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Gilmore v. AK Workers' Comp, Timber Insurance Exc. and Klukwan (10/14/94), 882 P 2d 922
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Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501.
THE SUPREME COURT OF THE STATE OF ALASKA
WARREN K. GILMORE, )
) Supreme Court No. S-4765
Appellant, )
) Trial Court No.
v. ) 1KE-90-891 Civil
)
THE ALASKA WORKERS' COMPENSATION ) O P I N I O N
BOARD, ALASKA TIMBER INSURANCE )
EXCHANGE and KLUKWAN FOREST )
PRODUCTS, INC., )
)
Appellees. ) [No. 4135 - October 14,
1994]
___________________________________)
Appeal from the Superior Court of the
State of Alaska, First Judicial District,
Ketchikan,
Thomas E. Schulz,
Judge.
Appearances: Peter R. Ellis, Ellis Law
Offices, Inc., Ketchikan, for Appellant.
Robert A. Royce, Assistant Attorney General,
Anchorage, Charles E. Cole, Attorney General,
Juneau, for Appellee Alaska Workers' Compensa
tion Board. Paul M. Hoffman, Robertson,
Monagle & Eastaugh, P.C., Juneau, for
Appellees Alaska Timber Insurance Exchange
and Klukwan Forest Products, Inc. Michael A.
Barcott, William D. De Voe, Faulkner,
Banfield, Doogan & Holmes, Anchorage, for
Amici Curiae.
Before: Moore, Chief Justice,
Rabinowitz, Matthews and Compton, Justices.
[Burke, Justice, not participating.]
MATTHEWS, Justice.
COMPTON, Justice, concurring.
As originally presented by the parties, this case
called upon us to construe the 1988 amendment to AS 23.30.220(a).
This statute prescribes the wage base on which an injured
worker's disability benefits are calculated. In the course of
considering each party's contentions on this issue, we became
aware of potential constitutional problems with the wage base
calculation scheme found in AS 23.30.220(a). Specifically, we
recognized that the formula contained in section 220(a) would
result in substantially different compensation rates for workers
who appeared to be in important respects similarly situated.
These differences raised questions under the due process and
equal protection clauses of the Alaska Constitution. Sua sponte,
we ordered the parties to file supplemental memoranda addressing
these questions. We now hold that the AS 23.30.220(a) formula
violates the equal protection clause of the Alaska Constitution.
Under AS 23.30.180 and .185, temporary and permanent
total disability benefits are calculated by taking eighty percent
of an injured employee's "spendable weekly wages." Spendable
weekly wages are, in turn, defined in AS 23.30.220(a) as the
employee's gross weekly earnings minus payroll tax deductions.1
Gross weekly earnings are calculated by totalling the employee's
earnings for the past two calendar years and dividing the sum by
100. Until 1988, the Alaska Workers' Compensation Board (Board)
was required to determine whether the wage base that resulted
from the use of this or earlier similar mechanical formulas would
fairly reflect the future earnings lost by an injured employee.2
If the formula did not produce a fair result viewed from the
perspective of both the employee3 and the employer,4 the Board
was permitted to determine gross weekly earnings by an
alternative method based on the nature of the employee's job and
his work history.
This alternative method was the subject of considerable
litigation.5 In 1988 the legislature eliminated the Board's
discretion to use the alternative method in circumstances where
the mechanical approach would lead to unfair results. Under the
1988 amendment, the Board may not make an alternative wage
calculation unless "the employee was absent from the labor market
for 18 months or more of the two calendar years preceding the
injury . . . ." AS 23.30.220(a)(2). As a result, the gross
weekly earnings for purposes of calculating benefits for any
employee present in the labor market for six or more months in
the previous two calendar years will be determined by the
mechanical formula provided in AS 23.30.220(a)(1). Because this
formula divides the employee's total gross wages over the two
year period by 100 regardless of how many weeks the employee
actually worked during this period, the employee's actual wage
earning capacity during periods of employment is reduced in
proportion to any period in which the employee was unemployed for
any reason.6 The resulting benefits therefore may only be
randomly related to the injured worker's actual loss. This
formula applies regardless of any discrepancy, no matter how
large, between the result of the formula and the actual wages
lost by the employee during the period of his or her disability.
I. FACTS AND PROCEEDINGS
Warren Gilmore suffered serious burn injuries on
September 17, 1989, while employed by Klukwan Forest Products,
Inc. (Klukwan). Klukwan's workers' compensation insurance
carrier, Alaska Timber Insurance Exchange (Alaska Timber), paid
Gilmore temporary total disability benefits of $110 per week
until he was released to return to work on March 1, 1990.
Gilmore started work for Klukwan on June 12, 1989 and was earning
average spendable weekly wages of approximately $850. However,
for the calendar years 1987 and 1988 he worked for a total of
only thirty-nine weeks. He claims that for twenty-two of the
thirty-nine weeks he was in vocational training programs learning
to be a motorcycle mechanic. He contends that he should have
been considered "absent from the labor market"within the meaning
of section .220(a)(2) for these twenty-two weeks. If he is
correct, he would be entitled to an alternative wage computation,
for he would have been "absent from the labor market" for at
least eighteen months during the two years in question.
The Board rejected Gilmore's contention, ruling:
AS 23.30.220(a) mandates that the
employee's compensation rate must be cal
culated based on his 1987 and 1988 earnings
unless he can demonstrate that he was "absent
from the labor market"for at least 18 months
during those two years. The 1988 legislation
containing the present provision of AS
23.30.220(a)(2), Senate bill 322, carried an
"intent" section which required that the
benefits system be quick, efficient, fair,
and predictable. The employee provides a
novel argument to expand the meaning of
"absent from the labor market," but any
definition involving vocational intent,
career experience, true earning potential,
and so on, invariably leads into a gray area
of disputed fact, a fertile ground for
litigation, delay, and waste. The clearest
rule and the rule least subject to dispute is
to interpret "absent from the labor force"to
mean simply "unemployed,"and we consistently
interpret the statute that way. See, e.g.,
Langley v. Alaska Commercial Investments,
AWCB No. 89-0167 (July 5, 1989).
On appeal the superior court affirmed. The court
stated:
It was the intent of the legislature to
establish a fair and predictable test for
establishing eligibility for compensation
rate adjustments pursuant to AS
23.30.220(a)(2). The Board's definition of
"absent from the labor market" as
"unemployed" accomplishes this purpose
. . . , while also furthering the leg
islature's desire to narrow the group of
employees allowed a compensation rate
adjustment.
Gilmore appealed to this court. In the course of
considering the arguments of the parties with respect to the
meaning of the phrase "absent from the labor market," we took
notice of potential equal protection and due process problems
with AS 23.30.220(a). As these constitutional issues are
"critical to a proper and just decision"in this case, we sua
sponte ordered the parties to brief the question of the
constitutionality of AS 23.30.220(a).7 We also requested the
parties, in briefing this question, to consider two examples in
which the loss of future earnings for the injured workers would
be the same:8
Example A: Two workers work side-by-side
for eleven and one half months in 1992,
ending December 15th, as well as for the last
seven months of 1991, beginning June 1st.
During this period each worker performs the
same work and earns the same wage. Worker
#1, however, did not work the first five
months of 1991 or at all in 1990 because he
was injured. Worker #2, on the other hand,
worked all of both 1991 and 1990. On
December 15, 1992, both workers suffered the
same injury in an on-the-job accident. Under
AS 23.30.220(a)(2) the wage base for worker
#1 will be only 7/24 of that of worker #2.
Example B: Same facts as Example A except
that there is a third worker doing the same
work at the same wage who suffers the same
injury on December 15, 1992. Worker #3,
however, did not work during the first seven
months of 1991 or at all in 1990 because he
was injured. Worker #3 would be entitled to
an alternative calculation under AS
23.30.220(a) and may be eligible for
compensation benefits based on his current
wage which would approximate the wage base of
worker #2 and be nearly 3.4 times higher than
that of worker #1 (who worked two months
longer than worker #3 during 1991).
Briefing is now complete,9 and the issue is ripe for decision.
II. DISCUSSION
Article I, section 1 of the Alaska Constitution
provides in part that "all persons are equal and entitled to
equal rights, opportunities, and protection under the law." This
clause may be more protective of individual rights than the
federal equal protection clause. State v. Cosio, 858 P.2d 621,
629 (Alaska 1993). As our examples illustrate, the current
statutory scheme clearly classifies injured employees based on
differences in their prior work history. These classifications
will often result in substantially different disability benefits
for similarly situated employees. The question therefore is
whether this unequal treatment is permissible under the Alaska
Constitution.10
We have adopted a "sliding scale"test for analyzing
equal protection questions under the Alaska Constitution. State
v. Erickson, 574 P.2d 1, 11-12 (Alaska 1978). This test involves
a three-step analysis:
First, it must be determined at the
outset what weight should be afforded the
. . . interest impaired by the challenged
enactment. The nature of this interest is
the most important variable in fixing the
appropriate level of review. . . . Depending
on the primacy of the interest involved, the
state will have a greater or lesser burden in
justifying its legislation.
Second, an examination must be
undertaken of the purposes served by the
challenged statute. Depending on the level
of review determined, the state may be
required to show only that its objectives
were legitimate, at the low end of the
continuum, or, at the high end of the scale,
that the legislation was motivated by a
compelling state interest.
Third, an evaluation of the state's
interest in the particular means employed to
further its goals must be undertaken. . . .
At the low end of the sliding scale, we have
held that a substantial relationship between
means and ends is constitutionally adequate.
At the higher end of the scale, the fit
between means and ends must be much closer.
If the purpose can be accomplished by a less
restrictive alternative, the classification
will be invalidated.
Alaska Pac. Assurance Co. v. Brown, 687 P.2d 264, 269-70 (Alaska
1984).
A. Interest Impaired
The interest impaired by the classifications at issue
is the injured employee's interest in compensation benefits which
reflect his actual losses. In Brown, we implied that the
employee's "right to receive the full measure of workers' compen
sation benefits which he would receive but for the
classification" at issue was not an interest deserving of
elevated scrutiny. Id. at 270-71. We noted that there is no
constitutional mandate that benefits bear a particular
relationship to the worker's salary at the time of injury.11 Id.
at 270. As the employee's right to travel was also implicated by
the classification at issue in Brown, we did not determine the
exact weight to be afforded an injured employee's interest in
particular benefit levels. Id. at 271. An interest in workers'
compensation benefits is, however, similar to an interest in
unemployment compensation benefits or other economic interests.
We have consistently held that such economic interests are only
"entitled to review at the low end of the scale." Sonneman v.
Knight, 790 P.2d 702, 705 (Alaska 1990); see also Cosio, 858 P.2d
at 629; Coghill v. Coghill, 836 P.2d 921, 929 (Alaska 1992);
State v. Anthony, 810 P.2d 155, 158, reh'g granted, 816 P.2d 1377
(Alaska 1991); Herrick's Aero-Auto-Aqua Repair Serv. v. State,
Dep't of Transp., 754 P.2d 1111, 1114 (Alaska 1988). Therefore,
section 220(a) will pass constitutional muster if the
classifications it creates bear a fair and substantial
relationship to the purposes of the Workers' Compensation Act
(Act).
B. Purpose of the Act
In analyzing equal protection challenges to a provision
of the Workers' Compensation Act, we must examine the purpose
behind the provision in light of the purpose of the entire Act.
Taylor v. Southeast-Harrison W. Corp., 694 P.2d 1160, 1162
(Alaska 1985). In adopting the 1988 amendments, the legislature
clearly stated the purpose behind the Act:
It is the intent of the legislature that
AS 23.30 be interpreted so as to ensure the
quick, efficient, fair, and predictable
delivery of indemnity and medical benefits to
injured workers at a reasonable cost to the
employers who are subject to the provisions
of AS 23.30.
Ch. 79, 1, SLA (1988). These are legitimate purposes. The
overall purpose of AS 23.30.220(a) and the other sections of the
Act used to calculate an injured worker's indemnity benefits is
"to formulate a fair approximation of a claimant's probable
future earning capacity during the period in which compensation
benefits are to be paid."12 Johnson, 681 P.2d at 907. This "fair
approximation"is an essential component of the basic compromise
underlying the Workers' Compensation Act -- the worker's
sacrifice of common law claims against the employer in return for
adequate compensation without the delay and expenses inherent in
civil litigation. The 1988 amendments to AS 23.30.220(a) attempt
to further the Act's overall purpose by decreasing the amount of
litigation over the determination of an employee's "spendable
weekly wage." House Judiciary Hearing on SB 322, April 25, 1988,
Tr. 13, 18-19.
C. Relationship of Means to Ends
At the lower end of our sliding scale, the means
adopted by the legislature must be substantially related to the
ends sought to be achieved. Brown, 687 P.2d at 269-70. A
perfect fit between the legislative classification and the
governmental objective is not required. Anthony, 810 P.2d at
159. We nevertheless conclude that no substantial relationship
exists between calculating a worker's weekly wage by dividing the
worker's earnings over the last two calendar years by 100
regardless of whether the number reached reflects the worker's
actual losses and the goals of fairly approximating a worker's
probable future earning capacity and achieving a "quick,
efficient, fair, and predictable delivery of indemnity and
medical benefits."
The benefit levels among injured workers based on
section 220(a) bear no more than a coincidental relationship to
the goal of compensating injured workers based on their actual
losses. In any of the many situations in which a worker's past
wage and time of employment do not accurately reflect the
circumstances existing at the time of the injury, the formula
will misrepresent the losses.13 The means chosen for determining
an injured worker's gross weekly wage therefore do not bear a
substantial relationship to that goal.
Klukwan and the Amici concede that the current version
of AS 23.30.220(a) will lead to unfair or unfavorable results in
some instances. They and the Board argue, however, that the
statute is nevertheless constitutional because it is
substantially related to the legislative interest in reducing
litigation and in furthering quick, predictable results. We
recognize that rigid application of the mechanical formula set
out in AS 23.30.220(a)(1) probably leads to quick and predictable
results. This efficiency is gained, however, at the sacrifice of
fairness in result. The purpose of the Act, as expressed by the
legislature, is to provide a "quick, efficient, fair, and
predictable delivery of indemnity and medical benefits." The
facts of the present case amply demonstrate the potential
unfairness of a rigid application of the mechanical formula.14
Under the section 220(a)(1) formula as applied by the Board,
Gilmore received only the statutory minimum amount of
compensation, despite his earning over seven and one-half times
more per week at the time of injury.
Efficiency in this area does not require unfairness. A
quick, efficient, and predictable scheme for determining a
worker's gross weekly earnings could be formulated without
denying workers like Gilmore benefits commensurate with their
actual losses. Many jurisdictions avoid the need for an
alternative open-ended determination of actual future earning
capacity by focusing narrowly on wages at the time of injury and
converting, by formula or formulas, the worker's rate of pay into
a weekly wage. See, e.g., D.C. Code Ann. 36-311 (1993); Iowa
Code Ann. 85.36 (1984); Kan. Stat. Ann. 44-511(b) (1993); Ky.
Rev. Stat. Ann. 342.140 (1993); Minn. Stat. 176.011(18)
(1993); Mo. Rev. Stat. 287.250 (1993); Neb. Rev. Stat. 48-126
(1990); N.J. Rev. Stat. 34:15-37 (1988); N.M. Stat. Ann. 52-1-
20 (1978); 77 Pa. Cons. Stat. Ann. 582 (1992).15 Such a
formulaic system can be quick, efficient, predictable, and fair.
Review of the worker's compensation statutes of the other forty-
nine states reveals that Alaska is the only state which bases
compensation exclusively on the average wage earned over a more
than one year period without providing an alternate approach if
the formula reaches an unfair result. It is also the only state
which includes significant periods of unemployment in calculating
the worker's average wage without requiring a preliminary finding
that the worker was employed in a seasonal occupation at the time
of injury.16
The gross weekly wage determination method of AS
23.30.220(a) creates large differences in compensation between
similarly situated injured workers, bears no relationship to the
goal of accurately calculating an injured employee's lost wages
for purposes of determining his or her compensation, is unfair to
workers whose past history does not accurately reflect their
future earning capacity, and is unnecessary to achieve quickness,
efficiency, or predictability. Therefore, the formula expressed
in AS 23.30.220(a) is not substantially related to the purposes
of the Act. It cannot survive scrutiny on even the lowest end of
our sliding scale and is therefore an unconstitutional
infringement on the equal protection clause of the Alaska
Constitution. Art. I, 1.17
III. CONCLUSION
We reverse the Board's determination of Gilmore's
weekly compensation rate as it was based on an unconstitutional
statutory requirement. On remand, the Board should recalculate
Gilmore's gross weekly earnings by using the alternative method
specified in section 220(a).18
REVERSED AND REMANDED.
COMPTON, Justice, concurring.
In my view the Alaska Workers' Compensation Board
(Board) erred when it construed "absent from the labor force" to
mean "simply 'unemployed.'" The basis for the Board's
construction is its view of how to implement the legislative goal
sought to be achieved by the amendments contained in Senate Bill
322, which is establishment of a quick, efficient, fair, and
predictable benefits system. This goal is explicit in the
prefatory 'intent' section of the bill. In the Board's view, any
definition of "absent from the labor force" broader than
"unemployed"would frustrate the legislative goal and lead to "a
fertile ground for litigation." Consequently, "[t]he clearest
rule and the rule least subject to dispute is to interpret
'absent from the labor force' to mean simply 'unemployed' . . .
."
This simplistic construction may result in a bright
line for applying the statutory limitation, and a benefits system
with quick, efficient, and predictable results that will not be
"a fertile ground for litigation." However, the litigative
sterility it produces strips "fair"of any chance of life.
"Fair" denotes a balancing of equities and interests. The
Board's construction brooks of none. The phrase "absent from the
labor force"cannot be construed properly unless the element of
fairness is considered. The opinion of the court quite properly
emphasizes that the legislature mandated that fairness be
considered in administering the benefits system.
The Board found:
Gilmore worked at Dales Cycle in San
Bernadino, California for 13 weeks and 5 days
for $6.00 per hour to gain on-the-job
experience in conjunction with the Motorcycle
Mechanics Institute of Phoenix, Arizona. He
also worked as J-S Repair in Edmonds,
Washington under a veterans' benefit program
for 8 weeks and 3 days at $7.00 per hour. He
worked in these positions for experience
because he hoped to establish an
international dealership in reconditioned
Harley Davidson motorcycles.
Alaska Workers' Compensation Board, Docket AWCB No. 8925031,
Decision and Order, p.2.
Gilmore's jobs were in connection with "formal training
program[s]."19 He was pursuing an educational goal. One 'job'
was subsidized by the federal government. Another 'job' was as a
trainee in a program for which Gilmore paid a tuition in excess
of $5,000, from which he was attempting to graduate. Thus his
employment was, in his words, in furtherance of a primary
educational objective: "The restrictions of an educational goal
simply don't afford one an opportunity to pursue involvement in a
'free labor market.'"
Applying an "independent judgment"standard of review,
Phillips v. Houston Contracting, Inc., 732 P.2d 544 (Alaska
1987), I conclude that Gilmore should be rated under AS
23.30.220(a)(2). Gilmore was "absent from the labor market" for
the requisite period. His rate of compensation should be
calculated under AS 23.30.220(a)(2).
The court has concluded without resolution of the
statutory construction issue that constitutional issues are
"'critical to a proper and just decision' in this case . . . ."
Constitutional issues cannot be critical to a proper and just
decision of the case until the court has determined that the
Board's construction of AS 23.30.220(a)(2) is correct. If the
Board's construction is not correct, and Gilmore would recover
under this court's construction of the statute without resolution
of constitutional issues which the court itself has raised, there
is no justification for reaching the constitutional issues. I
continue to believe in the doctrine that a court should abstain
from reaching constitutional issues unless essential to a
decision in the case. See State v. Hazelwood, 866 P.2d 827, 834
n.2 (Alaska 1993) (Compton, J., dissenting in part: would not
address constitutional issues until addressing whether evidence
supported exception to exclusionary rule); Abood v. League of
Women Voters, 743 P.2d 333, 343, 345 n.3 (Alaska 1987) (Compton,
J., dissenting: constitutional issue need not be decided as
policy mandate of statute was dispositive); Deubelbeiss v.
Commercial Fisheries Entry Comm'n, 689 P.2d 487, 491 (Alaska
1984) (Compton, J., concurring: abstain from answering
constitutional questions when other dispositive grounds exist,
citing Escambia County v. McMillan, 466 U.S. 48 (1984)). This
court has itself invoked the doctrine of abstention.
Municipality of Anchorage v. Anchorage Daily News, 794 P.2d 584,
594 n.18 (Alaska 1990) (civil rules constitute sufficient device
for controlling discovery harassment, thus decline to reach
broader constitutional issue); State v. F/V Baranof, 677 P.2d
1245, 1255 (Alaska 1984) (since owners were afforded due process,
need not address constitutionality of statute), cert. denied, 469
U.S. 823 (1984); Zerbe v. State, 578 P.2d 597, 598 (Alaska 1978)
(because of disposition of first point on appeal, need not
address constitutional issue), overruled on other grounds,
Stephens v. State, Dept. of Revenue, 746 P.2d 908 (Alaska 1987);
Puller v. Municipality of Anchorage, 574 P.2d 1285, 1288 (Alaska
1978) (in light of construction of statute, do not reach
constitutional issues); State v. City of Anchorage, 513 P.2d
1104, 1112 (Alaska 1973) (interpretation of statute makes it
unnecessary to reach constitutional issue); Anniskette v. State,
489 P.2d 1012, 1016 (Alaska 1971) (since conduct protected by
constitution, do not reach broader question of statute's
constitutionality, cited with approval in Marks v. City of
Anchorage, 500 P.2d 644, 647 n.9 (Alaska 1972); Perry v. State,
429 P.2d 249, 251-52 (Alaska 1967) (do not need to reach and
therefore decline to reach statutory issue, since answer might
lead to constitutional issue; should not pass on constitutional
issue unless determination essential to decision of case).
However, it has not always seen fit to follow it. Granato v.
Occhipinti, 602 P.2d 442, 447 (Alaska 1979) (Boochever, J., with
whom Rabinowitz, C.J., joins, dissenting: court should not
construe statute to reach an incongruous result, thereby
necessitating resolution of constitutional issue). Similarly,
the court of appeals has invoked the doctrine of abstention.
Robins v. Municipality of Anchorage, 711 P.2d 550, 552 (Alaska
App. 1985) (need not decide constitutional issue, since probable
cause for arrest existed prior to giving breath test); State v.
Williams, 653 P.2d 1067, 1069 (Alaska App. 1982) (do not reach
constitutional issue since case can be resolved by applying
Alaska Rules of Criminal Procedure), aff'd in part, 681 P.2d 313
(Alaska 1984).
I think it unfortunate that this court continues to
take an ad hoc approach to application of the doctrine of
abstention. First, failure to apply the doctrine may result in
unnecessary confusion and disruption within the governmental
agency charged with the responsibility of attempting to enforce a
statutory scheme, part of which is no longer operative. Second,
failure to apply the doctrine may afford a windfall benefit to
non-litigants whose position is bettered by a declaration of
unconstitutionality, while applying the doctrine may deny the
benefit to a particular litigant. This inconsistency may be
viewed as evidencing either arbitrariness or favoritism, neither
of which should be tolerated. Since I agree that
Gilmore should be rated under AS 23.30.220(a)(2), I concur in the
result.
_______________________________
1 AS 23.30.220(a)(1), (2) and (3) provide:
Sec. 23.30.220. Determination of
spendable weekly wage. (a) The spendable
weekly wage of an injured employee at the
time of an injury is the basis for computing
compensation. It is the employee's gross
weekly earnings minus payroll tax deductions.
The gross weekly earnings shall be calculated
as follows:
(1) the gross weekly earnings are
computed by dividing by 100 the gross
earnings of the employee in the two calendar
years immediately preceding the injury;
(2) if the employee was absent from
the labor market for 18 months or more of the
two calendar years preceding the injury, the
board shall determine the employee's gross
weekly earnings for calculating compensation
by considering the nature of the employee's
work and work history, but compensation may
not exceed the employee's gross weekly
earnings at the time of injury;
(3) if an employee when injured is a
minor, an apprentice, or a trainee in a
formal training program, as determined by the
board, whose wages under normal conditions
would increase during the period of
disability, the projected increase may be
considered by the board in computing the
gross weekly earnings of the employee . . . .
2 Former AS 23.30.220(a)(2) provided:
If the board determines that the
gross weekly earnings at the time of the
injury cannot be fairly calculated under (1)
of this subsection, the board may determine
the employee's gross weekly earnings for
calculating compensation by considering the
nature of the employee's work and work
history.
3 Johnson v. RCA-OMS, Inc., 681 P.2d 905 (Alaska 1984).
4 State, Dep't of Transp. v. Gronroos, 697 P.2d 1047
(Alaska 1985).
5 See, e.g., Houston Contracting, Inc. v. Phillips, 812
P.2d 598, 600-01 (Alaska 1991) (use of alternative method proper
where injured employee's employment history consisted of regular
pattern of discontinuous, short-term employment); Wrangell Forest
Prods. v. Alderson, 786 P.2d 916, 918 (Alaska 1990) (use of
alternative method proper where formula method so substantially
underestimates employee's projected future income as to no longer
fairly calculate that amount); Peck v. Alaska Aeronautical, Inc.,
744 P.2d 663, 666-67 (Alaska 1987) (alternative method must be
used when injury produces permanent total disability many years
later, and injured employee's earning capacity has increased
substantially in interim), reh'g granted, 756 P.2d 282 (Alaska
1988); Brunke v. Rogers & Babler, 714 P.2d 795, 800 (Alaska 1986)
(employee injured three months after beginning new job at
dramatically higher salary entitled to have temporary total
disability payments based on alternative method instead of
formula); Gronroos, 697 P.2d at 1049 (formula method
inappropriate where employee recently retired from full-time
employment and is injured in seasonal job); Deuser v. State, 697
P.2d 647, 649 (Alaska 1985) (alternative method based on injured
worker's wages on projected renewal of six-month contract must be
used for purpose of temporary disability payments, where formula
method substantially underestimates future income); Johnson, 681
P.2d at 907 (alternative method must be used where formula method
so substantially underestimates injured worker's wage-earning
capacity that formula did not accurately reflect his wage-earning
capacity).
6 Thus, although the formula may roughly approximate the
employee's lost wages when the employee worked full time during
the entire two year period at the same job held at the time of
injury or when the employee has consistently worked only at
seasonal occupations, it does not account for any upward or
downward change in the employee's earning capacity and punishes
workers who have newly committed to full time employment. The
formula also fails entirely to take account of any change in the
employee's earning capacity that occurred during the year of
injury.
7 Vest v. First Nat'l Bank of Fairbanks, 659 P.2d 1233,
1234 n.2 ("Where, however, an issue that has not been raised
involves a question of law that is critical to a proper and just
decision, we will not hesitate to consider it, particularly after
calling the matter to the attention of the parties and affording
them the opportunity to brief the issue."), reh'g granted, 670
P.2d 707 (Alaska 1983).
8 We offered these examples in order to illustrate
clearly the disparity among benefits which may result from rigid
application of the mechanical approach of AS 23.30.220(a)(1). We
do not intend to rely on hypothetical concerns in analyzing the
constitutionality of AS 23.30.220. See Municipality of Anchorage
v. Leigh, 823 P.2d 1241, 1245 & n. 11 (Alaska 1992). On the
contrary, both examples illustrate concerns raised by Gilmore's
own situation. Example A illustrates the harm to Gilmore which
resulted from the Board's determination that he was in the labor
force more than six months in the previous two calendar years.
Gilmore was injured after working several months earning an
average of $850 a week, but, under the Board's determination, he
received only the statutory minimum of $110 a week during the
period of his disability. Example B illustrates the possible
benefits to Gilmore if he successfully argued that he was absent
from the labor force for more than 18 months during the relevant
years. Based on 80% of $850, Gilmore stood to receive up to 6.18
times more compensation if he established that he worked less.
9 The parties have been joined in the briefing of this
issue by Amici Curiae Alaska National Insurance Co., All Alaskan
Seafoods, Alyeska Seafoods, Inc., NorQuest Seafoods, Inc., Ocean
Beauty Seafoods, Inc., Peak Oilfield Services, Co., The Alaska
Chapter of the Associated General Contractors, National Bank of
Alaska, Trident Seafoods Corp., Unisea, Inc., Unit Co., and Wards
Cove Packing Co.
10 If reasonably possible, we will construe statutes so as
to avoid the conclusion that they are unconstitutional. Sonneman
v. Hickel, 836 P.2d 936, 940 (Alaska 1992); see also 2A
Sutherland Statutory Construction 45.11, at 48-49 (5th ed.
1992). We cannot, however, "go so far as to redraft defective
legislation." State v. Fairbanks North Star Borough, 736 P.2d
1140, 1142 (Alaska 1987); see also State v. Campbell, 536 P.2d
105, 110-11 (Alaska 1975).
11 We listed both the maximum benefit cap provided in AS
23.30.175(a) and the possibility that actual earnings would not
be used as the measure of compensation if they did not fairly
represent wage-earning capacity under former 23.30.220 as
variances from the "rule of thumb"that benefits should bear a
fixed relationship to actual earnings. Brown, 687 P.2d at 270 &
n.7.
12 We note that the legislative history does indicate
dissatisfaction with the difficulties inherent in determining the
gross weekly wage under the alternative method of former AS
23.30.220(a)(2), used when the mechanical approach of section
220(a)(1) produced an unfair result.
These cases, such as Johnson v. RCA-OMS,
681 P.2d 905 (Alaska 1984), and its progeny,
have made the determination of spendable
weekly wage impossible because it is based on
the predictability of what someone might be
making at some future point in time. We
intend to clearly base the determination of
spendable weekly wage on the employees' past
earnings history except under some very
specific cases. . . .
Senate Labor and Commerce Committee, 15th Legislature, 2d
session, Sectional Analysis of Worker's Compensation Task Force,
SB 322 and HB 352, at 10. This statement does not, however,
indicate that it is no longer the purpose of indemnity benefits
to provide partial compensation for the injured employee's future
losses. As we stated in Johnson, "[t]he entire objective of wage
calculation is to arrive at a fair approximation of claimant's
probable future earning capacity. His disability reaches into
the future, not the past; his loss as a result of injury must be
thought of in terms of the impact of probable future earnings."
681 P.2d at 907 (quoting 2 Arthur Larson, The Law of Workmen's
Compensation 60.11(d), at 10-564 (1983)). The statement merely
indicates that the legislature intended to use past earnings to
calculate future losses in more instances.
13 For example, recent entrants to the full-time work
place who formerly were housemakers, students, or trainees, or
who were unable to work full time because of illness or injury,
or who formerly relied in whole or in part on subsistence hunting
and fishing, all potentially stand to be discriminated against by
the section 220(a) formula. Moreover, where the employee was
employed throughout the previous two calendar years at a high
paying job, but has recently switched to a lower paying or part-
time job, the employee will be unfairly overcompensated. E.g.,
Gronroos, 697 P.2d 1047.
14 To be "fair,"benefit levels must be at least rational.
That is, they must bear at least some relationship to the circum
stances existing at the time of the injury. The formula approach
of AS 23.30.220(a)(1), however, results in benefit levels which
only randomly relate to the worker's earning capacity at the time
of injury.
15 The majority of these statutes apparently follow, at
least in part, the Council of State Governments' Draft Workmen's
Compensation and Rehabilitation Law, quoted in 2 Arthur Larson,
The Law of Workmen's Compensation 60.11(a)(1), at 10.606 n.77
(1993), which provides:
Section 19. Determination of Average
Weekly Wage. Except as otherwise provided in
this act, the average weekly wage of the
injured employee at the time of the injury
shall be taken as the basis upon which to
compute the compensation and shall be
determined as follows:
(a) If at the time of the injury
the wages are fixed by the week, the amount
so fixed shall be average weekly wage;
(b) If at the time of injury the
wages are fixed by the month, the average
weekly wage shall be the monthly wage so
fixed multiplied by twelve and divided by
fifty-two;
(c) If at the time of injury the
wages are fixed by the year, the average
weekly wage shall be the yearly wage so fixed
divided by fifty-two;
(d)(1) If at the time of the injury
the wages are fixed by the day, hour, or by
the output of the employee, the average
weekly wage shall be the wage most favorable
to the employee computed by dividing by
thirteen the wages (not including overtime or
premium pay) of said employee earned in the
employ of the employer in the first, second,
third, or fourth period of thirteen
consecutive calendar weeks in the fifty-two
weeks immediately preceding the injury.
(2) If the employee has been in the
employ of the employer less than thirteen
calendar weeks immediately preceding the
injury, his average weekly wage shall be
computed under the foregoing paragraph,
taking the wages (not including overtime or
premium pay) for such purpose to be the
amount he would have earned had he been so
employed by the employer the full thirteen
calendar weeks immediately preceding the
injury and had worked, when work was
available to other employees in a similar
occupation.
(e) If at the time of injury the
hourly wage has not been fixed or can not be
ascertained, the wage for the purpose of
calculating compensation shall be the taken
to be the usual wage for similar services
where such services are rendered by paid
employees.
(f) In occupations which are
exclusively seasonal and therefore cannot be
carried on throughout the year, the average
weekly wage shall be taken to be one-fiftieth
of the total wages which the employee has
earned from all occupations during the twelve
calendar months immediately preceding the
injury.
. . . .
(i) When the employee is working
under concurrent contracts with two or more
employers and the defendant employer has
knowledge of such employment prior to the
injury, his wages from all such employers
shall be considered as if earned from the
employer liable for compensation.
We do not mean to imply that a similar statutory
construction is constitutionally required. This draft section
and the state laws following it do demonstrate, however, that a
much closer fit between an employee's work history and his
expected losses is possible within the confines of an exclusively
formulaic definition of base wages.
16 Typically, worker's compensation statutes eliminate
periods of unemployment greater than one week before calculating
the average wage. See, e.g., Conn. Gen. Stat. 31-310 (1987 &
1994 Supp.); Mass. Gen. Laws. Ann. ch. 152, 1 (1988) (two
weeks); Mich. Comp. Laws 418.371 (1988); Miss. Code Ann. 71-3-
31; Tenn. Code Ann. 80-6-102 (1993); Va. Code. Ann. 65.2-101
(1991). Other states follow the Council of State Government's
draft and provide special provisions for seasonal employees.
See, e.g., Ky. Rev. Stat. Ann. 342.130 (1993); Neb. Rev. Stat.
48-126 (1990); 77 Pa. Cons. Ann. 582 (1992); Wis. Stat.
102.11 (1988).
17 Our conclusion that AS 23.30.220(a) violates the equal
protection clause of the Alaska Constitution renders our consid
eration of whether the statute also violates the due process
clause of the Alaska Constitution unnecessary. Art. I, 7.
18 We decline to reach the question raised by the Amici
Curiae of whether our decision today should be given purely
prospective application only. This question is not properly
raised in this proceeding. With respect to Gilmore himself,
recalculation of his benefits accords with the rule that even in
cases where a ruling is given prospective effect only, the
litigant in the case in which the rule is announced is given the
benefit of the rule. Plumley v. Hale, 594 P.2d 497, 505 (Alaska
1979).
19 The gross weekly earnings for "a minor, an apprentice,
or a trainee in a formal training program"may be enhanced under
AS 23.30.220(a)(3). Under Section (a)(3), in determining the
gross weekly earnings for this special category of employees the
Board may take into consideration "wages [which] under normal
conditions would increase during the period of disability . . .
." This enhancement is not permitted unless the injured employee
falls within the Section (a)(3) exception. Thus the statute
itself segregates the labor market. If a trainee is afforded
disparate and more favorable treatment for the purpose of making
a gross weekly earnings determination, it is difficult to justify
treating the trainee's "formal training program" time as
equivalent to that of an employee not so circumstanced.
Presumably the enhancement is because the trainee is not part of
the labor market.
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