What Is LWEC?
When an employee gets hurt and returns to work, they might struggle to perform their previous job duties or earn equivalent wages due to lingering effects of the injury. In such cases, they may be considered partially disabled and entitled to compensation for Loss of Wage-Earning Capacity (LWEC).
Compensation for Partial Disability Using the Shadrick Formula
If a claimant qualifies for partial wage loss compensation after returning to work, the Claims Examiner calculates the benefit using the Shadrick formula, based on the case Albert C. Shadrick, 5 ECAB 376. This formula ensures fair compensation when residual limitations prevent full earning capacity.
Breakdown of the Shadrick Formula:
1. Pay rate when:
-
-
(a) Injured
-
(b) Disability began
-
( c )Compensable disability recurred
-
2. Current pay rate for job and step when injured
3. Capable earnings vs. actual earnings
4. Wage Earning Capacity (WEC)
5. Adjusted pay based on WEC
6. Loss of WEC
7. Compensation (based on dependent status — 66⅔% or 75%)
8. Consumer Price Index (CPI) Adjustments
When a Second Injury Occurs After LWEC Is Established
Sometimes, a claimant receives an LWEC decision from their initial claim after returning to work. In these cases, their compensation is reduced using the Shadrick Formula. If the employee gets injured again in their new position with the LWEC in place and does not return to work, they receive compensation based on the LWEC pay rate from the first injury.
This situation doesn’t happen often, but when it does, it can be confusing to understand how the DOL calculates compensation. At first glance, it may look like the claimant is overpaid when combining payments from both injuries.
For example, the claimant had a Date of Injury (DOI) on 11/16/2011, with a weekly salary of $1,145.54. After returning to work, the claimant was placed on an LWEC, with a new wage of $572.77 per week.
Example Case:
- First DOI: 11/16/2011
- First DOI Salary: $1,145.54/week
- LWEC Salary: $572.77/week
- Compensation Rate: 75%
- Second DOI: 10/11/2012
- New pay rate (for second injury): $572.77/week (from LWEC job)
Perception of Overpayment
At first glance, the claimant might appear overpaid because they receive compensation for both injuries.
- First injury payout: $2,195.75 every 28 days
- Second injury payout: $2,157.76 every 28 day
However, Consumer Price Index (CPI) increases (17.8% over the last three years) significantly influence the total compensation over time
Final Thoughts: Clarifying LWEC’s Role in DOL Compensation
Though rare, these dual-claim LWEC scenarios can cause confusion. Understanding that CPI adjustments and Shadrick formula calculations can create the feeling of overpayment is important. This perception often comes from structured guidelines that take inflation and past wage loss decisions into account.
Contact Us Today
Frasco® Government Services delivers ethical and efficient solutions tailored to your needs. Have questions or want to discuss your investigative needs further? Schedule a call with one of our experts today to find the answers you’re looking for.
Disclaimer: This blog post is for informational purposes only and should not be considered legal advice. Please consult your general counsel for specific legal guidance. Frasco investigators hold licenses, and we ensure our operations comply with US industry, federal, state, and local laws.