Section 4453 Average Weekly Earnings
In the leading case of Montana, the Supreme Court addressed the questions of "average weekly earnings" and "earning capacity" under section 4453 where a 50-year-old employee, although employed full time at the time of his industrial injury, previously had worked intermittently over a period of five years as a construction laborer and had earned less than $ 1,300 in the 15 months prior to his injury.
The court upheld the Board's finding that Montana's average weekly earnings were maximum for the temporary disability award, notwithstanding his unimpressive evidence of actual earnings and earning history at the time of injury.
Subdivision (c)(4) of section 4453, emphasized the court, "is to equalize for compensation purposes the position of the full-time, regularly employed worker whose earning capacity is merely a multiple of his daily wage and that of the worker whose wage at the time of injury may be aberrant or otherwise a distorted basis for estimating true earning power." (Montana, supra, 57 Cal. 2d at p. 594, italics added.)
The court continued:
"All facts relevant and helpful to making the estimate must be considered.
The applicant's ability to work, his age and health, his willingness and opportunities to work, his skill and education, the general condition of the labor market, and employment opportunities for persons similarly situated are all relevant." (Id. at p. 595.)
Although the Supreme Court in Montana annulled the Board's award of maximum permanent disability indemnity using the same criteria for construing the term "earning capacity," it is not relevant in the case at bar because (1) only temporary disability is an issue and (2) applicant's earning capacity would be the same.
However, we note the court did make an important distinction, often confused by litigants as well as appellate courts, when it opined as follows:
"An estimate of earning capacity is a prediction of what an employee's earnings would have been had he not been injured. Earning capacity, for the purposes of a temporary award, however, may differ from earning capacity for the purposes of a permanent award.
In the former case the prediction of earnings need only be made for the duration of the temporary disability. In the latter the prediction is more complex because the compensation is for loss of earning power over a long span of time.
Thus an applicant's earning capacity could be maximum for a temporary award and minimum for a permanent award or the reverse.
Evidence sufficient to sustain a maximum temporary award might not sustain a maximum permanent award. In making an award for temporary disability, the Board will ordinarily be concerned with whether an applicant would have continued working at a given wage for the duration of the disability.
In making a permanent award, long-term earning history is a reliable guide in predicting earning capacity, although in a variety of fact situations earning history alone may be misleading." (Montana, supra, 57 Cal. 2d at pp. 594-595.) the former is intended "primarily to substitute for the worker's lost wages, in order to maintain a steady stream of income," while the latter "HAS a DUAL FUNCTION: to compensate both for actual incapacity to work and for physical impairment of the worker's body . . . ." ( J. T. Thorp, Inc. v. Workers' Comp. Appeals Bd. (1984) 153 Cal. App. 3d 327, 333 [200 Cal. Rptr. 219]; accord, Nickelsberg v. Workers' Comp. Appeals Bd. (1991) 54 Cal. 3d 288, 294 [285 Cal. Rptr. 86, 814 P.2d 1328].)