NEIL PROCHNOW, Employee/Appellant, v. ROBERT GIBB & SONS, INC., and CINCINNATI INS. COS., Employer-Insurer, and ST. FRANCIS MED. CTR., MERITCARE HOSP., MERITCARE MED. GROUP, and UNITED STATES VETERANS AFFAIRS, Intervenors.
WORKERS= COMPENSATION COURT OF APPEALS
APRIL 27, 2006
WAGES - CALCULATION. The compensation judge did not err by excluding amounts paid into a national pension fund, a local pension fund, a health and welfare fund, an apprenticeship fund, an international training fund, and the piping industry fund from the employee=s weekly wage calculation where the payments were not discretionary and the employee had no independent control over the amount contributed to each fund.
Determined by Rykken, J., Johnson, C.J., and Stofferahn, J.
Compensation Judge: Peggy A. Brenden
Attorneys: James E. Lindell, Lindell & Lavoie, Minneapolis, MN, for the Appellant. Timothy S. Crom, Jardine, Logan & O=Brien, Lake Elmo, MN, for the Respondents.
MIRIAM P. RYKKEN, Judge
The employee appeals the compensation judge=s determination that certain benefit fund payments should not be included in calculating the employee=s weekly wage. We affirm.
On March 2, 2004, Neil Prochnow, the employee, sustained a serious work-related head injury while working as a pipefitter for Robert Gibb & Sons, the employer, which was insured for workers= compensation liability by Cincinnati Insurance Companies, the insurer. The employee was injured when he removed a cap from a pressurized pipe and was struck in the head by the cap. He sustained serious injuries to his head and lost his right eye, for which the employer and insurer admitted liability and paid wage loss benefits, medical expenses and rehabilitation benefits. The employee also claimed a neck injury which the employer and insurer denied.
The employee is a member of a pipefitters and steamfitters union, Union Local 300. The employee=s total wage package is determined through negotiations between a negotiating committee elected by the union membership and negotiators/attorneys appointed by contractors who are signatory to the union=s bargaining agreement. Once the wage package is determined, the union committee then determines how to divide the negotiated wage into the amount paid directly to the members and amounts paid into various benefit funds, including a national pension fund, a local pension fund, a health and welfare fund, an apprenticeship fund, an international training fund, and the piping industry fund. The employer and insurer initially paid the employee temporary total disability benefits based upon a weekly wage of $848.40.
In April 2004, the employee filed a claim petition, amended in January 2005, claiming a neck injury and underpayment of temporary total disability benefits. The employee also filed a medical request for medical expenses related to the employee=s neck condition. The pleadings were consolidated and a hearing was held on May 26, 2005. At the hearing, the employer and insurer agreed that the employee=s weekly wage was at least $924.40 ($23.11/hour x 40 hours), based on the employee=s taxable wage, including his vacation pay. The employer and insurer stipulated that they would recalculate the payments owed to the employee and pay the additional wage loss due. The employee argued that the weekly wage should be $1,216.40 ($30.41/hour x 40 hours), based on the inclusion of the amounts paid into the various union funds. The compensation judge found that the amounts claimed by the employee were not includable in the employee=s weekly wage calculation since they were not discretionary and the employee had no independent control over the amount contributed to each fund, and therefore concluded that the employee=s weekly wage was $924.40. The employee appeals the compensation judge=s determination of the employee=s weekly wage.
STANDARD OF REVIEW
This court may not disturb a compensation judge=s findings of fact unless clearly erroneous and unsupported by substantial evidence in the record as a whole. Minn. Stat. § 176.421, subd. 1(3). A decision, however, which rests upon the application of the law to essentially undisputed facts involves a question of law which the Workers' Compensation Court of Appeals may consider de novo. Krovchuk v. Koch Oil Refinery, 48 W.C.D. 607, 608 (W.C.C.A. 1993), summarily aff'd (Minn. June 3, 1993).
At the time of his injury, the employee's hourly wage was $30.41. From that amount, a total of $7.30 per hour was withheld by the employer and paid into various benefit funds. The compensation judge found that amounts paid into various benefit funds, including a national pension fund, a local pension fund, a health and welfare fund, an apprenticeship fund, an international training fund, and the piping industry fund should not be included in determining the employee's weekly wage. For purposes of computing workers' disability benefits, wages are 'compensation for labor and service which reflect an employee's earning capacity." Stewart v. Ford Motor Co., 474 N.W.2d 162, 164, 45 W.C.D. 175, 179 (Minn. 1991). Generally, benefits that are not paid directly to the employee, that the employee cannot use at his or her discretion, and that are not taxed as wages, are not included in the calculation of weekly wage. Powell v. Northern Cass DAC, slip op. (W.C.C.A. Aug. 20, 1996).
As described by witness testimony and as outlined in the hearing exhibits, the union members= total wage package on the employee=s date of injury was $30.41 per hour, and was reached through negotiations between a negotiating committee elected by union membership and negotiators/attorneys appointed by contractors who are signatories to the Union Local 300's bargaining agreement. Deductions from that hourly rate for pension and other benefits are voted upon by union members, after review by committees assigned to address each item. In this case, deductions from the employee=s hourly wage rate totaled $7.30, resulting in an hourly wage rate, paid directly to the employee, of $23.11. The employee claims that his weekly wage should include both those amounts paid to him directly and the amounts paid into the benefit funds, which would result in a weekly wage of $1,216.40 ($30.41 x 40 hours) instead of the $924.40 ($23.11 x 40 hours) awarded by the compensation judge. The employee argues that the employer does not determine whether the union pays certain amounts to the employee or to the various benefit funds, but the union members themselves make that determination, since it is the members who elect the committees to review each benefit and pension deduction, and it is the members who vote on the contracts.
This court has reviewed similar cases on several occasions and has held to the general rule that benefits which the employee cannot utilize at his discretion, and that are not taxable as wages, are not considered a part of the employee=s wages. See Boschee v. Barry Blower, slip op. (W.C.C.A. Aug. 28, 1989); Carothers v. Pride Mechanical, et al, slip op. (W.C.C.A. Nov. 4, 1994).
In Boschee, the employer=s contribution to a union employee=s pension fund was not included in determining his weekly wage since the employee did not have discretion over the use of the payments and the payments were not taxable as wages at the time they were paid by the employer. In the Carothers case, the employee=s hourly wage as a journeyman plumber included amounts for a health and welfare fund, an annuity fund, jury duty, local pension, building trade and industry fund and an apprenticeship fund. The compensation judge excluded those amounts in determining the employee=s weekly wage since the employee lacked discretion over the funds and the funds were not taxable as wages at the time they were paid by the employer.
In Powell v. Northern Cass DAC, slip op. (W.C.C.A. Aug. 20, 1996), this court affirmed the exclusion of fringe benefit payments for health, dental and life insurance premiums paid by the employer from the weekly wage calculation, noting that the employee could not choose to forego the insurance benefits or the payments by the employer. Further, this court has stated that the payment must have been paid directly to the employee in order to be included in the weekly wage calculation. Little v. Quality Machine, Inc., slip op. (W.C.C.A. June 12, 1997). Voluntary contributions, however, by the employee to an employer-sponsored plan, within the employee's discretion, which would otherwise be payable directly to the employee, may be included in the employee's weekly wage. See De Rusha v. Minneapolis Boxing and Wrestling Club, slip op. (W.C.C.A. Nov. 30, 1987).
The employee argues that these cases were wrongly decided, noting that the Boschee case does not cite any Minnesota Supreme Court cases. In Skistad v. Whispering Pines Constr., slip op. (W.C.C.A. Dec. 3, 1990), this court specifically declined to reconsider its reliance on the Boschee case, indicating that the reasoning in that case was correct. The employee also argues that other jurisdictions have included benefit fund payments in determining an employee=s weekly wage. The employee cites Ragland v. Morrison-Knudsen Co., Inc., 724 P.2d 519 (Alaska 1986), where the Alaska Supreme Court held that a union employee=s total hourly wage, regardless of how it is divided between cash payments and fringe benefit plans, should be used to determine the employee=s weekly wage. Decisions from other jurisdictions, however, provide little guidance since statutory workers= compensation schemes vary significantly between states. The compensation judge did not err by excluding the benefit fund payments from the employee=s weekly wage calculation. Accordingly, we affirm.
 After the hearing, additional medical evidence was submitted and the employer and insurer thereafter admitted liability for the employee=s neck injury.