PATRICK R. SCHMITT, Employee, v. HANEFELD BROS., UNINSURED, Employer/Appellant, and SPECIAL COMP. FUND.
WORKERS= COMPENSATION COURT OF APPEALS
AUGUST 15, 2006
WAGES - CONTRACT; WAGES - BOARD & ALLOWANCES. Where there was little significance in the fact that the employee=s employment contract was unwritten, and where there was testimony and other evidence to reasonably support the judge=s findings, the compensation judge=s implicit conclusion that the employee=s per diem allowance was part of his wage contract and should be included in calculation of his weekly wage was not clearly erroneous and unsupported by substantial evidence.
Determined by Pederson, J., Stofferahn, J. and Wilson, J.
Compensation Judge: Danny P. Kelly
Attorneys: Luke M. Seifert, Quinlivan & Hughes, St. Cloud, MN, for the Respondent. Michael D. Aafedt and Brad M. Delger, Minneapolis, MN, for the Appellant. Thaddeus V. Jude, St. Paul, MN, for the Special Compensation Fund.
WILLIAM R. PEDERSON, Judge
The uninsured employer appeals from the compensation judge=s finding that per diem payments made to the employee were properly included in the employee=s weekly wage calculations. We affirm.
On about April 13, 2004, Patrick Schmitt [the employee] was hired by Hanefeld Brothers, Inc. [the employer], as an over-the-road truck driver to transport cattle in Minnesota, Wisconsin, and Iowa. The employee is a resident of Minnesota, and the employer is a Wisconsin corporation. The employer was insured against Wisconsin workers= compensation liability by West Bend Mutual Insurance Company [West Bend] but did not have workers= compensation coverage in Minnesota.
As an over-the-road driver, the employee was often on the road and away from home. He was paid on a weekly basis at a wage of $.28 cents per mile, along with a per diem allowance of $80.00 for each night spent on the road away from home. The per diem was paid to cover the employee=s road expenses. The employee received the per diem regardless of his actual expenses, and no proof or documentation was required to qualify for the payment. The usual payroll taxes were withheld from the employee=s payroll check, except that taxes were not withheld from the per diem payments.
On January 5, 2005, the employee sustained an injury to his right hip while unloading cattle in Long Prairie, Minnesota, in the course of his employment. West Bend paid worker= compensation benefits on behalf of the employee under Wisconsin=s workers= compensation law, apparently without including the employee=s per diem allowance in calculating his weekly wage and compensation rate. The employee later filed a claim petition for benefits under Minnesota=s workers= compensation law, alleging underpayment of wage loss benefits based on West Bend=s failure to include the per diem payments as part of the wage calculation.
The employee=s claim for benefits in Minnesota came on for hearing before a compensation judge on December 14, 2005. The only issue presented to the judge was whether the per diem allowances paid to the employee should be included in calculating the employee=s weekly wage. Weekly payroll records were unavailable for the twenty-six-week period prior to the employee=s injury, but evidence introduced by the parties established that over the course of the entire period worked by the employee, alleged to be thirty-seven weeks, the employee earned $29,522.53. At trial, the employee testified that he did not discuss the per diem payments with his employer when he was hired, but he did recall being told how to complete the forms necessary to collect the per diem. David Hanefeld, an owner of the employer, testified that his employees, including the employee in this case, had the option of being paid the per diem or of receiving a higher wage and no per diem. Mr. Hanefeld indicated that, because taxes are not withheld from the per diem, those employees choosing the per diem actually make more money. In a findings and order served and filed February 15, 2006, the compensation judge determined that the per diem payments were to be included in calculating the employee=s weekly wage, and he found that wage to be $797.91, arrived at by dividing the employee=s total earnings by thirty-seven weeks. The employer appeals.
Minnesota Statutes ' 176.011, subdivision 3, provides in part, AWhere board or allowances other than tips and gratuities are made to an employee in addition to wages as part of the wage contract they are deemed a part of earnings and computed at their value to the employee.@ Minn. Stat. ' 176.011, subd. 3. The employer argues that the compensation judge erred in including the per diem payments in the employee=s weekly wage calculation because, it contends, the per diem payments were not part of the employee=s wage contract as required by the statute. At the time the employee was hired, it argues, the employee specifically elected to receive per diem payments rather than wages subject to withholding. It argues that the per diem was accounted for separately from wages and that there was no employment contract establishing that per diem payments were part of a wage contract. Moreover, it argues, because the IRS has extensively regulated the ability of employers to reimburse employees in the trucking industry with per diem expense payments, and because such payments are not treated as wages for tax purposes, the IRS guidelines should be followed, and the per diem payments should not be included in calculating the employee=s weekly wage. We are not persuaded.
First of all, we see no basis for concluding that the employee=s per diem allowance was not part of the wage contract. The supreme court has held that, for purposes of computing workers= disability benefits, wages Aare compensation for labor and services 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), citing Backaus v. Murphy Motor Freight Lines, 442 N.W.2d 326, 327, 42 W.C.D. 24, 26 (Minn. 1989). Here, the employee=s choice of compensation methods was to receive a wage and an allowance in addition to wages. The payment, although accounted for separately by the employer, nevertheless represented compensation for labor and services. While the tax consequences of allowances received by an employee is a factor to be considered in determining whether the allowance is included in the weekly wage calculation, it is not determinative. Cf. Gager v. McDowall Co., slip op. (W.C.C.A. Jun. 27, 1994).
In prior cases, this court has considered whether certain payments to an employee constitute an allowance within the meaning of Minnesota Statutes ' 176.011, subdivision 3. We have held that a meal or other expense allowance provided to an employee regardless of the actual expense incurred and without documentation is generally included in the employee=s wages. See Illg v. Daggett Truck Lines, Inc., slip op. (W.C.C.A. May 18, 1990); Truesdale v. Detman, Inc., 40 W.C.D. 12, 16 (W.C.C.A. 1987). In Illg v. Daggett Truck Lines, Inc., a flat fee expense allowance was provided to a truck driver by not withholding taxes from a part of the driver=s wages. Likewise, in Truesdale v. Detman, Inc., an over-the-road truck driver received a travel expense allowance of $.03 cents per mile in a separate paycheck. In each of these cases, the employee reported these allowances on their income tax returns, and no documentation was required. Id. Similarly, in Romans v. Northwest Airlines, Inc., per diem payments to a flight attendant, based on a fixed dollar amount for meals and lodging, were determined to be wages. Romans v. Northwest Airlines, Inc., 44 W.C.D. 6, 9 (W.C.C.A. 1990). These per diem payments were paid according to the terms of a union contract and were shown on the employee=s W-2 wage statement. Nor do we find any material significance in the lack of a written employment contract in this case, and the fact that the per diem was accounted for separately by the employer is simply consistent with the statute, which contemplates board and allowances made to an employee in addition to wages.
Finally, the employer relies on this court=s decision in Peter v. Volt Information Sciences to support its claim that the employee=s per diem payments were not part of the wage contract. See Peter v. Volt Information Sciences, slip op. (W.C.C.A. May 26, 2004). We find Peter distinguishable on its facts. In Peter, the employer and employee had entered into a separate rental agreement for the employee=s tools and vehicle. We stated there, AThe employer and employee=s rental agreement in the instant case, pertaining as it did to clearly capital investment, was something quite different in its very nature from the >allowances for board and lodging made in consideration for work.=@ Id. at p. 4, quoting Larson v. Cleansoils, Inc. 541 N.W.2d 591, 592, 54 W.C.D. 25, 26 (Minn. 1996). In the present case, there really was no separate agreement apart from the wage contract, which simply included two methods of paying the employee for his labor and services. In light of the evidence herein, it was not unreasonable for the compensation judge to implicitly conclude that the per diem that the employee received from the employer was part of his wage contract with the employer and should therefore be included in calculating the employee=s weekly wage. Therefore affirm the judge=s decision. See Hengemuhle v. Long Prairie Jaycees, 358 N.W.2d 54, 59, 37 W.C.D. 235, 239 (Minn. 1984).
 This is according to the First Report of Injury.
 The Special Compensation Fund is therefore a named party herein.
 Respondent=s Exhibit 1, consisting of the employee=s 2004 W-2 form and a payroll summary prepared by the employer on December 31, 2004, report 2004 wages of $12,592.53 and per diem payments of $15,600.00. Petitioner=s Exhibit M, which includes the employee=s payroll stub for the period ending January 8, 2005, reports an additional $530.00 in wages and $800.00 in per diem Ato date.@
 While it is apparent from the record that taxes were not withheld from the per diem payments, no evidence was offered as to the tax consequences for either the employee or employer.