Should the minimum compensation rate apply to foreign national Defense Base Act benefits recipients who become U.S. citizens or residents? In other words, should insurance carriers still pay Defense Base Act compensation rates tied to a foreign economy even though the injured worker is now living in a much more expensive country?
The Defense Base Act is an extension of the Longshore and Harbor Workers’ Compensation Act. But there are some important differences. Whereas the Longshore Act uses a minimum compensation rate, the Defense Base Act does not. In fact, the Defense Base Act does not have a minimum compensation rate for disability or death benefits.
Minimum Compensation Under the Longshore Act:
First, let’s look at the Longshore Act. Injured longshore workers who are totally disabled are paid wages equal to two-thirds of their average weekly wage. But, there is a floor. The statutory basis for the minimum compensation rate used in Longshore Act claims can be found at 33 U.S.C. 906(b)(2), which states:
(b)(2) Compensation for total disability shall not be less than 50 per centum of the applicable national average weekly wage determined by the Secretary under paragraph (3), except that if the employee’s average weekly wages as computed under section 10 are less than 50 per centum of such national average weekly wage, he shall receive his average weekly wages as compensation for total disability.
Based on this statutory language, a totally disabled longshore worker’s compensation rate will not fall below the minimum rate unless the injured worker’s average weekly wage was below the minimum rate.
The Longshore Act’s minimum compensation rate is re-calculated each year. The rates are then published online, at the Division of Longshore and Harbor Workers’ Compensation’s National Average Weekly Wage webpage.
Presently, the minimum compensation rate that can be paid to injured longshore workers with a total disability is $344.26 per week (provided that the worker’s average weekly wage exceeded the maximum compensation rate amount). Not much, right? This amount equals a little over $17,900.00 per year, tax-free.
To find the reason why Congress enacted the minimum compensation rate for Longshore Act claimants, we have to go back to the legislative history of the 1972 amendments to the Act. Before 1972, the weekly compensation rate for injured longshore workers was only $18.00. That dollar amount had been established in 1961, but had not been adjusted for inflation. A Congressional report from the Committee on Labor and Public Welfare called the $18.00 compensation rate “unconscionable.” Quite simply, it was much too low.
So, Congress amended the Longshore Act. When it did so, it established a statutory formula that provided for an annual upwards adjustment of the total disability compensation rate. No longer would longshore workers be paid at an “unconscionable” rate. Instead, injured workers had to be paid at a rate that was tied to inflation in the United States.
No Minimum Compensation Rate Under the Defense Base Act:
The Defense Base Act does not offer the same protections against unconscionably low compensation rates. Section 2(a) of the Defense Base Act says: “The minimum limit on weekly compensation for disability, established by section 6(b) . . . of the Longshoremen’s and Harbor Workers’ Compensation Act, shall not apply in computing compensation . . . benefits under this Act.”
The reason for the lack of a minimum weekly compensation rate in Defense Base Act claims is simple enough to explain. The Defense Base Act applies to local nationals and third country nationals just like it applies to U.S. citizens. Sometimes, foreign nationals are paid average weekly wages that, while reflective of the local economy, are significantly lower than the wages paid in the U.S.
In fact, the wages paid to some foreign nationals are so low that they can fall well below the minimum weekly compensation rate established annually by the Department of Labor. For instance, Afghans could be paid $200.00 to $250.00 to perform work–like translation–for military contractors. Yet, the present minimum compensation rate under the Longshore Act is $344.26 per week.
Since the minimum compensation rate does not apply to Defense Base Act claims, employers and carriers are only liable for two-thirds of the injured worker’s average weekly wage. Consequently, an Afghan who is paid at $200.00 per week to work will only receive $133.40 per week as a compensation rate.
Local Nationals Who Immigrate to the United States:
When a local national immigrates to the United States, their compensation rate remains the same. Date of injury determines average weekly wage. Date of disability determines compensation rate. No matter what happens after those dates, the rates are set.
But can we really expect someone to be able to live in the United States on $133.40 per week? What if that person lost both their legs while working as a translator for a military contractor?
Some of the foreign nationals who make it to the United States do so through the Special Immigrant Visa (“SIV”) program. The SIV program was developed to help a limited number of Iraqi and Afghan employees–who provided faithful service to the U.S.–to immigrate to the United States. If the Iraqis or Afghans were willing to participate in U.S. service, then they could be awarded a visa. Indeed, many of the recipients of the SIV were translators and interpreters who worked for Defense Base Act contractors. And many of those translators and interpreters suffered catastrophic injuries for which they received Defense Base Act benefits.
But when these foreign nationals get to the United States, their Defense Base Act compensation rate does not change. They are now living in the United States, but their income is based on the relatively small wages paid to Iraqis and Afghans. In other words, their compensation rate remains tied to the Iraq or Afghanistan economies even though they now live in the U.S.
Should Compensation Rates Increase After Immigration?
Back to the question at hand: whether the minimum compensation rate should apply to foreign nationals who immigrate to the United States? Personally, I would like to see an increase. It seems like the morally right thing to do.
In the case of an Afghan making $200.00 per week, I would increase their compensation rate from $133.40 per week to $200.00 per week. This increase is supported by the LHWCA (but not the DBA): “if the employee’s average weekly wages as computed under section 10 are less than 50 per centum of such national average weekly wage, he shall receive his average weekly wages as compensation for total disability.” See 33 U.S.C. 906 (emphasis added). While I think that paying a weekly compensation rate equal to the average weekly wage paid to a local national working in Afghanistan is still too low, that may be the best that can be done.
The point of all this is not to give anyone a financial windfall but instead to recognize that there are shortcomings in the compensation rates paid to foreign nationals who later immigrate away from their war-torn country. While the compensation rates may have reflected the local economy on the date of injury and disability, subsequent events (like immigration to the United States) make that compensation rate unconscionable for severely injured claimants.
Invitation: if you need help with your Defense Base Act claim, contact Jon Robinson at (985) 246-3194 or [email protected]
Attribution: Photo courtesy of Flickr user Jamestiks.