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Arnesen v. Anchorage Refuse, Inc. (11/1/96), 925 P 2d 661
Notice: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the
attention of the Clerk of the Appellate Courts, 303 K Street,
Anchorage, Alaska 99501, phone (907) 264-0607, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
JIM A. ARNESEN, )
) Supreme Court No. S-7401
) Superior Court No.
v. ) 3AN-94-4252 CI
ANCHORAGE REFUSE, INC., and ) O P I N I O N
ALASKA NATIONAL INSURANCE )
Appellees. ) [No. 4422 - November 1, 1996]
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Mark C. Rowland, Judge.
Appearances: Charles W. Coe, Anchorage, for
Appellant. Theresa Hennemann, Faulkner,
Banfield, Doogan & Holmes, Anchorage, for
Before: Compton, Chief Justice, Rabinowitz,
Matthews, Eastaugh, and Fabe, Justices.
Jim Arnesen challenges decisions of the Alaska Workers'
Compensation Board holding that he was ineligible for reemployment
benefits because he was trained as and acted as a real estate sales
agent within the ten years preceding his injury; that his reason-
able wage earning capacity was $33,000; and that he was ineligible
to claim two children as dependents in the calculation of his
spendable weekly wage at the time of his injury.
II. FACTS AND PROCEEDINGS
Arnesen worked for Anchorage Refuse as a heavy equipment
mechanic from 1984 until 1993. He injured his shoulder on the job
in April 1993. Anchorage Refuse's insurance carrier, Alaska
National Insurance Company (Alaska National), paid Arnesen
temporary total disability (TTD) payments of $558.66 a week from
April 1993 until September 1993. In September 1993 Arnesen's
physician released him to work in a position as a real estate sales
agent and broker, for which he held a current license. Arnesen
received temporary partial disability (TPD) payments of $216.87
from September 1993 until March 1994, followed by a lump sum
permanent partial disability (PPD) payment.
Arnesen requested reemployment benefits under AS
23.30.041. The Reemployment Benefits Administrator's (RBA's)
Designee appointed Virginia Collins to conduct an eligibility
evaluation. Collins concluded, after corresponding with Arnesen's
physician and conducting a survey of the real estate market, that
Arnesen was ineligible for reemployment benefits under AS
23.30.041(e). On the basis of her report, the Alaska Workers'
Compensation Board (the Board) denied Arnesen reemployment
Arnesen's efforts in the real estate sales field
translated into an approximate net income of $500 per month after
September 1993, when he was released for that type of work by his
doctor. The Board recognized this in addressing a claim by Arnesen
for additional TPD benefits for the period during which he was
working in real estate sales but before which he received a
permanent partial impairment rating. (EN2) Nevertheless, the Board
found, based upon Collins's report concerning Arnesen's eligibility
for reemployment benefits, that Arnesen could have earned $33,000
annually if he had pursued employment with an established real
estate company instead of working alone.
Arnesen is a divorc with two children, for whom he pays
child support. His ex-wife has custody of the children and claims
both children as dependents for tax purposes. As a result, Arnesen
was considered by Alaska National to be single with one dependent,
himself, for calculation of his benefits. Arnesen questioned the
propriety of this determination before the Board. The Board held
that Alaska National properly based Arnesen's compensation rate on
a single dependent status.
Arnesen appealed to the superior court on the above
issues. The superior court affirmed the holdings of the Board on
all relevant issues. (EN3) Arnesen now appeals to this court.
III. STANDARD OF REVIEW
When the superior court acts as an intermediate court of
appeal, we review the merits of the administrative decision without
deference to the superior court's decision. Tesoro Alaska
Petroleum Co. v. Kenai Pipe Line Co., 746 P.2d 896, 903 (Alaska
1987). Questions of law which do not involve any particular agency
expertise are reviewed under the substitution of judgment standard.
Id. Questions of law involving agency expertise are reviewed under
the "reasonable basis test." Municipality of Anchorage, Police and
Fire Retirement Bd. v. Coffey, 893 P.2d 722, 726 (Alaska 1995).
Determinations of fact by an administrative agency are reviewed
under the "substantial evidence"standard. Id.
A. Is Real Estate Sales a Job within the Meaning of AS
Alaska Statute 23.30.041(e) provides:
An employee shall be eligible for
[reemployment] benefits under this section
upon the employee's written request and by
having a physician predict that the employee
will have permanent physical capacities that
are less than the physical demands of the
employee's job as described in the United
States Department of Labor's "Selected
Characteristics of Occupations Defined in the
Dictionary of Occupational Titles"for
(1) the employee's job at the time of
(2) other jobs that exist in the labor
market that the employee has held or received
training for within 10 years before the injury
or that the employee has held following the
injury for a period long enough to obtain the
skills to compete in the labor market,
according to specific vocational preparation
codes as described in the United States
Department of Labor's "Selected Character-
istics of Occupations Defined in the
Dictionary of Occupational Titles."
(Emphasis added.) Arnesen does not dispute that he has received
training for, kept current a license for, and practiced real estate
sales within the ten years before his injury. He nevertheless
argues that real estate sales is not a job because income from real
estate sales is based solely on commissions. Arnesen argues that
the term "job"contemplates an employee being hired by an employer
through a contract of hire, and that his real estate broker's
license was maintained merely as a "hobby."
We have previously held that, where a term used in a
statute is not defined in that statute, "the plain or common
meaning . . . is controlling." Tesoro, 746 P.2d at 905. The
American Heritage Desk Dictionary defines a job as a "regular
activity performed in exchange for payment, especially a trade,
occupation, or profession." We believe that most people would
consider a position as a real estate sales agent and broker --
indisputably a trade, occupation, or profession --to be a job.
The Dictionary of Occupational Titles (DOT) contains
entries for both real estate sales agent and real estate broker and
recognizes that compensation is generally by commission. Anchorage
Refuse argues that this is dispositive of the existence of these
positions as "jobs"given the reference to the DOT in subsection
.041(e). Whether or not it is dispositive, the DOT listing is
certainly persuasive. It seems safe to say that the positions are
"occupations,"given the DOT listing. Arnesen attempts to make a
distinction between an "occupation"and a "job." Nothing in the
statute or elsewhere suggests that the legislature intended the
same distinction, or contemplated anything other than the common
meaning of the word "job."(EN6)
Arnesen does not have to work as a real estate sales
agent or broker if he does not want to. If he wants a job as an
employee for a fixed wage, he is free to search for one. But the
purpose of the reemployment benefit scheme is to ensure that an
injured employee has some skills with which he or she can earn a
living after an injury. Arnesen, a licensed real estate agent and
broker, has such skills. (EN7) Whether he uses those skills in a
self-employment situation or through an established real estate
company is up to him. But under the terms of AS 23.30.041(e), he
cannot provide a physician's prediction that his permanent physical
capacities are less than the physical demands of another job that
exists in the labor market that he has held or received training
for in the ten years preceding the injury. (EN8)
We affirm the superior court's holding that the Board
properly denied reemployment benefits to Arnesen.
B. Did the Board Err in Imputing $33,000 Income to Arnesen?
Alaska Statute 23.30.200(a) sets an injured employee's
TPD compensation as a percentage of the difference between the
employee's spendable weekly wages before the injury and his or her
wage-earning capacity after the injury in the same or another
employment. Alaska Statute 23.30.200(b) provides:
The wage-earning capacity of an injured
employee is determined by the actual spendable
weekly wage of the employee if the actual
spendable weekly wage fairly and reasonably
represents the wage-earning capacity of the
employee. The board may, in the interest of
justice, fix the wage-entering [sic] capacity
that is reasonable, having due regard to the
nature of the injury, the degree of physical
impairment, the usual employment, and other
factors or circumstances in the case that may
affect the capacity of the employee to earn
wages . . . .
Arnesen's actual earnings after his injury as a real
estate sales agent were approximately $500 per month. However,
under AS 23.30.200(b), the Board found that those earnings did not
fairly represent his wage-earning capacity: "[T]hat level of
earnings is associated with the employee's choice to work alone,
after a considerable period of absence from full-time real estate
sales, without funds for advertisements." The Board fixed his
wage-earning capacity at $33,000 a year. Arnesen challenges the
This court has noted with respect to the calculation of
[E]arning capacity and post-injury earnings
are not synonymous. . . . Actual post-injury
earnings raise a presumption of actual earning
capacity; the presumption may be rebutted with
"evidence showing that they are an unreliable
indicator of earnings capacity.". . . Actual
post-injury earnings may be an unreliable
indicator of earning capacity, especially
where they are of a temporary or unpredictable
Pioneer Constr. v. Conlon, 780 P.2d 995, 997 (Alaska 1989)
The evidence offered by Anchorage Refuse to rebut the
presumption consisted of the report submitted by Virginia Collins.
(EN10) The Board found that Arnesen could have earned $33,000 per
year "if as an experienced real estate salesperson he had pursued
employment at an established real estate company."
The report by Collins incorporated information from,
among other sources: a National Association of Realtors survey
which listed by region median agent and broker compensation, which
in each category was greater than $30,000; occupational outlook
information from the Alaska Department of Education which reported
that many new agents average about $1,500 per month but that full-
time experienced agents can earn about $2,750 per month; wage rate
information from the Department of Labor reporting essentially the
same thing; and an Anchorage labor market survey in which Collins
contacted twelve different real estate companies, most of whom
indicated that there was a wide range of earnings by sales agents
but that the Department of Labor figures were reasonable and that
most agents would make between $30,000 and $40,000 annually.
The legitimacy of the Board's determination that
Arnesen's earning capacity was $33,000 per year rests, therefore,
upon whether he could properly be considered an "experienced"real
estate salesperson. Although Arnesen presented testimony that he
was not an "established"salesperson, we do not independently
reweigh the evidence concerning findings of fact by the Board.
Yahara v. Construction & Rigging, Inc., 851 P.2d 69, 72 (Alaska
1993). The Board could have considered his long-time maintenance
of both agent's and broker's licenses, and his operation of his own
business, Arnesen and Associates, since the mid-1980's, as evidence
that he was experienced enough to make $33,000 per year. It also
clearly considered that many of the obstacles he faced in terms of
start-up costs were a result of his choice to work by himself
rather than with a well-known larger firm, and that there were
positions available with larger, established real estate firms in
"Substantial evidence is that which a reasonable mind,
viewing the record as a whole, might accept as adequate to support
the Board's decision." Yahara, 851 P.2d at 72 (citing Morrison v.
Afognak Logging, Inc., 768 P.2d 1139, 1141 (Alaska 1989)). Given
the degree of deference afforded findings of fact by the Board
under the substantial evidence standard, we affirm the judgment of
the Board. (EN11)
C. Did the Board Err in Classifying Arnesen as Single with
No Dependents? (EN12)
1. Use of Internal Revenue Code
Alaska Statute 23.30.220(a) provides in pertinent part:
"The spendable weekly wage of an injured employee at the time of an
injury is the basis for computing compensation. It is the
employee's gross weekly earnings minus payroll tax deduc-
tions. . . ."
Alaska Statute 23.30.265(23) defines "payroll taxes"as
(A) the amount that would be withheld
under withholding tables in effect on the
January 1 preceding the injury under the
Internal Revenue Code of 1954 as amended and
regulations issued under the code, as though
the employee had claimed the maximum number of
dependents for actual dependency, blindness,
and old age to which the employee is entitled
on the date on which the employee is injured;
(B) the amount that is or would be
deducted or withheld as of the January 1
preceding the injury under the Social Security
Act of 1935 as amended . . . .
Arnesen challenges the calculation of his benefits, claiming that
he should be considered to have two dependent children even though
his ex-wife has physical custody of the children and claims the
children as dependents on her federal income taxes under the
provisions of their divorce decree. He argues that, since he pays
child support under Alaska Civil Rule 90.3, his children are
Arnesen's argument fails. The statute is clear. If
Arnesen cannot claim the children as dependents under the Internal
Revenue Code, then he may not claim them as dependents for the
workers' compensation benefit calculation. The statute looks to
the employee's spendable weekly wage at the time of injury. That
is an objective number: gross weekly earnings minus payroll taxes
as defined in AS 23.30.265(23). The statute is concerned with how
much money he takes home every week, not with how best to
characterize his relationship with his children.
Arnesen also argues that under the definition of payroll
taxes, his deductions are calculated "as though the employee had
claimed the maximum number of dependents . . . to which the
employee is entitled on the date on which the employee is injured."
See AS 23.30.265(23). He reasons that, since he could have claimed
the children as dependents if he and his wife had agreed that he
could do so, his maximum number of dependents should include the
two children. This argument is meritless. Under the statute, the
"maximum number of dependents . . . to which the employee is
entitled"is one. He is not entitled to claim the children as
dependents because I.R.C. sec. 152(e) does not allow him to. (EN14)
We affirm the superior court's holding that the Board
properly calculated Arnesen's benefits under the statute. (EN15)
2. Equal protection
Arnesen also argues that, by not having his benefits
calculated as if his children were dependents, he has been deprived
of the equal protection of the law. He argues that the application
of the benefit scheme creates two classes of people, custodial
parents and non-custodial parents, without a fair and substantial
relation to the workers' compensation statute.
Arnesen has not demonstrated an equal protection
violation. As Anchorage Refuse points out, this court has
considered an equal protection challenge to Civil Rule 90.3 and
held that custodial and non-custodial parents are not similarly
situated for purposes of child support. Coghill v. Coghill, 836
P.2d 921, 929 (Alaska 1992). Custodial parents qualify for the
personal exemption because they care for the children for the
better part of the year.
We affirm the ruling of the superior court that AS
23.30.220 and the calculation of Arnesen's compensation based upon
a single status with one dependent is constitutionally sound.
The decision of the superior court is AFFIRMED in all
1. The procedural history is actually more complicated. The
Board first considered a less comprehensive report by Collins but
remanded to the RBA's Designee for a determination of whether real
estate sales would return Arnesen to remunerative employability
under AS 23.30.041. Collins then supplemented her findings with a
survey of the real estate sales labor market and concluded that
work as a real estate broker would return Arnesen to remunerative
employability; the RBA's Designee again denied reemployment
benefits, and the Board affirmed the denial in April 1994. Under
this court's subsequent decision in Moesh v. Anchorage Sand &
Gravel, 877 P.2d 763, 765 (Alaska 1994), issued in July 1994, the
remand would have been improper since remunerative employability is
not a factor in determining eligibility for reemployment benefits.
2. Alaska National had reduced its payments to Arnesen in light
of Collins's report.
3. The superior court also held, in response to Anchorage
Refuse's cross-appeal, that the Board erred in using remunerative
employability as a factor in determining eligibility for
reemployment benefits. See supra note 1.
4. The interpretation of AS 23.30.041, including the question of
whether a position as a real estate sales agent and broker is a
"job,"is a question of law suitable to judicial determination de
novo. See Tesoro, 746 P.2d at 903.
5. Arnesen argues that the inclusion of self-employment as a real
estate sales agent or broker in the definition of "job"deprives
him of "the rights and privileges of the employee-employer
relationship." These rights and privileges purportedly include the
minimum wage protection of the Alaska Wage and Hour Act, from which
commission-based sales agents are exempt. See AS 23.10.055(9). He
implies that every "job"must include these protections. As a
heavy equipment mechanic for Anchorage Refuse, Arnesen was entitled
to the protection of the Alaska Wage and Hour Act. This does not
mean, however, that he is entitled to perpetual protection under
the Act. The very existence of the exemptions noted above
indicates that there are "jobs"in the labor market that do not
have those protections. That a position as real estate sales agent
or broker is not a job subject to minimum wage protection does not
mean that it is not a job.
6. This court has previously noted that the DOT describes "jobs"
in Yahara v. Construction & Rigging, Inc., 851 P.2d 69, 71 (Alaska
1993) (describing the application of "the Department of Labor job
activity level classifications") (emphasis added).
7. To this extent, it is irrelevant whether Arnesen's operation
of a sole proprietorship realty company was indeed only a "hobby,"
as he claims.
8. Arnesen also argues that self-employment is only an option
after an employee becomes eligible for reemployment benefits
because AS 23.30.041(i) lists self-employment as an option under
the employee's reemployment plan if it will return the worker to
remunerative employability in the shortest possible time. But
simply because self-employment is an option after eligibility has
been established, does not mean it is an option only after
eligibility has been established.
9. The determination of Arnesen's reasonable earning capacity is
an issue of fact to which the substantial evidence test should be
applied. See Coffey, 893 P.2d at 726.
10. As noted above, the report and labor market survey were
submitted only after Arnesen successfully, but in hindsight under
Moesh erroneously, argued for a remand for a determination of
whether the job would meet the remunerative employability standard.
That the information was before the Board for a different purpose
than to determine his earning capacity is irrelevant, however.
11. Collins's report indicated that there were numerous positions
available with established real estate firms in Anchorage. Both
she and the Board assumed that Arnesen could have acquired one of
these positions had he tried. We accept this assumption here,
noting that, given the relative nature of the substantial evidence
concept, if Arnesen had been able to demonstrate that the positions
in the established firms were not available to him, the report by
Collins would be considered insubstantial because it would describe
a labor market not open to Arnesen. Since Arnesen made no attempt
to acquire one of these positions, however, we are left only with
evidence that the positions existed.
12. The use of federal tax dependency determinations is a question
of law involving agency expertise, subject to a "reasonable basis"
standard of review. See Coffey, 893 P.2d at 726; Pioneer Constr.,
780 P.2d at 998 (holding Board's treatment of federal tax
depreciation deductions subject to reasonable basis standard under
which Board has "considerable discretion"). The constitutionality
of the workers' compensation statute is subject to this court's
independent review. See Keane v. Local Boundary Comm'n, 893 P.2d
1239, 1241 (Alaska 1995).
13. We note that, even if Arnesen's argument were correct and we
were to base his workers' compensation payments on what his
spendable weekly wage would be if he had two more dependents, it
would primarily affect his TTD payments, which are calculated as
80% of his spendable weekly wage. AS 23.30.185. His PPD payment
would not be affected because it is calculated without reference to
spendable weekly wage. AS 23.30.190. His TPD payment would not be
significantly affected because it is based upon the difference
between his spendable weekly wage at the time of injury and his
wage-earning capacity after the injury. AS 23.30.200. No matter
how many dependents he is credited with before the injury, he would
have the same number of dependents after the injury. The effect on
his withholdings would be similar, so the difference between his
before and after wages would also be similar.
14. Internal Revenue Code sec. 152(e)(1) and (2) provide that the
custodial parent gets the personal exemption unless he or she
releases the claim in writing.
15. Arnesen points out that, if he were to be killed in a work-
related accident, his children would receive death benefits under
AS 23.30.215. But that statute provides that death benefits are
payable to "children,"not to "dependents." The death benefit
provision has no relevance to the issue here.