DANIELLE CARLSON, Employee/Appellant , v. FORD MOTOR COMPANY, SELF-INSURED, Employer/Cross-Appellant.
WORKERS= COMPENSATION COURT OF APPEALS
JULY 12, 2006
WAGES - IRREGULAR. Where the employee=s weekly wage was irregular, ranging from $225.60 to $1,304.49 over the course of the twenty-three weekly pay periods preceding her work injury, and where the employee earned less than $1000.00 during fifteen of those twenty-three pay periods, the compensation judge=s decision not to exclude the two lowest weekly pay periods from her computation of the employee=s average weekly wage was not clearly erroneous and unsupported by substantial evidence.
WAGES - BONUS. Where the employee=s weekly wage over the course of the twenty-six weeks prior to her work injury had been irregular, where she had received a $3000 signing bonus and a $600 Christmas bonus during that period, where the Christmas bonus was based in part on regular attendance at work over the course of the preceding year and so was related to the employee=s individual performance, and where the signing bonus was unrelated to the employee=s individual performance, the compensation judge=s decision to include the Christmas bonus pro-rated over the course of the entire year rather than only the half-year averaging period was not clearly erroneous or unsupported by substantial evidence, but the judge=s inclusion of the signing bonus was clearly erroneous.
Affirmed in part, reversed in part, and modified in part.
Determined by Pederson, J., Johnson, C.J., and Stofferahn, J.
Compensation Judge: Janice M. Culnane
Attorneys: James Michael Gallagher, Minneapolis, MN, for the Appellant. Lawrence C. Miller, Miller & Carlson, Minneapolis, MN, for the Cross-Appellant.
WILLIAM R. PEDERSON, Judge
The employee appeals and the self-insured employer cross-appeals from the compensation judge=s calculation of the employee=s date-of-injury weekly wage. We affirm in part, reverse in part, and modify the judge=s determination.
On January 6, 2004, Danielle Carlson [the employee] sustained an admitted injury to her low back in the course of her employment with Ford Motor Company [the employer]. The employer, which was self-insured against workers= compensation liability, evidently commenced payment of temporary total disability benefits based on a reported weekly wage of $1,125.00. This weekly wage evidently included a $3,000.00 signing bonus and a $600.00 Christmas bonus that the employee had been paid over the course of twenty-three weeks immediately preceding her work injury pursuant to negotiations between her union and the employer. The employer later contended that the lump-sum bonuses should not have been included in the weekly wage calculations. The employee=s benefits were evidently reduced to reflect the employer=s revised calculations, and the employee responded by filing a claim petition alleging underpayment of temporary total disability benefits.
The employee=s claim came on for hearing before a compensation judge on November 15, 2005. The parties agreed that the employee=s weekly earnings were Airregular@ under Minnesota Statutes ' 176.011, subdivisions 3 and 18, and that the amount actually paid to the employee in the twenty-six weeks prior to her injury, reflecting twenty-three pay periods, was $23,153.94. This total included the $3,000.00 signing bonus and the $600.00 Christmas bonus. It was agreed that the Christmas bonus was, in part, based on the employee=s attendance while the signing bonus was not.
At trial, the employee argued that her earnings during two of the weekly pay periods preceding her injury were unusually low and should not be included in her weekly wage calculation. The employer argued that neither the signing bonus nor the Christmas bonus should be included in the weekly wage calculation and that, if they were included, they should be pro-rated to more approximately reflect the employee=s earning capacity. Evidence introduced at trial included portions of the collective bargaining AAgreements@and the ALetters of Understanding@ between the employer and the United Auto Workers. The employer and the union had agreed to a four-year contract that had become effective on September 29, 2003. The $3,000.00 signing bonus, in return for membership ratification of the agreement, had been paid to each employee, on the active employment roll on September 29, 2003, excluding temporary part-time employees. The employee was paid the $3,000.00 bonus with her paycheck for the week ending October 5, 2003. With regard to the Christmas bonus, an employee who had worked thirteen to nineteen of the fifty-two pay periods in the AChristmas Bonus eligibility year@ was determined to be entitled to a bonus of $300.00. An employee who had worked twenty to twenty-five pay periods received $450.00, and one who had worked twenty-six or more pay periods received $600.00. The employee received a $600.00 Christmas bonus with her paycheck for the week ending November 30, 2003. The employee calculated her weekly wage to be $1,078.27. She arrived at this figure by subtracting from her gross earnings her earnings during the two unusually low pay periods and then dividing the balance by twenty-one weeks rather than twenty three. The employer calculated the employee=s wage to be $850.17, by subtracting the two bonus payments from the employee=s gross earnings and then dividing the balance by twenty-three.
In a Findings and Order issued December 23, 2005, the compensation judge determined the employee=s weekly wage to be $876.12. The judge rejected the employee=s argument that her two low earnings weeks should not be included in the wage analysis, and she rejected also the employer=s argument that the bonus payments should not be included. The judge determined, however, that pro-rating the Christmas bonus over an entire year and the signing bonus over the four-year term of the agreement provided Aa fair assessment of the employee=s average weekly wage.@ The employee appeals and the employer cross-appeals.
1. The Two Weeks of Low Earnings - Appeal
The primary object of wage calculation is to Aarrive at a fair approximation of [the employee=s] probable future earning power which has been impaired or destroyed because of injury.@ Knotz v. Viking Carpet, 361 N.W.2d 872, 874, 37 W.C.D. 452, 455 (Minn. 1985), quoting Sawczuk v. Special School Dist. No. 1, 312 N.W.2d 435, 437-38, 34 W.C.D. 282, 287 (Minn. 1981). In addition to actual wages earned by an employee, additional items to be included in calculation of the weekly wage for benefits purposes can include various other income such as the following: tips and gratuities if accounted for by the employee to the employer; payments made by the employer for board or allowances; vacation, holiday, and sick pay; overtime pay; attendance and performance bonuses; and incentive bonuses. See Minn. Stat. ' 176.011, subd. 3 and 18; Boschee v. Barry Blower, slip op. (W.C.C.A. Aug. 25, 1989); see also Fougner v. Boise Cascade, 42 W.C.D. 281, 460 N.W.2d 1 (Minn. 1990); Anderson v. Ford Motor Co., 46 W.C.D. 24 (W.C.C.A. 1991); Senser v. Minnesota Vikings Football Club, 42 W.C.D. 688 (W.C.C.A. 1989); Rogers v. Margaret Baker Foods, slip op. (W.C.C.A. Sept. 7, 1990). Weekly wage is normally computed using the formula in Minnesota Statutes ' 176.011, subdivisions 3 and 18, which define daily and weekly wages. In this case, however, there is no evidence showing either the specific calendar days worked by the employee or the actual number of days or hours that she worked daily or weekly for the employer. Where the evidence necessary to comply with the statutory wage calculation directives is not available, the compensation judge may use another method of calculating the employee=s weekly wage, so long as it fairly represents the employee=s injury-related loss of earning capacity. Hansford v. Berger Transfer, 46 W.C.D. 303, 309-10 (W.C.C.A. 1991); Decker v. Red Wing Shoe Co., 41 W.C.D. 763 (W.C.C.A. 1988).
The employee contends initially, citing the Afair approximation@ principle cited above as set forth in Sawczuk v. Special School District No. 1, that the compensation judge erred in failing to exclude from her wage calculation two pay periods during which she earned nowhere near what she earned during her other pay periods. Inclusion of these non-representative pay periods, she contends, does not lead to a fair approximation of her probable future earning power that has been impaired or destroyed by her injury. We are not persuaded.
Over the course of the twenty-three pre-injury pay periods represented in the employee=s wage records, the employee=s weekly wages ranged from $225.60 to $1,304.49, excluding the two bonuses also at issue here. In fifteen of those twenty-three pay periods, the employee earned less than $1,000.00. The employee testified that in the week during which she earned only $225.60 she was absent from work due to a personal health condition. She did not recall why her earnings were lower during her second least income productive week, that ending September 14, 2003, during which she earned only $284.55. No testimony was offered regarding the fluctuation of the employee=s earnings over the remaining twenty-one pay periods. In choosing to calculate the employee=s weekly wage using all twenty-three pay periods, rather than excluding the two periods here at issue, the judge simply concluded that there was insufficient support, either legally or factually, for the employee=s argument. In cases where evidence necessary to perform calculations in accordance with the statute is deficient, the judge is granted some discretion in calculating the weekly wage based on whatever evidence is provided. Here, given the employee=s irregular earnings and the limited evidence available on the issue, we cannot conclude that the judge=s decision to include all twenty-three weeks in her weekly wage calculation was unreasonable. Therefore we affirm that decision. See Hengemuhle v. Long Prairie Jaycees, 358 N.W.2d 54, 59, 37 W.C.D. 235, 239 (Minn. 1984).
2. The Contractual Signing and Christmas Bonuses - Appeal and Cross-Appeal
On appeal, the employee argues also that the judge erred by pro-rating the contractual signing bonus and the Christmas bonus. On cross-appeal, the employer contends that neither bonus should have been included in the employee=s weekly wage calculation. We conclude the judge properly included and pro-rated the Christmas bonus but should not have included the contractual signing bonus.
a. The employee=s appeal. The parties stipulated that the employee=s $600 Christmas bonus was, in part, based on attendance. The amount of the bonus was based on the number of pay periods that the employee had worked in the Christmas bonus eligibility year. The judge concluded that, because the bonus was partially tied to the employee=s attendance, and because it was for the entire year, including the bonus pro-rated over the course of the entire year accurately reflected the impact of the bonus on the employee=s pre-injury earning capacity. The judge therefore included the Christmas bonus in her calculations, finding the value of the bonus to be $11.53 per week ($600 ) 52). The employee contends that the judge erred in pro-rating the bonus over fifty-two weeks rather than simply including the entire bonus in her wages for the twenty-three weeks at issue. She contends that her right to the bonus had vested after thirteen weeks of paid employment per year and had been established before the twenty-six week period prior to the injury. While we agree that, under the agreement between the employer and the union, the employee may have qualified for the Christmas bonus even before the twenty-six week period prior to the injury, we note that the bonus was nevertheless paid annually by the employer, reflecting pay periods worked over the course of the entire eligibility year. We conclude, therefore, that it was not unreasonable for the judge to conclude that the actual period of time represented by the bonus was the entire year and that it was therefore proper for her to pro-rate the bonus over fifty-two weeks. See Boelter v. City of Ham Lake, 46 W.C.D. 214 (W.C.C.A. 1991); Hengemuhle, 358 N.W.2d at 59, 37 W.C.D. at 239.
b. The employer=s cross-appeal. The employer contends that neither the Christmas bonus nor the signing bonus should have been included in the judge=s weekly wage calculation, pursuant to factors enumerated in this court=s decision in Boschee v. Barry Blower. In Boschee, this court established that, in order for an employee=s bonus payment to be includable in his or her weekly wage, (1) the employee must have earned the payment, (2) the payment must have been paid directly to the employee, (3) the employee must have been able to use the payment at his or her own discretion, and (4) the employee must have been subject to paying tax on the payment. Boschee v. Barry Blower, slip op. (W.C.C.A. Aug. 25, 1989). The employer admits that both bonus payments satisfy the second, third, and fourth of these factors, but it contends that neither bonus payment was Aearned@ by the employee. Citing the supreme court=s holding in Stewart v. Ford Motor Co., the employer contends that the key factor in analyzing whether an employee has Aearned@ a bonus payment is whether the payment represents compensation for labor and services. See Stewart v. Ford Motor Co., 474 N.W.2d 162, 45 W.C.D. 275 (Minn. 1991). The employer argues that both bonuses were merely products of the collective bargaining agreement negotiated by the employer and the UAW and were not compensation for any work. We agree that the signing bonus should not have been included in the employee=s weekly wage, but we are not persuaded that the judge erred in including a pro-rated portion of the Christmas bonus.
In Stewart, the court considered whether profit sharing payments were includable in weekly wage calculations. The court stated in part that,
Not all taxable income is considered Awages@ for purposes of computing workers= disability benefits. Wages, for those purposes, are compensation for labor and services which reflect an employee=s earning capacity. Backhaus v. Murphy Motor Freight Lines, 442 N.W.2d 326, 327 (Minn. 1989). Conversely, profits which accrue independent of the employee=s own efforts generally are not included in the average weekly wage calculation.
Stewart at 164, 45 W.C.D. at 179. The employer argues that neither bonus payment in this case represented earned compensation for the employee=s labor or services. The employee, it contends, was eligible for the signing bonus merely by her status as an active employee on a particular date. All active employees of the employer as of that date were paid the same amount, and the employer contends that there is no connection between the employee=s work efforts and the $3,000.00 signing bonus. Further, although the Christmas bonus was somewhat contingent upon the employee=s work attendance, the employer contends that the connection between her individual work efforts and even that bonus was remote.
We agree that the signing bonus, a payment only related to union ratification of the collective bargaining agreement, should not have been included in calculating the employee=s weekly wage. That payment had nothing to do with the employee=s own work efforts or performance and was made only under a separate agreement not related to the employee=s wage agreement. On the other hand, the Christmas bonus was based, in part, on the employee=s attendance, and it was not unreasonable for the judge to conclude that that bonus was related to the employee=s performance at work, by her attendance at work in twenty-six or more pay periods throughout the eligibility year.
We therefore reverse the judge=s inclusion of the signing bonus, modifying the weekly wage finding to $861.70, to reflect inclusion of the pro-rated Christmas bonus. See Hengemuhle, 358 N.W.2d at 59, 37 W.C.D. at 239.