurers to average a worker’s hours over the last 52 weeks and then multiply that number by the wage at injury. This worked well.

For example, let’s say Nancy averaged 40 hours per week in the 52 weeks before her injury, and she received a pay raise from $15.00 to $20.00 the week before her work injury. Nancy’s AWW would be $800.00 (40 hours per week x $20/hr).

Unfortunately for workers, the WCD, under pressure from insurance companies, decided this process was too complicated. Effective January 1, 2017, the WCD changed the rules so that insurers could just average a worker’s earnings over the prior 52 weeks without consideration of any pay increases. Under this new directive, Nancy’s AWW went from $800 to $600, thereby reducing most of her workers’ compensation benefits for the life of her claim by 25%. The WCD’s rules inexplicably dropped any attempt to have insurers calculate workers’ AWW in a way that reflects workers’ wage “at the time of injury” as required by Oregon law. This change was codified at OAR 436-060-0025.

There are two ways to change this new rule. The first method is to ask that the WCD engage in a rulemaking process to change its rules. The Wellstone Law Group is working with other workers’ rights advocates to do just that. Our collective efforts appear promising. The WCD recently announced they will be formally reopening rulemaking proceedings in January to re-examine the changes it made to AWW calculation rules. While that is far from a guarantee that better rules will emerge, it is certainly a promising step.

The second avenue for changing this rule is to have the Workers’ Compensation Board, or an Oregon appeals court, rule that the WCD exceeded its statutory authority by writing a rule that conflicts with Oregon law. The Wellstone Law Group has already filed an appeal on this very issue. We are arguing to the Workers’ Compensation Board that the WCD violated Oregon law by devising an AWW calculation that does not reflect workers’ wage “at the time of injury.” Therefore, the rule cannot stand. We expect a decision from the Board by mid-April.

The recent evolution of the AWW rules is a painful illustration of just how tenuous workers’ compensation benefits can be. While many workers rightfully complain about the workers’ compensation system in Oregon, the system can get worse. Much worse. The Wellstone Law Group is proud to be on the front lines fighting on behalf of workers to make sure rules are applied correctly, and when those rules are wrong, we will fight to change those rules by all means available.