### IN THE SUPREME COURT OF IOWA

No. 0 8

– 0065
Filed February 12 , 2010

JACOBSON TRANSPORTATION COMPANY and LIBERTY MUTUAL INSURANCE , Appellant s ,

vs. RUSSELL HARRIS , Appellee.

On review from the Iowa Court of Appeals.

Appeal from the Iowa District Court for Polk County, Robert B.
Hanson , Judge.

Employee seeks further review of court of ap peals ’ decision reversing workers’ compensation commissioner’s calculation o f a weekly compensation rate. DECISION OF COURT OF APPEALS VACATED;
DISTRICT COURT JUDGMENT AFFIRMED.

Kevin R. Rogers of Swisher & Cohrt, P.L.C., Waterloo , for appellant s
.

Michael L. Mock of Bradshaw, Fowler, Proctor & Fairgrave, P.C.,
Des Moines , for appellee.2 HECHT , Justice. In this appeal, we must determine whether the workers’ compensation commissioner properly excluded three weeks of earnings
from the calculation of a n injured employee’s compensation rate . We
conclude the commissioner did not err by excluding three weeks of low earnings and repl acing them with earnings from three earlier weeks which more fairly represented the employee’s customary earnings

. I. Factual and Procedural Background
. Russell Harris (Harris) was hired by Jacobson Tr ansportation Company (Jacobson) in April 2003 as an over

- the

- road truck driver . He was paid by the mile , and he was not guaranteed a min imum amount of work each week. Accordingly, the number of miles he drove each week varied depending on the assignments he received from Jacobson, but
also on o ther factors such as traffic, speed limits, road construction, and
weather. Harris’ s weekly earnings during his employment were as
follows: 1 04/26/2003 $702.08 08/23/2003 $958.72 05/03/2003 $851.20 08/30/2003 $667.20 05/10/2003 $295.84 09/06/2003 $892.64 05/17/2003 $1117.12 09/13/2003 $247.36 05/24/2003 $764.80 09/20/2003 $1036.48 05/31/2003 $833.76 09/27/2003 $944.00 06/07/2003 $0.00 10/04/2003 $227.52 06/14/2003 $1710.08 10/11/2003 $1223.76 06/21/2003 $1068.64 10/18/2003 $0.00 06/28/2003 $538.24 10/25/2003 $1183.52 07/05/2003 $542.08 11/01/2003 $870.72 07/12/2003 $355.68 11/08/2003 $1012.00 07/19/2003 $698.59 11/15/2003 $1128.32 07/26/2003 $0.00 11/22/2003 $940.16 08/02/2003 $806.51 11/29/2003 $662.40 08/09/2003 $708.48 12/06/2003 $453.92 08/16/2003 $875.52

1 This list of Harris’ s weekly earnings includes only his earnings up to the date of his injury, although he continued to work for Jacobson for several months after being injured.3 On December 9, 2003, while unloading freight in California, Harris injured his low back. The injury was diagnosed as a lumbosacral and thoracic spine strain , and Harris was restricted to light

- duty work by a physician. Harris received a series of spinal injections after returning to work, but in March 2004 he was unable to continue driving because of the injury. From June 2004 through September 2005, Harris sought
treatment from several dif ferent doctors . Their diagnoses were generally similar, although they disagreed about the best course of treatment and whether Harris had reached maximum medical improvement. Each of
the doctors believed Harris was capable of light

- duty work and

recommen ded that he not return to truck driving. In March 2005, Harris filed a claim for workers ’ compensation
benefits. After an arbitration hearing on November 8, 2005, a deputy

w orkers’ c ompensation commissioner determined that Harris was permanently and tot ally disabled. The deputy commissioner calculated
Harris’ s average weekly rate pursuant to Iowa Code section 85.36(6) (2003) by using the thirteen weeks immediately prior to his injury, although Harris had argued that his earnings in several of th ose week s
were nonrepresen tative and should be excluded. The deputy found
Harris’ s average weekly earnings were $827.52 and his weekly compensation rate was $483.99. 2

2 The deputy commissioner apparently excluded the week ending October 18, 2003, in which Harris had zero earnings and replaced it with the week ending September 6, 2003 , in which Harris earned $892.64. The exclusion of that week from the calculation of Harris’s wage rate has not been challen ged in this case.4 Both parties appealed, Jacobson 3 contending the deputy erred in concluding Harris was permanently and totally disabled and Harris contending the deputy calculated the average weekly rate incorrectly. In the appeal decision, the wor kers’ compensation commissioner agreed with the deputy commissioner ’s finding that Harris is total ly disab led

. However, the commissioner concluded three of the thirteen weeks preceding Harris’ s injury were not representative 4 and should have been
excluded from the calculation of Harris’ s average weekly earnings. Accordingly, the commissioner calculated Harris’ s average weekly earnings at $953.50 and his weekly compensation rate a t $545.51. 5 When calculating Harris’ s weekly compensation rate, the
commissioner cited Hanigan v. Hedstrom Concrete Products , Inc. , 524 N.W.2d 158 (Iowa 1994), noting the “purpose of weekly compensation is to replace the probable earnings that were lost due to the injury.” The commissioner then engaged in a lengthy analysis of Harris’ s compensation.

3 Jacobson and its insurance carrier, Li berty Mutual Insurance, were
co defendan ts before the agency and are co petitioners on judicial review. We refer to them jointly as “Jacobson” in this opinion.

4 As in the deputy’s arbitration awa rd, the commissioner’s appeal decision also did not include in the rate calculation the week of October 18 in which Harris had no earnings. Although there is some evidence in the record tending to prove Harris missed work in October because he was hunting, had the agency concluded Harris’ s lack of earnings were due to personal reasons, section 85.36(6) provides the weekly earnings for such period “shall be the amount [Harris] would have earned had [he] w orked when work was available to other employees of [Jacobson] in a similar occupation.” Iowa Code § 85.36(6). Neither the arbitration decision nor the appeal decision explains the exclusion of the October 18 earnings. As neither party challenges the co mmissioner’s exclusion of the week of October 18 from consideration in the calculation of the weekly rate, we assume without deciding for purposes of our opinion that the exclusion was appropriate.

5 Although the commissioner’s appeal decision found Harri s’ s weekly
com pensation rate was $549.90, an o rder nunc p ro t unc was later entered conforming the rate to the applicable rate table.5 The weekly earnings range from a high of $1,223.76 to a low of $227.52. When review ing the distribution of earnings I find that there are five weeks in which claimant earned $1,012.00 or more per week. There were two weeks in which claimant earned $247.36 per week or less. Over the 30 weekly pay periods that claimant worked for the emp loyer his t otal earnings were $24,317.34 .

. . . The weekly average of claimant’s total earnings is thus $810.58. For the thirteen weeks immediately prior to his work injury, claimant earned more than $810.58 in ten of those weeks. 6

Jacobson sought judicia l review , conte nding the commissioner
erred both in determining Harris was perman ently and totally disabled and in calculating Harris’ s weekly compensation . The district court affirmed the commissioner’s decision. Jacobson appealed, and we
transferred the case to the court of appeals. The court of appeals affirmed the disability decision, but reversed the commissioner’s
calculation of average weekly earnings and reinstated the deputy
commissioner’s lower calculation. We granted Harr is’ s petition for
f urther review to address the earnings issue. It is concluded that claimant’s average weekly wage should be calculated by discarding the weeks ending December 6, 2003 ($453.92), October 4, 2003 ($227.52) , and September 13, 2003 ($247.36). By discarding those three weeks and adding earnings for the weeks ending August 30 , 2003 ($667.20), August 23 , 2003 ($958.72), and August 16, 2003 ($875.52) it is concluded that claimant’s gross earnings for the period are $12,395.44. When divided by thirteen weeks the average weekly gross earnings are $953.50.

II. Scope of Review.
Our review of a decision of the workers ’ compensation commissioner varies depending on the type of error allegedly committed by the commissioner. If the error is one of fact, we must dete rmine if the commissioner’s findings are supported by substantial evidence. Iowa

6 Although the commissioner states that ten of the thirteen weeks of earnings exceeded $810.58, our review of the earnings h istory indicates that Harris earned more than $810.58 in nine of the weeks.6
Code § 17A .19(10) ( f

) ; Meyer v. IBP, Inc., 710 N.W.2d 213, 219 (Iowa 2006). If the error is one of interpretation of law, we will determine whether the commissioner’s interpr etation is erroneous and substitute our judgment for that of the commissioner. Iowa Code § 17A. 19( 10 ) ( c ) ; Meyer, 710 N.W.2d at 219. If, however, the claimed error lies in the commissioner’s application of the law to the facts , we will disturb the
commiss ioner’s decision if it is “ [ b ] ased upon an irrational, illogical, or wholly unjustifiable application of law to fact.” Iowa Code §
17A. 19( 10 ) ( m ) ; Meyer, 710 N.W.2d at 219. Because of the widely varying standards of review, it is “essential for counsel to search for an d pinpoint the precise claim of error on appeal.” Meyer, 710 N.W.2d at 219. In this case, the commissioner concluded three of the thirteen weeks prior to Harris’ s injury did not fairly r eflect his customary earnings and replaced them with weeks that he concluded did represent Harris’ s customary earnings. There is no factual dispute concerning the amount
of Harris’ s wages in the weeks prior to the injury. T he dispute centers
instead on the commissioner’s interpretation of the words “custom ary earnings” in Iowa Code section 85. 3 6(6) and his application of the law to the facts. Accordingly, we must first determine whether the commissioner has misinterpreted the law

. Iowa Code § 17A .19(10)( c ) ; Meyer, 710 N.W.2d at 219. If the commissioner’s interpretation of the law is correct, we will then review his application of the law to the facts

to determine if it is “irrational, illogical, or wholly unjustifiable.” Iowa
Code § 17A.19(10)( m ) ; Meyer, 710 N.W.2d at 219

. III. Di scussion.
Iowa Code section 85.36 describes the basis for calculating a disabled employee’s compensation rate . “The basis of compensation7 shall be the weekly earnings of the injured employee at the time of the injury.” Iowa Code § 85.36

. In the case o f an employee who is paid on a daily or hourly basis, or by the output of the employee, the weekly earnings shall be computed by dividing by thirteen the earnings, not including overtime or premium pay, of the employee earned in the employ of the employer in the last completed period of thirteen consecutive calendar weeks immediately preceding the injury. If the employee was absent from employment for reasons personal to the employee during part of the thirteen calendar weeks preceding the injury, the empl oyee’s weekly earnings shall be the amount the employee would have earned had the employee worked when work was available to other employees of the employer in a similar occupation. A week which does not fairly reflect the employee’s customary earnings sh all be replaced by the closest previous week with earnings that fairly represent the employee’s customary earnings. Id. § 85.36(6) (emphasis added). 7
Jacobson alleges the commissioner misinterpreted the last sentence of this provision authorizing the replacement of weeks which do not reflect the employee’s “customary earnings.” Because Harris’ s weekly earnings fluctuated based on the number of miles he drove and because
Harris was not guaranteed a uniform number of miles each week, Jacobson posit s that the only customary feature of Harris’ s earnings is
the ir var iability . Accordingly, in the case of a n employee like Harris, Jacobson argues, the statute does not authorize the commissioner to exclude weekly earnings simply because they are significa ntly lower than other weeks without an explanation for the low wages that provides a rationale beyond the expected fluctuation in miles occurring from week
to week

.

7 The last two sentences, including the one at issue in this case, were added to the statute in 2000. 2000 Iowa Acts ch. 1007, § 2.8 Our goal, when interpreting a statute, is to give effect to the intent of the legislat ure. Griffin Pipe Prods. Co. v. Guarino , 663 N.W.2d 862, 864 (Iowa 2003). To determine the intent of the legislature, we look first to
the words o f the statu t e itself as well as the context of the language at
issue. Id. at 865. We seek to “interpret [t he provision] in a manner consistent with the statute as an integrated whole.” Id. Mindful that a fundamental purpose of the workers’ compensation statute is to benefit
the injured workers , we interpret chapter 85 “liberally in favor of the employee.” Id. C onsistent with the remedial nature of workers’ compensation laws, statutes for computation of wage bases
are “ meant to be applied, not mechanically nor technically, but flexibly, with a view always to achieving the ultimate objective of reflecting fairly the claimant’s probable future earning loss. ” Hanigan , 524 N.W.2d at 160 (quoting 2 Arthur Larson, Workm e n’s Compensation Law § 60.11, at 10

- 622 (1994) (now found at 5 Arthur Larson & Lex Larson, L arson’s Workers’ Compensation Law § 93.01[1][c],
at 93

– 7 (2009 ) ) ).
We think our decision in Griffin Pipe , interpreting section 85.36(6), informs our analysis here

. In that case, Guarino was an hourly

- paid employ ee at the Griffin Pipe plant. See Griffin Pipe, 663 N.W.2d at 864.
T h e plant was closed two weeks each summer and two weeks each winter for maintenance and cleaning. Id. During the semi

- annual plant closures, Guari n o did not work and did not earn any wages. Id. Guarino was injured on th e job, and although the two

- week winter closure occurred within the thirteen weeks immediately prior to his injury, the commissioner concluded those two weeks did not reflect his customary9 earnings and replaced them with earnings from earlier weeks

. 8

In our review, we a greed with the commissioner ’s decision to replace the weeks when the plant was closed. Although the closin g of the plant was planned and routine , we explicitly rejected any distinction between anticipated and unanticipated occurrences causing a reduction in an employee’s wages. Id. The

e mployer contended that because the plant closures were expected and occurred regularly , they were “customary” and accordingly Guarino’s resulting two week s of zero earnings should be included in the calculation of his weekly earnings.

W hy a particular week may not reflect the employee’s customary hours is important only insofar as it might be relevant to whether the hours worked in that week are in fact customary.

. . . We agree with the agency that the issue un der section 85.36 “ is whether the hours of work in any particular workweek are representative of the hours typically or customarily worked by an employee during a typical or customary full week of work. ” Id. at 866

. Although not in effect at the time of Guarino’s injury, we also
discussed the 2000 amendment to section 85.36(6) which added to the

statute the language at issue in this case. Griffin Pipe , 663 N.W.2d at
867. We noted that while usually we presume a mate rial change in a statute changes the law, we concluded this amendment was intended to clarify the statute because it was enacted after significant dispute within the legal community about the correct application of section 85.36

. Id. Although we had prev iously interpreted section 85.36 to permit the

8 Guarino’s injury occurred before section 85 .36(6) was amended adding the sentence explicitly requiring the replacement of weeks of earnings that do not fairly reflect the employee’s customary earnings. However, as discussed, our interpretation of section 85.36(6) both before and after the amendmen t is relevant in this case.10 replacement of a non typical workweek with a typical workweek in the wage base calculation in Thilges v. Snap

- On Tools Corp. , 528 N.W.2d 614 , 619 (Iowa 1995), the issue arose again three years later in Weishaar v. Snap

- On Tools Corp. , 582 N.W.2d 177 , 183 (Iowa 1998). The
amendment , explicitly addin g language requiring that a non typical week be replaced with a typical week of earnings when calculating an employee’s compensation base, confirmed this court’s i nter pretation of section 85.36.

. . . Accordingly, to determine what weeks should be included in the compensation rate calculation one must ask whether the earnings attributable to a particular week are customary, not whether a particular abs ence from work is anticipated. Griffin Pipe , 663 N.W.2d at 867. Thus, in our interpretation of section 85.36, both before and after the addition of the language at issue in this case, we have determined
that one must look to the earnings themselves to see if they are customary. T he reason for the variance in earnings is not determinative
of whether a week’s earnings should be replace d because they are not customary

. 9 Next, the n , we must address whether an employee whose earnings
fluctuate each week can ever have a typ ical weekly earnings justifying replacement under section 85.36(6). Jacobson argues that because
Harris ’ s miles were not fixed or uniform each week, Harris’ s weekly earnings should have been calculated using the thirteen most recent weeks of earnings, wit hout regard to the amount of his average

9 The reason for non typical wages is relevant if the employee was absent from work for reasons personal to the employee. As previously noted, section 85.36(6) provides for a different method of addressing a nontypical week of ea rnings due to personal reasons. In that case, the weekly wages must be replaced with the wages the employee “would have earned had the employee worked when work was available” to the employer’s workers performing in a similar occupation . Iowa Code § 85.3 6(6).11 earnings. 10

We do not interpret the word “customary” s o rigidly as to conclude that just because an employee ’s schedule or output is n either fixed nor guaranteed, the employee cannot have “customary” earnings

. “Customary” means “based on or established by custom ” ; “ c ommonly practiced, used or observed ” ; or “ usual.” Merriam

- Webster’s Collegiate Dictionary 285 ( 10th ed. 2002). We have previously defined “customary” as “typical.” Griffin Pipe , 663 N.W.2d at 866. Ascertain ment of an employee’s c ustomary earnings does not turn on a determination of what earnings are guaranteed or fixed ; rather , it asks simply what earnings

are usual or typical for that employee. As discussed above, an employee
need not justify the variance with a particular explanation

. The amount
of the variance alone , by the magnitude of its departure from the usual earnings of the employee, may suffice to justify the exclusion of a week’s earnings from the weekly rate calculation . Put another way, even an employee whose wages fluctuate can have a n unusually low or abnormally high week of output and resulting earnings. We think it is important that when the legislature clarified its intent in the 2000
amendment to have a typical weeks excluded from the calculation, it added the language to section 8 5.36(6) which specifically addres s es the
calculation of weekly earnings for employees paid daily, hourly, or by output. A n employee like Harris, who is paid by output (miles driven) , is likely to have fluctuating earnings. The fact that the legislature i ncluded the language authorizing the exclusion of non customary earnings in this In effect, Jacobson advocates for a bright

- line rule that would preclude the replacement of a week’s earnings under section 85. 3 6 if the employee’s earnings customarily vary from week to week.

10 Again, Jacobson does not argue that the week ending October 18 with zero earnings should be included in the calculation.12 subsection indicates it expected that even employee s with variable earnings will on occasion have earnings that diverge from the customary

. We believe the commissioner’s inter pretation of “customary earnings” is compatible with the legislature’s directive that injured employees’ weekly rate of compensation shall be based on their “ average spendable weekly earnings” at the ti me of the injury. Iowa Code § 8 5.34(2), (3) (emphasis added ). The legislat ure ’ s adoption of the concept of earnings

- averaging as a first principle of rate calculation
evidences an intention to base workers’ compensation rates on an earnings history of several weeks that are more likely than earning s of a single week to fairly represent the claimant’s probable future earning
loss. The legislature’s intent to provide even greater protection to injured
workers with variable earnings from the harsh effects of basing the weekly rate of compensation on u nusually low

- pay weeks is clearly
evidenced by the amendment to section 85.36(6) adopted in 2000. As amended, the section expressly authorizes the commissioner to exclude from the computation of average weekly earnings weeks in which injured employees ’ ea rnings do not fairly represent their customary earnings

. Our interpretation of “customary earnings” is further supported by
the fact that all calculations of Harris’ s average weekly earnings, whether performed by either of the parties or by the agency, h ave replaced the
October 18 week of zero earnings with an earlier week in which Harris had earnings. Although no explanation has been provided for this replacement, we think it demonstrates a common sense understanding of
what is considered customary. Even for an employee like Harris whose earnings vary each week, a week of zero earnings is not customary

. This
raises the question : I f a week of zero earnings is so low that it must be
excluded as not typical , where should the line be drawn? W hat of a we ek13 of $100 earnings? Because we think the determination of what earnings are customary will depend on the specific facts of each case, we reject a bright

- line rule that any employee whose wages var y may not have weeks
excluded as non customary

. Instead, w e think the determination of whether wages are customary under the circumstances is a matter expressly committed by section 85.36(6) to the discretion of the
commissioner. Accordingly, we conclude the commissioner correctly interpret ed se ction 85.36(6)

. We must next decide whether the commissioner ’s decision to replace the thre e weeks of Harris’ s earnings was illogical, irrational , or wholly unjustifiable in this case

. T he commissioner’s appeal decision
discloses a careful and thorough consider ation of Harris’ s earnings during each of the thirteen weeks immediately prior to the injury and a thoughtful comparison of how the earnings in those weeks compared with those paid to Harris during earlier weeks of employment with
Jacobson

. After reviewing the we ekly earnings and comparing them to the average weekly earnings for Harris’ s prior career a s an employee of Jacobson, the commissioner c oncluded the earnings from three of the weeks were so low as to be not customary and replaced them with the immediately preceding three weeks of earnings. In deciding whether Harris’s earnings during the three disputed weeks were so substantially lower than what he usually earned as to be unrepresentative, we conclude the commissioner aptly compared the earnings from those weeks with Harris’s broader earnings history. When viewed in this way, the three weeks excluded by the commissioner were so far afield from Harris’s usual earnings as to be fairly characterized as unrepresentative of customary earnings.14

While we do not b elieve the analysis undertaken by the commissioner in this case is the only appropriate method of arriving at a determination of whether earnings are customary , we conclude it was reasonable under the circumstances presented here

. Jacobson contends that even if the commissioner did not err in excluding the three low est weeks of earnings , it was irrational and arbitrary to exclude only the lowest weeks and not the highest weeks. 11

11 It should be noted at this juncture that the legislature has provided protection to the employer from the risk of rate calc ulations based on weeks of unusually high earnings by excluding overtime and premium pay from average weekly wage computations. Iowa Code § 85.36(6). As we have already noted , workers’ compensation statutes are to be interpre ted and applied liberally and flexibly for the benefit of the worker. Griffin Pipe , 663 N.W.2d at 865; Hanigan , 524 N.W.2d at 160. T he
commissioner ’s decision that Harris’s compensation during the three low
weeks was exceptionally low, while the high weeks were not unusually high when compared to the earnings history was not arbitrary or
unreasonable in this case

. As acknowledged by the commissioner , nearly half of the thirteen weeks prior to the injury produced earni ngs of more than $1012.00 , but only two weeks had income of $247.36 or less.
The commissioner reasonably determined that most of the thirteen weeks of earnings exceeded $810.58, Harris’ s average weekly earnings for his
entire pre injury career at Jacobson

. When the range of Harris’ s weekly earnings is considered, as well as the distribution of the earnings, with most of the weekly earnings near the high end, the commissioner’s decision to replace only the three lowest weeks because they were significantly lower than Harris’ s career average is not unreasonable.
Given our standard of review, as well as the mandate to apply workers’ compensation laws to benefit the worker, we conclude the15

commissioner’s de termination of customary earnings in this case is not illogical, irrational, or wholly unjustifiable.
IV. Conclusion.
We agree with the workers’ compensation commissioner’s interpretation of section 85.36(6) . His decision to replace three low weeks of earnings with weeks in which Harris’ s weekly earnings fairly represented customary earnings was not irrational, illogical, or wholly unjustifiable

. DECISION OF COURT OF APPEALS VACATED; DISTRICT
COURT JUDGMENT AFFIRMED.