FL: Share of Corporate Profits May Be Used to Compute AWW

A Florida appellate court recently held that in at least some situations, a claimant’s average weekly wage may include the pro rata portion of the corporate profits to which he or she was entitled as a shareholder. The employer argued that according to § 440.02(28), Fla. Stat., indemnity benefits were to be based only on the wages earned and “reported for federal income tax purposes” on the job where the employee is injured and any other concurrent employment …, that the “and reported for federal income tax purposes” term was added by a 1994 amendment to the statute, and that the average weekly wage was limited, therefore, to “wages” as defined by the Internal Revenue Code.  Here, claimant made $250.00 per week plus sixty percent of the business profits per year. Claimant argued that those profits were essentially wages and should be utilized to compute the AWW.  The JCC agreed and the appellate court affirmed.  The appellate court stated that here, the employer conceded that the profits given to the claimant "were the results of his active income, not the result of passive income or return on investment," and thus were earned.  The court reasoned that because it was undisputed that the claimant's portion of the profit was reported to the IRS, although not necessarily as "wages" as defined by the federal tax code, the plain language of the statute as applied to this case did not prohibit the inclusion of the claimant's pro rata profits as "wages" under the Workers' Compensation Law.

Reported by Thomas A. Robinson, J.D.

LexisNexis Online Subscribers: Citations below link to Lexis Advance. Bracketed citations link to lexis.com.

See K-C Elec. Co. v. Walden, 2013 Fla. App. LEXIS 15832 (Oct. 7, 2013) [2013 Fla. App. LEXIS 15832 (Oct. 7, 2013)]

See generally Larson’s Workers’ Compensation Law, § 93.01 [93.01]

Source: Larson’s Workers’ Compensation Law, the nation’s leading authority on workers’ compensation law

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