Each fiscal year, the Secretary of Labor must calculate a new National Average Weekly Wage for Longshore and Defense Base Act claims. See 33 U.S.C. 906(b)(3). The Secretary made those calculations for fiscal year 2022.
The Fiscal Year 2022 Numbers:
For the period between October 1, 2021, and September 30, 2022, the following values apply:
National Average Weekly Wage: $863.49
Maximum Compensation Rate: $1,726.98
Minimum Compensation Rate: $431.75
Percent Increase: 5.77% (but there’s a catch)
What does all this mean? First, I want to address the percent increase. This entire percent increase does not apply to death or permanent total disability benefits. Although cost of living adjustments apply annually to those classification of benefits, no percent increase may exceed 5%. Section 10(f) of the Longshore Act, which also applies to the Defense Base Act, states:
(f) Effective October 1 of each year, the compensation or death benefits payable for permanent total disability or death arising out of injuries subject to this chapter shall be increased by the lesser of–
(1) a percentage equal to the percentage (if any) by which the applicable national weekly wage for the period beginning on such October 1, as determined under section 906(b) of this title, exceeds the applicable national average weekly wage, as so determined, for the period beginning with the preceding October 1; or
(d) 5 per centum.
See 33 U.S.C. 910(f) (emphasis added).
All of this is just to say that a PTD claimant or a death benefits claimant will not get the full 5.77% increase to their benefits. Instead, they will get a 5% increase because of Section 10(f).
Maximum Compensation Rate for Fiscal Year 2022 Disabilities:
Second, the new maximum compensation rate for fiscal year 2022 applies when disability begins on or after October 1, 2021. An injured worker’s average weekly wage is determined on the date of injury. The injured worker’s compensation rate is determined on the date of disability. Often, but not always, those dates are one and the same. When they are not, then workers’ with high average weekly wages who are injured before October 1, 2021, but not disabled until October 1, 2021 or later, could claim the maximum compensation rate for fiscal year 2022 ($1,726.98) instead of the lower maximum compensation rate for fiscal year 2021 ($1,632.70). See Roberts v. Sea-Land Servs., Inc., 132 S.Ct. 1350, 1359 n.7 (2012).
Foreign Nationals With DBA Claims Do Not Get the Benefit of the Minimum Compensation Rate:
Third, the minimum compensation rate does not apply to foreign nationals claiming Defense Base Act benefits. See 42 U.S.C. 1652(a). Section 2(a) of the DBA states:
The minimum limit on weekly compensation for disability, established by Section 906(b) of title 33, and the minimum limit on the average weekly wages on which death benefits are to be computed, established by section 908(e) of title 33, shall not apply in computing compensation and death benefits under this chapter.
The Full 5.77% Increase Should Affect Commutation Value:
Finally, to my knowledge, the percent increase affects commutation value. Commutation applies to foreign national claims for permanent total disability, death benefits, and unscheduled permanent partial disability benefits paid pursuant to 33 U.S.C. 908(c)(21). Benefits are reduced by half. See 33 U.S.C. 909(g); 42 U.S.C. 1652(b). The commutation calculator used by the Division of Federal Employees’ and Longshore and Harbor Workers’ Compensation reduces benefits after certain variables are taken into account. Those variables include (1) life expectancy, (2) the interest rate for a one year constant maturity on the date commutation is calculated, and (3) the National Average Weekly Wage percent increase for the fiscal year in which commutation is calculated. I might be wrong, but this should increase the commutation value for all unscheduled foreign national DBA claims.