Munoz v. Industrial Commission of Arizona et al (2/10/2014)

March 3, 2014

Arizona Court of Appeals Division Two Holds that Income Earned as an Independent Contractor Should Not Be Included When Computing Average Monthly Wage for Workers’ Compensation Awards

Julie Munoz was an employee of Sonic Restaurants when she injured her shoulder and filed a workers’ compensation claim.  The insurer accepted her claim and calculated her Average Monthly Wage (AMW) based on her compensation from Sonic.  Munoz challenged the award, arguing that she also had executory contracts to perform horse training and rehabilitation which she could not fulfill due to her injury.  Munoz asked that the anticipated income from the contracts be included in her AMW.  After a hearing, an administrative law judge excluded the anticipated income from the AMW on the grounds that the income would have been earned as an independent contractor and that anticipated income should be excluded in any event.  The decision was affirmed on administrative review, and Munoz filed a special action challenging the decision.

The Court of Appeals affirmed the award.  The Court determined that Munoz was an independent contractor and thus not covered by the Workers’ Compensation Act.  Relying on Faulkner v. Industrial Commission, 71 Ariz. 76, 223 P.2d 905 (1950), the Court held that income earned from employment which is not included in the Act cannot be considered when calculating the AMW of an injured worker.

Munoz also challenged the ALJ’s determination that prospective income from executory contracts cannot be included in an AMW calculation.  Having decided that the income was excluded because Munoz was an independent contractor, the Court declined to decide the issue.

Presiding Judge Kelly authored the opinion; Judges Espinosa and Eckerstrom concurred.