United States Department of Labor

Employees’ Compensation Appeals Board

__________________________________________

N.C., Appellant

and

DEPARTMENT OF HOMELAND SECURITY, 

TRANSPORTATION SECURITY 

ADMINISTRATION, Los Angeles, CA, Employer

__________________________________________

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Docket No. 18-0172

Issued: August 7, 2018

Appearances: Case Submitted on the Record

Appellant, pro se

Office of Solicitor, for the Director

DECISION AND ORDER

Before:

CHRISTOPHER J. GODFREY, Chief Judge

PATRICIA H. FITZGERALD, Deputy Chief Judge

VALERIE D. EVANS-HARRELL, Alternate Judge

JURISDICTION

On October 30, 2017 appellant filed a timely appeal from a May 9, 2017 merit decision of 

the Office of Workers’ Compensation Programs (OWCP). Pursuant to the Federal Employees’

Compensation Act1(FECA) and 20 C.F.R. § 501.2(c) and 501.3, the Board has jurisdiction over 

the merits of this case.

ISSUE

The issue is whether OWCP properly determined appellant’s pay rate for compensation 

purposes in its reduction of his compensation for failing to participate in vocational rehabilitation.

 

1 5 U.S.C. § 8101 et seq.
2

FACTUAL HISTORY

This case has previously been before the Board.2 The facts and circumstances as set forth 

in the prior decisions are incorporated herein by reference. The relevant facts are as follows.

On August 9, 2004 appellant, then a 50-year-old screener, filed a traumatic injury claim 

(Form CA-1) alleging that on August 3, 2004 he strained a muscle in his shoulder and arm lifting 

a bag. OWCP accepted the claim for right shoulder strain, cervical strain, acromioclavicular joint 

arthritis and tendinitis of the right shoulder, cervical discogenic disc disease at C5-6, reflex 

sympathetic dystrophy of the right upper extremity, causalgia, and psychogenic pain. Appellant 

stopped work on August 7, 2004.

Appellant filed a claim for compensation (Form CA-7) requesting wage-loss compensation 

beginning September 21, 2004. On the claim form the employing establishment advised that he 

earned $14.44 per hour with an extra $1.44 per hour for two and a half hours per week of night 

differential. 

OWCP paid appellant wage-loss compensation beginning September 21, 2004 using a 

date-of-injury pay rate of $583.14 per week. It calculated his weekly pay rate by multiplying his 

hourly rate of $14.44 by 2087 hours per year and dividing by 52 weeks to find a weekly base pay 

rate of $579.54. OWCP added $3.60 per week in night differential, ($1.44 multiplied by 2.5 hours 

per week), to find a total weekly pay rate of $583.14.

Appellant was promoted on October 3, 2004 from the “D” band pay rate to the “F” band 

pay rate, and his base salary increased from $30,146.00 to $37,336.00, including locality pay. He 

returned to modified employment on December 13, 2004, but experienced a recurrence of 

disability on March 26, 2005.

The employing establishment offered appellant a position on April 13, 2005 as a modified 

lead transportation security screener with an annual salary of $39,158.00 in the “F” band. The 

duties required no lifting over 20 pounds or reaching above the right shoulder level. Appellant 

returned to work in the position on May 7, 2005.3

On September 4, 2005 appellant stopped work as the employing establishment no longer 

had work available within his restrictions. OWCP paid him compensation beginning 

October 30, 2005. It used a pay rate date of September 4, 2005 to find a weekly base pay rate of 

$753.04 and night differential of $4.71, for a total weekly pay rate of $757.75.

OWCP referred appellant back to the rehabilitation counselor on June 5, 2008 for 

vocational rehabilitation. By decision dated December 18, 2008, it reduced his compensation 

under 5 U.S.C. § 8113(b) as he failed without good cause to participate in vocational 

 

2 Docket No. 16-1152 (issued October 19, 2016); Docket No. 16-0441 (issued October 21, 2016).

3 By decision dated May 9, 2005, OWCP found that appellant received an overpayment of compensation in the 

amount of $471.74 because he returned to work on December 17, 2004, but received compensation through 

December 25, 2004. It found that he was at fault in the creation of the overpayment.
3

rehabilitation.4 OWCP determined that if appellant had undergone vocational rehabilitation he 

would have had the capacity to perform the duties of a surveillance system monitor. In applying 

the formula set forth in Albert C. Shadrick,

5

it used a pay rate date of September 4, 2005. OWCP 

calculated that appellant was entitled to net compensation of $786.78 each four weeks. 

By decision dated February 1, 2010, an OWCP hearing representative affirmed the 

December 18, 2008 decision. She found that OWCP properly reduced appellant’s compensation 

under section 8113(b) as he failed to participate in vocational rehabilitation without good cause. 

In decisions dated April 25, 2011 and August 13, 2012, OWCP denied modification of its 

reduction of his compensation for failure to participate with vocational rehabilitation. 

The employing establishment, in a letter dated April 16, 2013, advised that appellant 

sustained an injury on August 3, 2004 at which time he earned $14.44 per hour and had 2.5 hours 

per week of night differential. It noted that he was not entitled to a recurrent pay rate and that 

calculation of the loss of wage-earning capacity should be based on pay banding. The employing

establishment advised that, effective October 31, 2005, appellant earned a salary including locality 

pay of $14.44 per week with night differential of 25 hours per week and 8 hours of Sunday 

premium pay per week. 

On August 13, 2013 appellant again requested reconsideration. He argued that he should 

be paid at an “F” band rate as he was promoted on October 2, 2004. Appellant further maintained 

that he experienced a recurrence of disability on March 26, 2004. 

The employing establishment, by letter dated May 16, 2014, provided that the applicable 

“D” band pay ranged on appellant’s date of injury (DOI) from $23,600.00 to $35,400.00 and that 

he earned an annual salary of $30,146.00, effective January 11, 2004. Appellant was subsequently 

promoted to “F” band.

By decision dated June 20, 2014, OWCP modified its December 18, 2008 loss of wageearning capacity determination as it incorrectly calculated appellant’s pay rate. It found that it 

failed to include eight hours of Sunday premium pay and 25 hours of night differential in his 

recurrent pay rate and failed to properly calculate his weekly compensation rate using the formula 

applicable for performance-based pay systems. OWCP determined that appellant had not shown 

good cause for his failure to undergo vocational rehabilitation. In another decision dated June 20, 

2014, it vacated in part and affirmed in part the August 13, 2012 decision as it used an inaccurate 

pay rate in its loss of wage-earning capacity determination. 

Appellant requested reconsideration on June 19, 2015. He challenged the finding that he 

refused to cooperate with vocational rehabilitation and argued that his pay rate should be the higher 

rate he received when he returned to work in December 2004. 

 

4 By decision dated January 16, 2009, OWCP granted appellant a schedule award for 17 percent permanent 

impairment of the right upper extremity. 

5 5 ECAB 376 (1953); codified by regulation at 20 C.F.R. § 10.403 (c)-(e).
4

By decision dated September 10, 2015, OWCP denied modification of its June 20, 2014 

decision. It found that appellant had not demonstrated cooperation with vocational rehabilitation 

such that it would remove the sanction of section 8113(b). 

Appellant appealed to the Board. By decision dated October 19, 2016, the Board affirmed 

in part and set aside in part the September 10, 2015 decision.6 The Board found that OWCP 

properly reduced appellant’s compensation under section 8113(b) as he failed to participate in 

vocational rehabilitation. The Board further found, however, that OWCP erred in determining his 

pay rate for compensation purposes in reducing his compensation benefits. The Board noted that 

OWCP used a recurrent pay rate date of September 4, 2005 in reducing appellant’s benefits 

effective December 18, 2008 and in its subsequent modification of the December 18, 2007 

decision to included Sunday premium pay and night differential in his pay rate. The Board found 

that he had not returned to his usual full-time employment with the federal government following 

his August 3, 2004 work injury, but instead returned to modified employment on December 13, 

2004 and May 7, 2005 before stopping work on September 4, 2005. The Board determined that 

OWCP should have used the greater of either August 3, 2004, the DOI, or August 7, 2004, the date 

disability began, as the applicable pay rate date. The Board instructed OWCP to utilize the 

appropriate pay band and to include any applicable Sunday premium pay and night differential in 

calculating appellant’s pay rate for partial disability based on its reduction of his compensation for 

failing to participate in vocational rehabilitation.7

OWCP telephoned the employing establishment on January 13, 2017 to obtain pay rate 

information. It noted that on the DOI appellant earned $14.44 per hour with one-half hour of night 

differential a day at an additional 10 percent. OWCP asked that the employing establishment 

indicate whether the DOI pay rate was the same as the date disability began, August 7, 2004.

On January 31, 2017 OWCP calculated appellant’s pay rate as of the DOI and current pay 

rate for the DOI position. It found that his DOI pay ranged from $23,600.00 to $35,400.00 without 

locality pay and from $28,331.80 to $42,497.70 with locality pay. OWCP determined that 

appellant earned $30,146.00 on the DOI, which yielded a weekly pay rate of $579.72. It added an 

additional 10 percent for 2.5 hours per week of night differential, or $3.61, to find a total weekly 

pay rate of $583.34. 

OWCP further determined that the annual salary for appellant’s DOI position in 2008, the 

date it reduced his compensation, ranged from $24,432.00 to $36,648.00 without locality pay and 

$30,603.52 to $45,905.28 with the 20.05 percent locality pay indicated by Office of Personnel 

Management (OPM) locality tables for his geographical area. It applied the pay banding formula 

 

6 Docket No. 16-1152 (issued October 19, 2016).

7

In a decision dated July 6, 2015, an OWCP hearing representative found that appellant received an overpayment 

of compensation in the amount of $16,955.80 for the period October 30, 2005 to June 28, 2014 because he received 

compensation at in incorrect rate. He further found that appellant was not at fault in the creation of the overpayment,

but denied waiver of recovery of the overpayment as he failed to provide the required financial information. By 

decision dated October 21, 2016, the Board set aside the July 6, 2015 OWCP decision after finding that the case was 

not in posture for decision regarding whether appellant received an overpayment of compensation and the amount of 

any overpayment. Docket No. 16-0441 (issued October 21, 2016). The Board found that OWCP used an incorrect 

pay rate date in determining his pay rate for compensation purposes from October 30, 2005 to July 28, 2014. 
5

set forth in its procedures to find a weekly pay rate of $626.78. OWCP added $3.90 in night 

differential to find a weekly pay rate of $630.69.

By letter dated February 8, 2017, OWCP advised appellant that it had contacted the 

employing establishment to obtain his pay rate on August 7, 2004, the date disability began, but it 

did not respond to the request. It informed him that it would use his pay rate as of the DOI, 

August 3, 2004, of $583.34 per week. OWCP noted that the employing establishment’s pay band 

did not change yearly based on cost-of-living adjustments, but did include locality pay. It indicated 

that it had to calculate appellant’s pay rate as a percentage of the appropriate pay band. OWCP

found that he was in “D” band in 2004, which provided a yearly pay range of $23,600.00 to 

$35,400.00. It found that in 2008 “D” band had a base pay of $24,432.00 to $36,648.00 with an 

additional 25.26 percent locality pay. OWCP added 2.5 hours per week of night differential to 

find a weekly pay rate of $630.69. It applied the formula set forth in Shadrick to find net 

compensation every four weeks of $413.00, or $63.72 after it subtracted health and life insurance 

premiums.

By decision dated May 9, 2017, OWCP modified its December 18, 2008 reduction of 

appellant’s compensation for failure to undergo vocational rehabilitation. It noted that the Board 

had affirmed its finding that he failed to participate in vocational rehabilitation without good cause 

and specified that its decision addressed only the calculation of his pay rate. OWCP noted that the 

Board determined that appellant was not entitled to a recurrent pay rate. It used the date disability 

began, August 7, 2004, as the pay rate date, noting that there was no evidence that the pay rate on 

that date differed from that the pay rate on the DOI. OWCP found that appellant’s weekly pay 

rate on the date disability began was $583.34 including night differential. It noted that his locality 

pay, according to OPM pay tables, was 20.5 percent in 2004 and 25.26 in 2008, and that the base 

pay rate was $23,600.00 to $35,400.00 in 2004 and $24,432.00 to $36,648.00 in 2008. OWCP 

found that the updated DOI pay rate was $630.69 including night differential of a half hour per 

day for five days per week. It applied the Shadrick formula in computing the loss of wage-earning 

capacity. 

On appeal appellant contends that he did not refuse to participate in vocational 

rehabilitation, but was instead sent home from class due to his injury. He went to another school 

which did not teach him to be a surveillance system monitor. Appellant notes that it took OWCP 

nine years to include night differential in his pay rate calculation.

LEGAL PRECEDENT

Section 8105(a) of FECA provides: If the disability is total, the United States shall pay the 

employee during the disability monthly monetary compensation equal to 66 2/3 percent of his 

monthly pay, which is known as his basic compensation for total disability.8 Section 8101(4) of 

FECA defines monthly pay for purposes of computing compensation benefits as follows: “[T]he 

monthly pay at the time of injury, or the monthly pay at the time disability begins, or the monthly 

pay at the time compensable disability recurs, if the recurrence begins more than six months after 

 

8 5 U.S.C. § 8105(a). Section 8110(b) of FECA provides that total disability compensation will equal three fourths 

of an employee’s monthly pay when the employee has one or more dependents. 5 U.S.C. § 8110(b).
6

the injured employee resumes regular full-time employment with the United States, whichever is 

greater....”

9

The formula for determining loss of wage-earning capacity has been codified at section 

10.403(c)-(e) of OWCP’s regulations.10 Under the Shadrick formula, OWCP calculates an 

employee’s wage-earning capacity in terms of percentage by dividing the employee’s actual 

earnings (or constructed earnings) by the current or updated pay rate for the position held at the 

time of injury.11 The employee’s wage-earning capacity in dollars is computed by first multiplying 

the pay rate for compensation purposes, defined in 20 C.F.R. § 10.5(a) as the pay rate at the time 

of injury, the time disability begins, or the time disability recurs, whichever is greater, by the 

percentage of wage-earning capacity. The resulting dollar amount is then subtracted from the pay 

rate for compensation purposes to obtain loss of wage-earning capacity.12 It has been 

administratively determined that certain pay elements will be included in computing an 

employee’s pay rate, including night or shift differential, Saturday premium, Sunday premium, 

holiday, and retention pay.13

OWCP’s procedures note that some agencies have performance-based pay systems, which 

generally do not include automatic pay increases.14 To determine loss of wage-earning capacity 

under such a system, its procedures provide:

“If the employing agency pay scale was banded on the DOI, and remains banded 

‘currently’ the CE [claims examiner] will first need to determine the injured 

employee’s DOI pay rate as a percentage of the appropriate band. Once that 

percentage has been established, the current pay rate for the DOI job (as entered in 

Item (2) of the Shadrick formula) will be the same percentage of the current pay 

range for the band in which the employee was being paid on the DOI.

“For example, if the employee was hired in the second band (with a range of 

$28,085.00 through $60,049.00) at a salary of $50,000.00, then he earns 69 percent 

of the total range. If the current range of the band in which he was being paid on 

the DOI is $35,000.00 through $72,000.00, then $60,530.00 will be the current 

salary since it is 69 percent of the new range. When calculating the percentage of 

the pay band range, normal rounding rules apply.”

 

9

Id. at § 8101(4). 

10 20 C.F.R. § 10.403(c)-(e).

11 Id. at § 10.403(c)-(d).

12 Id. at § 10.403(e).

13 See Federal (FECA) Procedure Manual, Part 2 -- Claims, Determining Pay Rates, Chapter 2.900.6b 

(March 2011).

14 Id. at Part 2 -- Claims, Determining Wage-Earning Capacity Based on Actual Earnings, Chapter 2.815.4(e)(3) 

(June 2013).
7

OWCP’s procedures provide the steps required to determine the percentage on a pay as 

follows:

“Determine the range of the DOI pay band by deducting the lowest salary from the 

highest salary within that band. (In the example above, $60,049.00 – $28,085.00 = 

$31,964.00).

“Deduct the salary at the low end of the band from the actual salary paid to the

employee. ($50,000.00 – $28,085.00 = $21,915.00).

“Take the amount from step 2 and divide it by the amount from step 1. This will 

give the percentage of the salary range that the employee earned on the DOI 

($21,915.00 divided by $31,964.00 = 69 percent). The CE must document the case 

record with this calculation.”

15

The next step, according to OWCP’s procedures, it to determine the current salary for the 

DOI job as follows:

“Determine the range of the current salaries for the DOI pay band by deducting the 

lowest salary from the highest salary within that band. (In the example given, 

$72,000.00 – $35,000.00 = $37,000.00).

“Multiply the amount from step 1 by the percentage of the band that the employee 

was earning on the DOI. ($37,000.00 x 69 percent = $25,530.00).

“Add the number obtained in the second step to the lowest salary in the current 

range for the appropriate band. This will give you the current pay rate for the job 

held when injured. ($25,530.00 + $35,000.00 = $60,530.00).

“Once the current pay rate for the job held when injured is calculated according to 

the above instructions, it can be entered into Item (2) of the Shadrick formula so 

that compensation for [loss of wage-earning capacity] can be paid to the injured 

employee. The CE must document the case record with the Form CA-816 or 

equivalent.”

16

ANALYSIS

On prior appeal the Board found that OWCP erred in using a recurrent pay rate date of 

September 4, 2005 in its December 18, 2008 reduction of appellant’s compensation to reflect the 

amount that he could have earned as a surveillance system monitor if he had continued to 

participate in vocational rehabilitation and in its June 20, 2014 modification of the reduction of his 

compensation. The Board determined that he had not resumed regular full-time employment with 

the Federal Government after his August 3, 2004 work injury, and that his pay rate was either the 

August 3, 2004, the DOI, or August 7, 2004, the date disability began. The Board instructed 

 

15 Id.

16 Id. 
8

OWCP to use the formula for pay banding and include any applicable premium pay in calculating 

appellant’s compensation for partial disability due to his failure to participate in vocational 

rehabilitation.

OWCP, on remand, noted that it was unable to obtain information from the employing 

establishment regarding the pay rate on the date disability began, but found that the evidence 

supported that it was the same rate as on the DOI. It indicated that it was using the date disability 

began as the pay rate, August 7, 2004. 

The Board finds that OWCP properly calculated appellant’s pay rate in reducing his 

compensation based on the amount that he would have earned as a surveillance system monitor 

had he continued to participate in vocational rehabilitation. The employing establishment paid 

him under a performance-based alternative pay system, or pay banding. OWCP’s procedures set 

forth a formula for determining pay rate as a percentage of the appropriate pay band.17 Once the 

percentage of the band has been determined, OWCP’s procedures provide a second formula to 

calculate the current pay rate for the job held when injured.18 Its procedures specify that it must 

include its calculation finding appellant’s pay rate as a percentage of the band in the case record.19 

On January 31, 2017 OWCP noted that appellant earned $30,146.00 on the date of injury, 

for a weekly pay rate of $579.73. It added an additional 10 percent to his hourly rate of $14.44 for 

2.5 hours per week to find an additional $3.61 weekly, for a total weekly pay rate of $583.34.

OWCP next utilized the pay banding formula to determine appellant’s pay rate as a 

percentage of the applicable “D” pay band. It found that in 2004 the pay band ranged from 

$28,331.80 to $42,497.70 with locality pay. OWCP deduced the lowest salary from the highest 

salary in the band ($42,497.70 - $28,331.80) to find $14,165.90. It then deducted the salary at the 

low end of the band from the actual salary paid ($30,146.00 - $28,331.80) to find $1,814.20, which 

it divided by $14,165.90 to find that appellant earned 13 percent of the salary range of the band. 

OWCP noted that in 2008 the range of salary for his DOI pay band ranged from $30,603.52 to 

$45,905.28 with locality pay. In accordance with its procedures, it deducted the lowest salary from 

the highest salary within in the band ($45,905.28 - $30,603.52) to find a range of $15,301.76, 

which it multiplied by the percentage of the band that appellant earned on the DOI to find 

$1,989.23. OWCP added the $1,989.23 to the low end of the salary band, $30,603.52, to find an 

annual base salary of $32,592.75, or a weekly pay rate of $626.76. It added $3.90 for 2.5 hours of 

night differential to find a weekly pay rate of $630.69.

The Board also finds that OWCP properly applied the formula in Shadrick to determine 

appellant’s wage-earning capacity had he participated with vocational rehabilitation.20 It divided 

his employment capacity to earn wages of $513.00 a week by his current pay rate of the position 

held when injured of $630.69 per week effective August 7, 2004 to find an 81 percent wage-

 

17 Id.

18 Id.

19 Id.

20 See M.K., Docket No. 17-0208 (issued April 17, 2018).
9

earning capacity. OWCP multiplied the pay rate at the time of injury of $583.34 by the 81 percent 

wage-earning capacity percentage. The resulting amount of $472.51 was subtracted from 

appellant’s DOI pay rate of $583.34 which provided a loss of wage-earning capacity of $110.83 

per week. OWCP then multiplied this amount by the appropriate compensation rate of threefourths which yielded $83.12 or $105.25 weekly after adjustments. It subtracted benefit premiums 

to find a net compensation every four weeks of $71.72 every four weeks. 

On appeal appellant contends that he did not refuse to participate in vocational 

rehabilitation and did not receive adequate training for the rated position. In its October 19, 2016 

decision, however, the Board affirmed OWCP’s reduction of his compensation under section 

8113(b) to reflect his loss of wage-earning capacity had he continued to participate in vocational 

rehabilitation. Absent further merit review by OWCP, this matter is res judicata.

21

CONCLUSION

The Board finds that OWCP properly determined appellant’s pay rate for compensation 

purposes in its reduction of his compensation for failing to participate in vocational rehabilitation.

ORDER

IT IS HEREBY ORDERED THAT the May 9, 2017 decision of the Office of Workers’

Compensation Programs is affirmed.

Issued: August 7, 2018

Washington, DC

Christopher J. Godfrey, Chief Judge

Employees’ Compensation Appeals Board

Patricia H. Fitzgerald, Deputy Chief Judge

Employees’ Compensation Appeals Board

Valerie D. Evans-Harrell, Alternate Judge

Employees’ Compensation Appeals Board

 

21 See S.M., Docket No. 18-0075 (issued April 11, 2018).