Sole proprietor's wages diminished by business expenses

To calculate a sole proprietor's average weekly wage, business expenses claimed in federal taxes should be deducted from gross earnings.

Case name: Vite v. Vite, et al., No. CA09-1375 (Ark. Ct. App. 09/01/10).

Ruling: The Arkansas Court of Appeals held that a sole proprietor's average weekly wage was correctly calculated by the Workers' Compensation Commission and that he was not entitled to permanent disability and additional medical benefits.

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What it means: To calculate a sole proprietor's average weekly wage, business expenses claimed in federal taxes should be deducted from gross earnings.

Summary: A self-employed carpet layer was injured when he was unloading a 350-pound roll of carpet from a truck. The roll fell and hit his back, causing him to trip, fall, and lose consciousness. The layer stated he had pain in his back, legs, and shoulders. He said that he was unable to do any carpet laying after the incident. The layer asserted that he previously earned $93,000 and that he could not sustain his standard of living based on the temporary total disability rate that the commission calculated. He contended that his average weekly wage should have been based on gross receipts paid to him without a deduction of business expenses. The Arkansas Court of Appeals held that the layer's business expenses that he claimed in his federal tax return should be deducted from his gross receipts in order to calculate an average weekly wage that was "just and fair to all parties."

The layer also argued that he should be entitled to permanent disability benefits and additional medical treatment. The court explained that an orthopedic surgeon concluded that there was no anatomic evidence of significant injury. The surgeon found "profound psychological abnormality and unsupported pain behavior." The commission assigned greater weight to the doctor's opinion over that of other medical professionals, which gave a basis to deny the claims.

Read more at the WorkersComp Forum homepage.

December 6, 2010

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