Hupp

Is an employer paying benefits pursuant to Labor Code section 4850 entitled to a credit for the gross self-employment income of the injured worker or should the credit be reduced by subtracting expenses related to the production of that income? We hold that the credit is limited to the net earnings of the worker after subtracting expenses reasonably related to the production of self-employment income. We annul that portion of the decision of the Workers’ Compensation Appeals Board (Board) holding otherwise.

Facts

Applicant John E. Hupp was employed as a deputy sheriff by defendant County of Santa Barbara (County) from February 17, 1982, through December 5, 1992. He sustained orthopedic injuries in 1989 while unloading gurneys when assigned to coroner investigations. He was later reassigned to patrol duties, but experienced severe back pain which prevented him from performing that assignment. He became temporarily disabled and claimed benefits pursuant to section 4850.

On February 3, 1994, the workers’ compensation judge issued findings that Hupp was entitled to 36 percent permanent disability and one year of full salary in lieu of temporary disability payments,…