Title: Powell v. Industrial Commission
Citation: 104 Ariz. 257, 451 P.2d 37
Docket Number: 9362-PR
State: Arizona
Issuer: Arizona Supreme Court
Date: February 27, 1969

104 Ariz. 257 (1969) 451 P.2d 37 Elizabeth POWELL, Petitioner, v. The INDUSTRIAL COMMISSION of Arizona and Phoenix School District No. 1, Respondents. No. 9362-PR. Supreme Court of Arizona. In Banc. February 27, 1969. *258 Donald J. Morgan, Phoenix, for petitioner. Noel J.R. Levy, Phoenix, for respondent Industrial Commission of Arizona; Robert D. Steckner, Robert K. Park, Arthur B. Parsons, Jr., Glen D. Webster, Phoenix, Spencer K. Johnston, Tucson, Dee-Dee Samet, Donald L. Cross, William E. Smith, Mchael A. Lasher, Jr., Phoenix, of counsel. McFARLAND, Justice. This case is before us on a petition of the respondent Industrial Commission of Arizona for a review of a decision of the Court of Appeals, 7 Ariz. App. 518, 441 P.2d 553, which set aside an award of the Industrial Commission. Decision of the Court of Appeals affirmed. The petitioner, Elizabeth Powell, a teacher, entered into a contract with the respondent School District No. 1. The contract provided that her employment as a teacher would begin on August 29, 1966, and end June 2, 1967, at a specified salary of $9,039.50, to be paid in the following manner: On October 24, 1966, while in the scope of employment, petitioner accidently slipped and injured herself. She properly filled in a claim with the Industrial Commission. The Commission, in its award, computed her average wage on a 12-month basis and fixed the same at $753.29 per month. This was arrived at by dividing the $9,039.50 by the twelve months. The petitioner contends that the total annual salary should have been divided by nine months. The Court of Appeals, Division One, reversed the award on the basis that she was employed for approximately nine months during the school year, holding that petitioner's employment was a matter of contract, that her average monthly wage should have been for approximately nine months, and that her average wage should have been determined on that basis. This Court granted the respondent's petition for review in order that we might further examine the question of the computation of "average monthly wage under A.R.S. § 23-1041, as amended;" namely, whether the petitioner's wage should be determined by the use of the 12-month period or the approximately 9-month period, such period representing the actual period in which the petitioner was employed as a teacher. Section 23-1041, A.R.S., as amended, provides as follows: In Steward v. Industrial Commission, 69 Ariz. 159, 211 P.2d 217, in a rehearing on an interpretation, we held: In the instant case the petitioner contends that her average wage is governed by subsection C of § 23-1041, stating that it is set out in the contract of employment and therefore must be computed on a 9-month basis. Because petitioner has worked more than thirty days prior to the injury, the "average monthly wage" may not be ascertained from wages earned in a single month. Kennecott Copper, Inc. v. Industrial Commission, 61 Ariz. 382, 149 P.2d 839; Pettis v. Industrial Commission, 91 Ariz. 298, 372 P.2d 72. The term "average monthly wage" in subsection A of § 23-1041 refers to the average wage where the claimant has worked more than thirty days prior to the injury. Therefore, we look to subsection A. It states that the employee who is entitled to compensation shall receive it on the basis of the "average monthly wage." The legislature, however, has omitted any formula to guide the Commission in computing that average. In illustrating further the point that the legislature has seemingly meant to omit any formula, we examine subsection B of § 23-1041. This subsection prescribes a procedure to follow only where the employee "has not been continuously employed for the period of thirty days immediately preceding the injury." It states that the payments shall "reasonably represent the monthly earning capacity." This subsection reflects the characteristics of subsection A in that neither give any criteria for computing the average wage. In examining other state statutes we find many, if not most states, set forth the method for computation in the statute. Therefore, it is reasonable to conclude that A.R.S. § 23-1041 allows the Commission to determine the basic unit of compensation which is equitable in the respective case. In Pettis v. Industrial Commission, supra, we held that the term "monthly wage" as defined in subsection D of A.R.S. § 23-1041, could only be used where the employee has worked for a period of less than thirty days. We also said: The respondent contends that Pettis v. Industrial Commission, supra, supports its position that the employment was seasonal in that it was held that the two-month period during which time the petitioner did not work due to a shutdown should not have been counted in computing the average monthly wage as it was not due to seasonal employment. However, the Pettis case specifically states that unlike most of the statutes in other states our statutes fail to specify the period of time over which the earnings are to be computed. The Industrial Commission used the 12-month basis in its computation. The Court said that because the statute fails to mention a formula for computing the wage, it could not say that the method adopted by the Commission constituted error. Again there is an inference that the Commission has discretion in computing the decisive average. The petitioner contends that the Pettis case supports her position in that the Court held the Commission erred in using the 12-month average wage which included the two months claimant did not work due to shutdown of his employer. In defining "seasonal employment," the Pettis opinion is emphasizing that in order for employment to be seasonal, a characteristic of that employment must be that the employee work only part of the year, and that it be the type of employment which dictates the seasonal character of the work. In making such a determination we should consider the purpose of the law. In West v. Industrial Commission of California, 79 Cal. App. 2d 711, 180 P.2d 972, the Court, in recognizing the purpose of workmen's compensation, said: Section 23-1044, A.R.S., sets forth the basis for payment on temporary partial disability at sixty-five per cent of the difference between the wages earned before the *262 injury and the wages which the injured person is able to earn thereafter. Section 23-1045, A.R.S., sets forth the basis of temporary total disability where there is not a dependent residing in the United States at sixty-five per cent of the average monthly wage and an increase of $10.00 per month for each dependent during the time provided for payment. It is evident that in Arizona, as in California, the purpose of an award is not to make the employee whole for the loss which he has suffered but to at least take care of the major portion of the loss during the disability. If a teacher with a contract similar to that of the instant case were injured at the beginning of the school term; namely, the 1st of September, and then adjudged to be able to resume normal work on June 1st, and the average wage was made on a 12-month basis on the theory that the employment was in fact "seasonal", there would have been paid industrial insurance for the total sum of $9,039.50 and yet, because of the division by twelve she would only be receiving three-fourths of the benefits for a year. A.R.S. § 23-981 et seq., the statutes effective at the time of the award, set up the compensation fund and provided that the Commission have full authority to fix the rates,[2] also that "the state compensation fund shall be neither more nor less than self-supporting." § 23-983, subsec. A, A.R.S. Subsection C of § 23-983 provides for the setting up of the fund, the determining of the hazards, different classes of occupations, industries, and fixing the premiums therefor at the lowest rates consistent with the maintenance of a solvent compensation fund, creation and maintenance of a reserve, etc. Under § 23-1006, A.R.S., the Commission was given authority to make contracts of insurance to cover the entire underlying liability of employers insured in the state compensation fund.[3] In the case of Gene Autry Production v. Industrial Commission, 67 Ariz. 290, 195 P.2d 143, we pointed out that one of the primary duties of the Commission is to insure the solvency of the state fund, that insurance is based upon the law of average and, in referring to the duties of the Commission, we said: Therefore, as stated in Gene Autry Production v. Industrial Commission, supra, the Commission has authority "to evaluate the reasonable, fair, and equitable earning capacity of workmen, both for purposes of assessment of premium and for the payment of compensation benefits, provided that the same measure of value was to be applied as it related to the collection of premium *263 and to payment of compensation benefits." This was not done in the instant case. We held in Cavness v. Industrial Commission, 74 Ariz. 27, 30, 243 P.2d 459, 462, that: And in City of Phoenix v. Industrial Commission of Arizona, 104 Ariz. 120, 449 P.2d 291 (1969), we said: Therefore, to fix the rate of pay on a 12-month basis would be including three months for which the petitioner is not covered under the contract and under which she could not recover industrial insurance because there would not be an accident which was an incident of employment, there being no employment during this period. Hence it would be inequitable for the school district to have to pay premiums on this 3-month period for which no accident could occur as she was not employed for this period under her contract. The Industrial Commission, however, evidently fixes rates on the entire amount of the contract which, in the instant case, was approximately for a 9-month period. The Industrial Commission likewise should fix the average monthly wage on the basis of the 9-month contractual period of employment. The Commission, therefore, had full authority to fix a rate of compensation for payment on a monthly basis as provided in a contract, as in the instant case. In Pettis v. Industrial Commission, supra, we held it was not proper to include the 2-month period during which time the petitioner did not work due to the shutdown of his employer. In the instant case, it would be equally unfair to make such inclusion for a period of time not covered in the contract by calling it seasonal employment. Certainly, as pointed out by petitioner and which was supported by the evidence, there is school work in the summer. A few schools are operated in the summer, as well as other work which a teacher might secure. If injured in this other work, the employer would be the one who would be paying the compensation for that period of time. Respondent points out the latitude of the schools in the employment of teachers. We agree that a school could make a contract for twelve months employment. However, this was not done in the instant case and the Industrial Commission is under a duty of providing workmen's compensation rates on the basis of contracts made by the school district, which in the instant case was for approximately a 9-month period. We, therefore, hold that the average monthly wage under petitioner's employment was covered by the contract under which she was employed and that her average monthly wage should be fixed by dividing the amount of the contract by the period of employment, which was approximately nine months. The decision of the Court of Appeals, holding that the average monthly wage should be fixed on the basis of the contract, is affirmed and the award of the Industrial Commission is set aside. UDALL, C.J., LOCKWOOD, V.C.J., and STRUCKMEYER and HAYS, JJ., concur. [1] The only change made in the 1963 amendment to A.R.S. § 23-1041 was the addition of subsection F. [2] As amended, § 23-981 provides that the manager of the state compensation fund shall have full authority over the fund. [3] As amended, § 23-1006 authorizes the state compensation fund to make contracts of insurance.