“Earning Capacity” is the Primary Consideration for Wage Differential Awards

Jackson Park Hospital v. IWCC, 2016 IL App (1st) 142431WC

By: Conor P. Desmond - Associate - Nyhan, Bambrick, Kinzie & Lowry

Synopsis: Petitioner was restricted to sedentary duty due to her injury at work. The employer placed her in a new position that met her physical restrictions and continued to pay her what she would have been earning at her old job. Therefore, she had no loss of wages.  The Appellate Court held the Commission must consider a claimant’s “earning capacity” rather than actual loss of wages when evaluating wage differential claims.


Facts: Petitioner alleged an October 25, 2005 injury to her lower back, left leg and knee. 

On September 12, 2006, an Arbitrator found Claimant sustained an injury, there was a causal relationship between Petitioner’s injuries and the accident, and Petitioner could only return to work at the sedentary level. Employer placed Petitioner into a security officer position in July of 2007. Petitioner did not meet the minimum education requirements for the position and was paid at her prior wage level, $23.61, instead of the usual wage for security officers, approximately $10 per hour. The Arbitrator and the Commission both denied wage differential benefits, finding Petitioner was not suffering any impairment of earnings.


On review, the Appellate Court opined the critical issue was whether Claimant has suffered an impairment of her “earning capacity” rather than any simple comparison of pre- and post-injury income. To qualify for a wage differential award, a petitioner must incur an injury that leaves them partially incapacitated from pursuing his or her usual and customary line of employment. Next, there must be a difference between what the person would earn in the pre-injury position and the earnings the person could obtain through new employment in a competitive job market.


Given there was no question the accidental injury precluded Petitioner from resuming her prior job, the Appellate Court moved to analyze Petitioner’s earning capacity. Such an analysis included consideration of Petitioner’s age, education, physical limitations, and what wages Petitioner could earn in a competitive job market given these limitations. Following the analysis, the court concluded Petitioner incurred a loss of earning capacity as she would not have been hired for the security position due to her qualifications and the wages she was earning were artificially higher than normal.


Impact on Illinois Employers: This ruling allows petitioners to claim wage differential awards if they can show their earning capacity was damaged in a work-related injury, even if their income did not change pre- and post-injury. To show this, a petitioner most likely would have to obtain a vocational assessment to gauge their possible loss of earning capacity. Employers must carefully scrutinize the use of such evidence of loss of earning capacity to protect their interests. 


Further, Employers can use Jackson Park as a tool to combat claims where whose post-injury earnings seem artificially low. If the petitioner’s job search does not accurately reflect the employee’s viability in a competitive labor market, the employer can present evidence from a vocational expert showing the claimant’s earning capacity exceeds his or her actual earnings.


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