5 U.S.C. § 8106 Partial Disability: LWEC, Shadrick, and Suitable Work

Under 5 U.S.C. § 8106, partial disability compensation for a federal employee equals 66⅔ percent of the difference between the monthly pay you were earning when injured and the monthly wages you are still able to earn afterward.¹ If you have a qualifying dependent, that rate rises to 75 percent of the same gap under 5 U.S.C. § 8110.² The Office of Workers’ Compensation Programs (OWCP) at the U.S. Department of Labor administers the payment and decides the numbers that go into it.

A dependent, for this purpose, is a spouse who lives with you or receives regular support, an unmarried child under 18 (or older if incapable of self-support or a student up to age 23), or a wholly dependent parent.² Total monthly compensation is capped at 75 percent of the maximum rate of basic pay for GS-15 under 5 U.S.C. § 8112.³

How OWCP Sets Your Wage-Earning Capacity

The compensation figure hinges on one number: your wage-earning capacity after the injury. Under 5 U.S.C. § 8115, if you have actual earnings that “fairly and reasonably represent” what you can earn, OWCP uses them.⁴ That is the usual path when an employee returns to a lower-paying job after being hurt.

When you are not working, or when your actual earnings do not fairly represent what you could earn, OWCP constructs a theoretical capacity. The statute directs the agency to weigh the nature of the injury, your degree of physical impairment, your usual employment, your age, your qualifications for other work, and the availability of suitable employment in your area.⁴ In practice, a rehabilitation counselor must identify at least two positions available in your commuting area, with documented salaries and vocational requirements.⁵

The Shadrick Formula

Regulations at 20 CFR § 10.403 spell out the three-step math known as the Shadrick formula. First, OWCP divides your actual (or constructed) earnings by the current pay rate for the job you held on the date of injury. That gives a percentage: how much of your pre-injury earning capacity you still have. Second, that percentage is multiplied by your “pay rate for compensation purposes,” which is the pay rate in effect on the date of injury and used for every FECA calculation. Third, the resulting dollar figure is subtracted from your pay rate for compensation purposes. The remainder is your loss of wage-earning capacity, and compensation runs at 66⅔ percent of that number (75 percent with dependents).⁶

Both pay rates in that comparison must be in effect on the same date.⁶ The formula does not account for grade or step increases you might have earned had the injury never occurred; it looks at current pay for the specific grade and step you held when you were hurt.⁷ The higher your post-injury earning capacity climbs, the smaller your compensation gets, reaching zero when it matches or exceeds your pre-injury pay.

When a Light-Duty Job Sets Your Capacity

Not every return to work locks in a new earning capacity. Under 20 CFR § 10.510, a light-duty assignment counts as “regular” federal employment only if the position is classified, you have been formally reassigned with a written position description, and the duties fit your medical restrictions. Work that fails those tests is treated as makeshift or non-competitive and does not represent your true earning capacity.⁸

Partial Disability Compared With Total Disability

The line between Section 8106 and Section 8105 is worth understanding, because the formulas look similar but pay very differently. Total disability under Section 8105 pays 66⅔ percent (or 75 percent with dependents) of your full monthly pay. Partial disability under Section 8106 applies the same percentages, but only to the gap between your pre-injury pay and what you can now earn.⁹ Two employees with the same pre-injury salary and the same statutory rate can therefore receive very different checks.

Changing an Existing LWEC Determination

Once OWCP issues a formal loss of wage-earning capacity (LWEC) decision, that number governs your compensation until it is formally modified. Under 20 CFR § 10.511, modification is available in only three situations: a material change in the injury-related condition, completion of vocational rehabilitation, or proof that the original determination was erroneous.¹⁰ Whoever seeks the change carries the burden of proof, and the existing rate keeps running in the meantime.

OWCP can still adjudicate limited periods of disability after an LWEC decision, for example when you need surgery on the accepted condition.¹⁰ For the vocational-rehabilitation ground, Employees’ Compensation Appeals Board (ECAB) guidance treats “rehabilitated” as working in a new job that pays at least 25 percent more than the current pay of the position used in the original LWEC calculation.¹¹

Refusing Suitable Work Ends Your Compensation

Section 8106(c) contains FECA’s most consequential enforcement rule. If you refuse to seek suitable work, or refuse or neglect to work after suitable work has been offered or secured, you lose entitlement to compensation.⁹ This is a termination of wage-loss and schedule award benefits on all claims where the injury occurred before the termination decision, not a temporary cut. Medical benefits for treatment of the accepted condition continue.¹²

The Procedure OWCP Must Follow

Because the section is a penalty provision, ECAB has repeatedly held it must be “narrowly construed.”¹³ Under 20 CFR § 10.516, OWCP must first notify you in writing that the offered work has been found suitable, and give you 30 days to either accept the job or explain why it is not suitable. If you offer reasons and OWCP finds them unacceptable, you get a second notice and 15 more days to accept without penalty.¹⁴ Only after both windows close without acceptance does OWCP issue a termination decision.

OWCP carries the initial burden to show the work is suitable, that you were told the consequences of refusing, and that you had a reasonable chance to respond. Once those elements are established, the burden shifts to you to show the refusal was reasonable or justified.¹⁵

What Counts as a Suitable Offer

The offer has to be in writing and include the duties, physical requirements, work schedule, location, availability date, response deadline, and pay information down to grade, step, and salary.¹⁶ Some offers are automatically unsuitable:

Positions offering fewer than four hours per day when you can work four or more.
Temporary jobs, permanent seasonal jobs that do not match your prior status, or positions that will end within 90 days.
Jobs requiring duties that conflict with medical conditions arising after the compensable injury.

ECAB has also held that the Section 8106(c) penalty cannot be applied when the offered position is temporary and you held a permanent job at the time of injury.¹³

Reasons OWCP Accepts and Rejects

Valid reasons for refusing a suitable job include medical evidence that your condition has worsened, withdrawal of the offer by the employer, finding other work that reasonably represents your earning capacity, or an inability to travel to the job because of the injury. OWCP will not accept reasons such as a preference for your current area of residence, age, retirement plans, lack of job security or promotion potential, or dislike of the hours or type of work offered.¹⁷

Reporting Earnings, and What Happens if You Don’t

Section 8106(b) lets the Secretary of Labor require you to report earnings from any employment or self-employment on a periodic basis. Non-cash compensation counts too, such as housing, meals, or lodging that can be valued in dollars.¹⁸

The penalty is heavy. If you fail to file a required earnings report, or knowingly omit or understate any part of your earnings, you forfeit the right to compensation for the entire period the report was supposed to cover.¹⁸ Any compensation already paid for that period becomes an overpayment, recoverable either by deduction from future compensation or through the recovery procedures at 5 U.S.C. § 8129, unless you obtain a waiver.¹⁹

Before recovery starts, OWCP has to issue a preliminary determination stating the amount, its fault finding, and your right to challenge the determination or request a waiver.¹⁹

Refusing Vocational Rehabilitation

A separate reduction rule lives in 5 U.S.C. § 8113(b). If the Secretary of Labor finds that your earning capacity would probably have increased substantially had you completed directed vocational rehabilitation, OWCP can prospectively reduce your compensation to reflect what you likely would be earning.²⁰ The reduction can reach zero if OWCP concludes you could have returned to work with no loss of earning capacity had you cooperated.⁸

This is different from the Section 8106(c) penalty in one important way. The rehabilitation-refusal reduction is prospective and adjustable, and it lifts once you comply. The suitable-work penalty terminates wage-loss entitlement entirely, and OWCP will not restore it even if your medical condition later worsens.¹⁶ During directed rehabilitation itself, a partially disabled employee is temporarily paid at the total disability rate, reduced by earnings from work outside the program.⁹

FECA Compensation and Federal Retirement

You generally cannot draw FECA partial disability compensation and a CSRS or FERS disability retirement annuity at the same time. Under 5 U.S.C. § 8116, an employee receiving FECA compensation may not receive salary, pay, or remuneration from the United States except in narrow categories, such as pay for actual service or veterans’ benefits for a different injury.²¹ You have to elect which benefit to take, and the election is generally irrevocable, although a disability retirement annuity is suspended rather than forfeited while FECA wage-loss payments are running.

One exception matters: scheduled awards under Section 8107 for the permanent loss or loss of use of a body part can be paid at the same time as a federal disability retirement annuity. The statute specifically preserves that combination.²¹

1
Office of the Law Revision Counsel. 5 U.S.C. § 8106 – Partial Disability
2
Office of the Law Revision Counsel. 5 U.S.C. § 8110 – Augmented Compensation for Dependents
3
Cornell Law Institute. 5 U.S.C. § 8112 – Maximum and Minimum Monthly Payments
4
Cornell Law Institute. 5 U.S.C. § 8115 – Determination of Wage-Earning Capacity
5
U.S. Department of Labor. FECA Procedure Manual Part 8 – Vocational Rehabilitation
6
Cornell Law Institute. 20 CFR § 10.403
7
Defense Civilian Personnel Advisory Service. Loss of Wage Earning Capacity Training
8
eCFR. 20 CFR Part 10 Subpart F – Continuing Benefits
9
U.S. Department of Labor. FECA Statute
10
Cornell Law Institute. 20 CFR § 10.511 – Modification of LWEC Determination
11
APWU. When OWCP Denies Compensation Based on Previous LWEC Determination
12
eCFR. 20 CFR § 10.517 – Penalties for Refusing Suitable Work
13
U.S. Department of Labor. ECAB Decision, Docket No. 22-0174
14
Cornell Law Institute. 20 CFR § 10.516 – Suitability Determination
15
U.S. Department of Labor. ECAB Decision, Docket No. 20-0946
16
U.S. Department of Labor. OWCP Job Offers Presentation
17
Office of Personnel Management. OWCP Overview Presentation
18
GovInfo. 5 U.S.C. § 8106
19
U.S. Department of Labor. FECA Procedure Manual Part 6 – Debt Management
20
Office of the Law Revision Counsel. 5 U.S.C. § 8113 – Reduction of Compensation
21
Office of the Law Revision Counsel. 5 U.S.C. § 8116 – Limitations on Right to Receive Compensation