Average Weekly Wage: Are Overtime Hours Really Mandatory Or Consistent?

November 2021

By: Markeya A. Fowler

Properly calculating average weekly wage is essential to any claim and can often pose a challenge based on the types of compensation received by an employee. In a year, an employee often earns regular wages, overtime wages, bonuses and additional earnings for working holidays. An issue often in dispute between parties that can significantly affect the average weekly wage calculation is whether overtime hours worked are mandatory, or, if not mandatory, consistently worked?

It is well established under case law and the Illinois Workers’ Compensation Act that average weekly wage is calculated generally to exclude overtime and bonuses. Section 10 of the Illinois Workers’ Compensation Act states that:

“Compensation shall be computed on the basis of the average weekly wage which shall mean the actual earnings of the employee in the employment in which he was working at the time of the injury during the period of 52 weeks ending with the last day of the employee's last full pay period immediately preceding the date of injury, illness or disablement excluding overtime, and bonus divided by 52.”

So what exactly does this mean? Since the enactment of the current version of Section 10, the Appellate Court has interpreted the statute to determine the legislature’s intentions and what should be classified as overtime.

In Edward Hines Lumbar Co v. Industrial Comm’n, 215 Ill.App.3d 659 (1990), the Illinois Appellate Court determined that overtime is compensation for any hours beyond those claimant regularly works and extra hourly pay above the claimant’s normal hourly wage. Overtime is not simply any hours worked over 8 hours per day or 40 hours per week. The court found that different occupations have different regular hours of employment and had the legislature intended to exclude all time worked over 8 hours per day or 40 hours per week, the statute would not include the ambiguous and flexible language. In Edward Hines Lumbar Co v. Industrial Comm’n, 215 Ill.App.3d 659 (1990), the Illinois Appellate Court determined that overtime is compensation for any hours beyond those claimant regularly works and extra hourly pay above the claimant’s normal hourly wage. Overtime is not simply any hours worked over 8 hours per day or 40 hours per week. The court found that different occupations have different regular hours of employment and had the legislature intended to exclude all time worked over 8 hours per day or 40 hours per week, the statute would not include the ambiguous and flexible language.

The Appellate Court expanded on this opinion in Ogle v. Industrial Comm’n, 284 Ill. App. 3d 1093 (1996), where it determined that the claimant established that his normal work week was on average 48 hours. The claimant was a member of the union and as a part of his contract, he was required to work 48 hours per week. Only after the claimant met the weekly requirement was he allowed to refuse overtime. The court found that an 8-hour work day was not claimant’s normal work day and he was mandated to work 8 hours of overtime per week.

In the case of Airborne Express, Inc. v. Illinois Workers’ Compensation Comm’n, 372 Ill. App. 3d 549 (2007), the Illinois Appellate Court expanded on its requirements that for overtime to be considered a part of claimant’s regular hours it must be mandatory or consistent. The court held that the overtime hours excluded from the average weekly wage calculation are overtime hours in excess of the employee’s regular hours that he or she is not required to work as a condition of his or her employment or which are not a part of a set number of hours consistently worked each week.

In Airborne Express, the claimant worked 32 hours prior to the date of injury and out of this period, he worked 31 weeks of overtime. In the 31 weeks, the claimant worked 538.7 hours of overtime, which the Commission included in the calculations for average weekly wage. The Illinois Appellate Court determined that the overtime hours should not have been included in the average weekly wage. Not only did the evidence establish that the claimant was allowed to refuse the overtime hours, he volunteered to work the overtime shifts and he did not work a consistent number of overtime hours each week. The wage summary sheet reflected claimant worked an irregular number of overtime hours ranging from .8 hours per week to 28.43 weeks. The court held that the overtime hours should not have been included in average weekly wage, reasoning that if merely working overtime on a regular, voluntary basis were sufficient to include the overtime hours worked in the calculation of an employee's average weekly wage, the overtime exclusion in Section 10 of the Act would be rendered meaningless.

The reasoning in Airborne Express was later applied to Edward Don Co. v. Industrial Comm’n, 344 Ill.App.3d 643 (2011) and Arcelor Mittal Steel v. IWCC, 2011 IL App (1st) 102180WC, where the Appellate Court again distinguished what is considered mandatory and consistent overtime.

In Arcelor Mittal Steel, the claimant testified that he was normally scheduled to work 8 or 12 hour shifts that were mandatory. The 12-hours shift were associated with managing outages in the plant and all employees were required to work the 12-hour shifts. The court held that the overtime in this case was consistent and a condition of his employment.

In contrast, in Edward Don Co., the claimant worked 16 weeks prior to the accident and in the 16 weeks his wage statement showed 15 weeks of overtime hours varying between 0 to 7.8 hours per week. The court held that the overtime should not be included because there was no evidence that he was required to work overtime as a condition of his employment or that he consistently worked a set number of overtime hours each week. There was no evidence that claimant’s overtime hours were part of his regular hours of employment.

The Commission issued two recent decisions on this topic, holding that the claimant’s overtime hours were not mandatory and should not be included in average weekly wage. In Janet Spencer v. State of Illinois, Jack Mabley Developmental Center, 20 IWCC 0609, claimant testified that at one point overtime was mandatory. However the employer changed its policy and overtime was only mandated if the employees did not volunteer. The evidence showed that claimant worked overtime for five pay periods prior to the accident earning $4,717.91. The Commission held that while the claimant may have worked overtime part of the year prior to her injury, she only worked overtime during a few pay periods and the hours were not consistent. The Commission reversed the Arbitrator’s decision and held overtime should not have been included in average weekly wage.

On February 26, 2021, the Commission issued its most recent decision reversing the Arbitrator’s decision and found overtime should not be included in average weekly wage. In, Jeffrey Turner v. State of Illinois Choate Mental Health Center, 21 IWCC 0079, claimant testified that he could volunteer for overtime and that it was also mandatory. The employer testified when overtime was necessary, volunteers were asked first and if there were not enough volunteers then overtime was mandated. The employer testified that claimant volunteered for 90% of the overtime hours he worked in the year prior to the accident. The Commission reasoned that while claimant worked overtime in the 52 weeks preceding the injury, the number of hours varied and he did not work a consistent number of hours each week. The Commission reversed the Arbitrator’s decision including overtime in average weekly wage holding that overtime was not set, the overtime was voluntary and it was not consistent mandatory overtime and was excluded from calculating average weekly wage.

As the Appellate Court stated in Airborne Express, for overtime hours to be included as regular hours for the calculation of average weekly wage, the overtime hours should be mandatory or consistently worked. Overtime hours that are consistently worked are those that are consistently worked by the claimant as a part of his or her regular work schedule. In disputing claimant’s argument that any overtime worked should be included with his regular hours, the employer should not only look at whether overtime was mandatory but also at whether there was consistent overtime worked per week.

In practice, whether or not overtime will be included as the claimant’s regular wages for calculating average weekly wage often depends on the testimony of the parties. Without a written overtime policy, it is the testimony and credibility of the claimant and the employer that provides the basis for the Arbitrator’s decision as to whether overtime is mandatory or consistent.

To prove that overtime is not consistent or mandatory, the employer ideally should have written overtime policies that state how overtime is scheduled, assigned and whether or not the employee can opt out of overtime. Having the evidence to show that the overtime is neither mandatory nor consistent with regular hours is your key to a lower average weekly wage.

If you have any questions on your claims, please do not hesitate to contact Brady, Connolly & Masuda, P.C.