Jessop v. State Industrial Insurance System

OPINION Per Curiam: This appeal challenges the method by which an appeals officer from the State Industrial Insurance System (SIIS) determined Matt Jessop’s average monthly wage for the purpose of calculating his industrial insurance benefits. Matt Jessop incurred a compensable injury to his back on [889] March 24, 1989, during the first week of his employment as a carpenter for Dillon Enterprises. On September 7, 1989, an administrative hearing was held to determine Jessop’s benefit level. At the hearing, a C-3 form submitted by Jessop’s employer on April 5, 1989, was presented, indicating that Jessop was hired to work seven days per week, from 6:00 a.m. to 4:00 p.m., for twelve dollars an hour, and that Jessop did not receive piecework. However, Jessop’s employer submitted a conflicting BCS-8 form, dated April 27, 1989, which stated that Jessop was hired to do piecework and.that his hours of employment varied. As a result of this conflicting evidence, the hearing officer directed SIIS to conduct an audit for the purpose of accurately determining Jes-sop’s average monthly wage. SIIS investigated Jessop’s income by examining his payroll history at the time of the accident and the employment histories of three co-employees who were hired to do piecework.1 Two of the three co-employees used for comparison had worked a total of two weeks and were employed subsequent to the date of Jessop’s injury. The third co-employee was employed for a five week period extending from the four weeks preceding Jessop’s injury to the week after. Based upon the payroll histories of Jessop’s co-workers, SIIS determined that Jessop was hired as a pieceworker and calculated his average monthly wage to be $776.94. The administrative appeals officer accepted this calculation as the average monthly wage, relying upon NAC 616.678(6) for her conclusions of law. Jessop appealed the decision of the appeals officer to the district court, claiming that the appeals officer did not properly interpret the statutes and regulations addressing the calculation of average monthly wage and that the evidence in the record was insufficient to support the conclusion. The district court affirmed, finding substantial evidence to support the administrative appeals officer’s decision. Jessop appealed to this court, and we reverse. To overturn the administrative appeals officer’s decision, this court may find either that the decision was not supported by substantial evidence or that it was based upon an incorrect conclusion of law. See, e.g., Kraft v. Nev. Emp. Sec. Dep’t, 102 Nev. 191, 194, 717 P.2d 583, 584 (1986); Nyberg v. Nev. Indus. Comm’n, 100 Nev. 322, 324, 683 P.2d 3, 4 (1984). The determination of the appeals officer in this case was based upon NAC 616.678(6), which provides: [890] If earnings are based on piecework and a history of earnings is unavailable for a period of at least 4 weeks, the wage must be determined as being equal to the average earnings of other employees doing the same work. Because Jessop had only worked at his job for one week prior to his injury, and because the results of the SIIS audit showed Jessop to be a pieceworker, the appeals officer calculated Jessop’s monthly wage based upon that of his co-workers. We conclude that application of subsection (6) of NAC 616.678 was unreasonable in the instant case. The general rule for calculating an employee’s average monthly wage for the purpose of determining insurance benefits is that earnings are to be calculated based on a history of that employee’s earnings for a twelve week period. See NAC 616.678(1). NAC 616.678(8) states that the earnings history should be the twelve weeks prior to injury. Where such a history is unavailable, other subsections of NAC 616.678 provide additional guidelines appropriate to various situations. For example, NAC 616.678(6) provides the general rule applicable to pieceworkers. However, these guidelines are not absolute. NAC 616.678(7) provides alternate rules to be applied when the methods described by the other subsections “cannot be applied reasonably and fairly.”2 This is the situation with which we are now presented. NAC 616.678(6) was the appropriate section to refer to first because the hearing officer determined that Jessop was a pieceworker. The four weeks earning history to which section (6) refers is an earnings history prior to the injury. This comports with the general approach of SIIS and the statutory scheme used to determine a person’s earnings by examining the time period before injury. Since Jessop does not have a four week earnings record before the injury, we are directed by section (6) to determine the claimant’s monthly wage by the average earnings of the other employees doing the same work. Again, these earnings should predate the injury. Since two of the three workers used to determine Jessop’s wage were only employed subsequent to his injury, we do not have a history of employees’ earnings prior to the injury. Consequently, it is inappropriate to use section (6) in [891] this case, and resort should be made to section (7). Therefore, we reverse with instructions to remand the matter to SIIS for a redetermination of average earnings. Mowbray, C. J., Rose and Steffen, JJ., and Lehman, D. J.,3 concur. Footnotes [1] Jessop continued to work for six consecutive weeks following his injury. [2] NAC 616.678(7) states in full: If these methods of determining a period of earnings cannot be applied reasonably and fairly, an average monthly wage will be calculated by the insurer at 100 percent of: (a) The sum which reasonably represents the average monthly wage of the employee as defined in NAC 616.670 to 616.688, inclusive, at the time his injury or illness occurs; or (b) The hourly wage on the day the injury or illness occurs, calculated by using the projected working schedule.