Mail Boxes, etc., U.S.A. v. Industrial Comm. of Arizona
In Mail Boxes, etc., U.S.A. v. Industrial Comm. of Arizona, 181 Ariz. 119, 888 P.2d 777 (Ariz. 1995), the Arizona Supreme Court was required to determine a self-employed claimant's average monthly wage in a situation where claimant never was paid a wage and where the sole proprietorship lost money during the year the claimant was injured. 888 P.2d 778-79.
Although never paid a wage, it was established that the claimant worked an average of 50 hours per week, approximately, and the fair value of his services as a general manager was $8 per hour. Id. at 778.
The administrative law judge ("ALJ") who initially heard the case determined that the claimant's average monthly wage was approximately $1,733.32; that figure was calculated by multiplying $400 ($8 by 50) by the number of weeks in a month. Id. at 779 n.1.
The Arizona Supreme Court held that in such a situation the appropriate way to measure the lost earning capacity of a self-employed individual was the market value of the claimant's services to the sole proprietorship. Id. at 780-81.
The Court affirmed the ALJ's decision that the market value of the claimant's services was $1,733.32 per month because that was the amount the sole proprietorship would have had to pay a general manager if the claimant had been merely a passive investor in the company. Id. at 781.