FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JOSEPH PETITT,

Petitioner,

v.

SAUSE BROTHERS; SEABRIGHT

INSURANCE COMPANY; DIRECTOR,

OFFICE OF WORKERS’

COMPENSATION PROGRAM,

Respondents.

No. 12-70740

BRB No.

11-0351

OPINION

On Petition for Review of an Order of the

Benefits Review Board

Argued and Submitted

May 8, 2013—Portland, Oregon

Filed September 20, 2013

Before: Alfred T. Goodwin, Stephen Reinhardt,

and Andrew D. Hurwitz, Circuit Judges.

Opinion by Judge Hurwitz
2 PETITT V. SAUSE BROTHERS

SUMMARY*

Longshore and Harbor Workers’ Compensation Act

The panel granted a petition for review of a decision of

the Benefits Review Board awarding benefits to petitioner

under the Longshore and Harbor Workers Compensation Act.

The panel held that under the Longshore Act, scheduled

wage increases given by a non-union employer to all

employees in a certain class based solely upon seniority were

a general increase in wages and did not increase a claimant’s

wage-earning capacity. The panel concluded that petitioner’s

quarterly “seniority raises” were more akin to a general wage

increase than to a merits-based raise in wages, and therefore

should not be calculated into his wage-earning capacity. The

panel remanded to the agency to recalculate petitioner’s

partial disability benefits.

COUNSEL

Charles Robinowitz (argued), Portland, Oregon, for

Petitioner.

Norman Cole (argued), Sather, Byerly & Holloway, LLP,

Portland, Oregon, for Respondents.

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.
PETITT V. SAUSE BROTHERS 3

OPINION

HURWITZ, Circuit Judge:

The question presented is whether, under the Longshore

and Harbor Workers’ Compensation Act (“LHWCA”),

scheduled wage increases unrelated to the merits of a

worker’s performance constitute an increase in the worker’s

wage-earning capacity or merely a general increase in wages. 

We hold that they are a general increase.

I.

Joseph Petitt injured his back in 2003 while earning $15

per hour as a welder for Sause Brothers (“Sause”). After

undergoing two surgeries, Petitt briefly returned to his job,

but, physically unable to continue, left Sause at the end of

2004. Sause then began paying Petitt permanent total

disability benefits under the LHWCA, 33 U.S.C. §§ 901–950.

Three years later, Petitt began working as an electronics

assembler at K&K Sound Systems (“K&K”), earning $7.80

per hour. K&K provides all production and clerical

employees, including assemblers, an automatic $0.25 per

hour raise every three months until their wages reach $13.50

per hour.

When Petitt began work at K&K, Sause began paying him

only permanent partial disability benefits based on his

starting salary. Sause periodically reduced those benefits to

reflect each quarterly increase. Petitt objected, claiming that

Sause incorrectly factored the quarterly raises into the

determination of his benefit.
4 PETITT V. SAUSE BROTHERS

Under the LHWCA, “‘[d]isability’ means incapacity

because of injury to earn the wages which the employee was

receiving at the time of injury in the same or any other

employment.” 33 U.S.C. § 902(10). A disabled employee is

entitled to “66 b per centum of the difference between the

average weekly wages of the employee and the employee’s

wage-earning capacity thereafter in the same employment or

otherwise, payable during the continuance of partial

disability.” 33 U.S.C. § 908(c)(21). Section 910(a)–(c)

provides three formulas for determining a claimant’s average

weekly wage. Wage-earning capacity of a partially disabled

employee

shall be determined by his actual earnings if

such actual earnings fairly and reasonably

represent his wage-earning capacity:

Provided, however, That if the employee has

no actual earnings or his actual earnings do

not fairly and reasonably represent his wageearning capacity, the deputy commissioner

may, in the interest of justice, fix such wageearning capacity as shall be reasonable,

having due regard to the nature of his injury,

the degree of physical impairment, his usual

employment, and any other factors or

circumstances in the case which may affect

his capacity to earn wages in his disabled

condition, including the effect of disability as

it may naturally extend into the future.

33 U.S.C. § 908(h).

Because the parties stipulated to Petitt’s average weekly

wage at the time of his injury, this appeal hinges on the
PETITT V. SAUSE BROTHERS 5

proper calculation of wage-earning capacity. After an

evidentiary hearing, an administrative law judge (“ALJ”)

found that Petitt’s “pay increases after the date of injury are

reflective of his wage-earning capacity and shall be used to

calculate his disability payments.” The Benefits Review

Board affirmed. Petitt filed a timely petition for review; we

have jurisdiction pursuant to 33 U.S.C. § 921(c).

We review Benefits Review Board decisions “‘for errors

of law and for adherence to the substantial evidence

standard.’” Gen. Constr. Co. v. Castro, 401 F.3d 963, 965

(9th Cir. 2005) (quoting Alcala v. Dir., OWCP, 141 F.3d 942,

944 (9th Cir. 1998)). “The Board’s interpretation of the

LHWCA is a question of law reviewed de novo and is not

entitled to any special deference.” Stevedoring Servs. of Am.

v. Price, 382 F.3d 878, 883 (9th Cir. 2004).

II.

“The objective in determining wage-earning capacity ‘is

to determine the wage that would have been paid in the open

market under normal employment conditions to the claimant

as injured.’” Deweert v. Stevedoring Servs. of Am., 272 F.3d

1241, 1248 (9th Cir. 2001) (quoting Long v. Dir., OWCP,

767 F.2d 1578, 1582 (9th Cir. 1985)). “The Act contemplates

that the current dollar amount of post-injury ‘wage-earning

capacity’ be adjusted downward (i.e., backward in time) to

account for post-injury inflation and general wage increases. 

This adjustment allows post-injury ‘wage-earning capacity’

to be meaningfully compared to pre-injury ‘average weekly

wages.’” Sestich v. Long Beach Container Terminal,

289 F.3d 1157, 1161 (9th Cir. 2002); see also Long, 767 F.2d

at 1582 (“A general increase in wages . . . may make post-
6 PETITT V. SAUSE BROTHERS

injury earnings an unreliable indicator of wage-earning

capacity.”).

Under the LHWCA, general wage increases include

“percentage increase[s] . . . in the contractual wages of the

base hourly rate.” Hanson v. Port of Portland, BRB Nos. 98-

1454 and 98-1454A, 1999 WL 35135239, at *3 (Ben. Rev.

Bd. Aug. 6, 1999). Wage increases required by a union

contract are treated as general wage increases. See, e.g.,

Randall v. Comfort Control, Inc., 725 F.2d 791, 797 n.10

(D.C. Cir. 1984) (“[W]ages received by a particular employee

as a result of union bargaining for industry-wide pay rates are

not indicative of the employee’s true wage-earning

capacity.”).

Conversely, merit or promotion-based wage increases are

factored into a claimant’s wage-earning capacity under the

LHWCA. Sestich, 289 F.3d at 1160–61; Deweert, 272 F.3d

at 1247 & n.3. Merit-based wage increases include raises

received for expanding one’s duties or learning new skills. 

Deweert, 272 F.3d at 1247 n.3.

III.

The only issue for decision is whether the $0.25 quarterly

raises are general wage increases, which should not be

factored into the determination of Petitt’s wage-earning

capacity, or instead reflect an increase in earning capacity,

properly reducing the partial disability benefit.1In finding

1 On January 20, 2008, K&K gave Petitt a $0.55 per hour merit increase. 

The parties agree that the ALJ properly increased Petitt’s wage-earning

capacity to account for this increase. Nor do the parties dispute that the
PETITT V. SAUSE BROTHERS 7

the latter, the ALJ relied primarily on the testimony of Karla

Kaudel, the chief executive officer of K&K. Kaudel labeled

the quarterly pay increases a “seniority raise,” and testified:

If people work for us, we promise them a

certain maximum wage that they can achieve

in a certain time frame for us. And the cap

wage for everybody in production and clerical

is $13.50. And when our employees start,

they start at minimum wage, and with

adequate performance they will get automatic

raises of 25 cents per quarter.

This Court has not previously had occasion to consider

the appropriate treatment under the LHWCA of such

“seniority raises.” We conclude that Petitt’s quarterly raises

are more akin to a general wage increase than to a meritsbased raise in wages, and therefore should not be calculated

into his wage-earning capacity.

In Randall, the District of Columbia Circuit noted that

increases in the collectively bargained union rate for a

particular employee’s work do not reflect increased earning

capacity under the LHWCA, because the increases simply

represent industry-wide pay rates, rather than an increase in

individual skill or responsibility. 725 F.2d at 797 n.10. 

Although K&K is not a union employer, its quarterly

increases are also untethered from advancement in skill or

responsibility. Like a union contract increase, which Randall

characterized as “not indicative of the employee’s true wageearning capacity,” id., the K&K seniority increases do not

ALJ appropriately adjusted for inflation in determining Petitt’s wageearning capacity.
8 PETITT V. SAUSE BROTHERS

increase Petitt’s value on the open market. Indeed, the record

is clear that newer K&K employees performing precisely the

same tasks as Petitt—with the same amount of proficiency—

receive K&K’s starting wage, adjusted upward from the time

of their hire, and thus earn less than Petitt.

Deweert, upon which Sause relies, is not to the contrary. 

Although we stated in Deweert that wage increases because

of seniority may be factored into a claimant’s wage-earning

capacity, the claimant’s seniority in that case was paired with

increased responsibility and new marketable skills. 272 F.3d

at 1247 n.3. Here, Petitt’s seniority is not accompanied by

any increase in his productivity, skill, or responsibility that

would make him more valuable on the market if he left K&K. 

Petitt testified without contradiction that after “your second

or third month” as an electronics assembler, “you’re pretty

much as fast as you’re going to get,” and will have “learn[ed]

what you need to learn until you get to another part of the

company.” And when asked whether he was more productive

than he was three months after he started, Petitt replied “no.” 

Again, the ALJ heard no evidence to the contrary.

This is not to suggest that K&K’s seniority increases are

not a rational market strategy or of real benefit to the

employer. By regularly increasing Petitt’s wages, K&K seeks

to avoid the costs, direct and otherwise, associated with hiring

or training a new employee, even at lower wages. But our

objective here is not to determine whether K&K benefits

from the wage increases, but rather to ascertain the wage that

Petitt could receive on the open market under normal

employment conditions. Id. at 1248. Because Petitt has

learned no new skills and taken on no additional

responsibility, his increased length of service makes him

more valuable only to K&K. Were he to seek work on the
PETITT V. SAUSE BROTHERS 9

open market, he could start at minimum wage, just as he and

all new employees did at K&K.

IV.

For the reasons above, we hold that under the LHWCA,

scheduled wage increases given by a non-union employer to

all employees in a certain class based solely upon seniority

are a general increase in wages and do not increase a

claimant’s wage-earning capacity. The petition for review is

granted and the Board’s decision is vacated. The matter is

remanded to the agency to recalculate Petitt’s partial

disability benefits in a manner consistent with this opinion.

PETITION GRANTED; VACATED AND

REMANDED.