Thinking about the Fourth Factor

By Judge Robert Durham, Cookeville

Robert Durham

When conducting settlements, we’re sometimes called upon to consider the four factors that might impact the disability benefits employees may receive if they’re not back to a pre-injury wage.

To be honest, it is a cut-and-dried affair in most cases. The biggest question is usually whether or not employees lost their jobs due to circumstances beyond their control. After that, it’s a fairly simple matter to determine whether they are making as much or more than before the injury, whether they have a high school diploma or GED, and whether they are over 40.

The fourth factor ̶ the unemployment rate in the county where the employees worked ̶ is the easiest of all, right? It practically never applies, particularly in 2017, when the whole state enjoyed historically low unemployment rates.

At least, that’s what I expected to find when I started digging into the question. Surprisingly, at least to me, that’s not always the case.

Before I go any further, please be advised these are simply my musings. This question hasn’t come before my colleagues or myself yet in a contested case, nor has the Appeals Board addressed the question. What follows is simply one way to look at it from a general perspective, outside of the context of a discrete set of facts. Ultimately, a trial judge and an appellate court might see it differently.

That said, recall that section 50-6-207(3)(B)(iii) provides that an employee who hasn’t returned to a pre-injury wage may receive an award multiplied by 1.3 times if, at the time of the injury, the monthly unemployment rate in the county of employment is at least two percentage points higher than Tennessee’s “yearly average unemployment rate” (YAUR) in the year immediately preceding the one in which the compensation period ends. (The compensation period is the time it takes employees to reach maximum medical improvement plus their impairment rating times 450 weeks.) Thus, two dates are important: the month of the injury date and the year the compensation period ends.

Let’s consider an example.

But first, a disclaimer: I got all of my numbers from the Internet. I’m not in any way establishing their validity. My analysis is also assuming that “yearly average unemployment rate” refers to the previous calendar year and not the twelve months immediately preceding the injury, which is certainly an argument that could be made.

Assume Tennessee’s YAUR for 2016 was 4.8%. In January 2017, forty-seven counties had unemployment rates at least two percent higher than that. So, it appears that employees who worked in half the counties in Tennessee would be eligible for the 1.3 multiplier if they got hurt in January 2017 and their compensation period ended in 2017.

By February, that number was reduced to 24 counties, and March saw it go down to 11. In April and May, no counties had a rate of 6.8% or higher. The same was true of August through November.

However, you can’t just assume the fourth factor will not apply for injuries that occurred after March 2017. Rhea County’s unemployment rate was 6.8% or higher in June and July, which would render the fourth factor applicable to injuries in that county. Further, and even more significantly, the statute states the monthly unemployment rate will be compared not to YAUR of the calendar year preceding the injury, but to the YAUR of the calendar year preceding the end of the compensation period.  For many (if not most) injuries, that occurred in the latter half of 2017, the compensation period will not expire until 2018.

Thus, the 2017 YAUR would be used to determine whether the fourth factor applies. Given 2017’s historically low unemployment, it will almost certainly be less than 4.8%.

This means that county rates in a given month that were not 2% or more than the 2016 YAUR might be more than 2% when compared to the lower 2017 YAUR. Therefore, some injured employees whose compensation periods end in 2018 will be entitled to the multiplier, even though they would not have received it if their compensation period ended in 2017.

Although it’s a lesson I’ve never quite learned, we all know what happens when we assume. While it might be true that the fourth factor doesn’t apply often now, it doesn’t mean that it never will.

To make sure employees aren’t missing out on benefits to which they are entitled, we must all set aside our assumptions, take a little time to check the numbers, and give the “fourth factor” its due.


3 thoughts on “Thinking about the Fourth Factor

  1. Rick L Moore says:

    Respectfully, I believe the statute states that the multiplier is 1.35 instead of 1.30 if the injured employee fails to return to work at a job making the same as the pre-injury wage.
    If the statute has changed please bring this to my attention.
    Rick L. Moore


    • tncourtofwcclaims says:

      Hello, This is Jane Salem. I’m the Chief Judge’s Staff Attorney and I publish the blog. I forwarded your comment to Judge Durham, who says 1.3 is correct for the unemployment rate. It is 1.35 if they didn’t return to work, which he never mentioned. Right? We appreciate your comment and keeping us on our toes!


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