Shaw v. U.S. Airways, Inc.

APPEALS THE COURT OF INC. SHAW v. U.S. AIRWAYS, (2007)] [186 AIRWAYS,INC., SHAW, AMERICAN v. U.S. CURRY Employer, Plaintiff Employee, COMPANY, INSURANCE Defendants PROTECTION Carrier, No. COA06-1407 2007) (Filed 6 November wage employer- average weekly Compensation— — retirement accounts funded compen- a workers’ Commission conclusion in

An Industrial plaintiffs two employer-funded-contributions sation case not in the calculation of should be included retirement accounts plaintiff’s weekly and remanded. Not average wage was reversed required average excluded from an fringe to be all benefits are moreover, did weekly calculation; the Commission not determining the contribu- analysis in whether apply proper should be excluded. tions issue case Judge dissenting. HUNTER September by opinion and award entered 13

Appeal plaintiff from Heard in the Court Industrial Commission. the North Carolina May 2007. Appeals Firm, by Mark T. Vernon Sumwalt and Law Sumwalt Sumwalt, plaintiff-appellant. for Zabroski, P.C., by Kimberly A.

Littler Mendelson defendants-appellees. GEER, Judge. opinion Curry appeals and award Shaw from

Plaintiff con- in which the Commission Carolina Industrial Commission North plaintiff’s two employer-funded contributions to cluded that retire- plaintiff’s included in the calculation of ment accounts should not be Gen. weekly wage,” 97-2(5) under N.C. Stat. “average term defined ought to be contributions considered (2005). Whether retirement question pre- not injured average wage is of an worker’s appellate Because viously North Carolina courts. considered required are to be that not all we have concluded and because the wage calculation excluded from an analysis apply proper determining whether Commission did excluded, we should be reverse at issue in this case it undertake Commission so that the matter to the remand inquiry. proper APPEALS IN THE COURT OF SHAW U.S. AIRWAYS, nothing opinion,

Contrary dissenting in the suggestion in this case should at issue opinion holds that the benefits weekly wage. Weleave plaintiffs average calculating included man applying the test to decide after the Commission question for App. 129,465 S.E.2d 301 Dep’t of Corr., 121N.C. dated Kirk v. 624, 476 S.E.2d improvidently allowed, 344 N.C. disc. review (1995), Dir., Co. v. Constr. (1996), and Morrison-Knudsen Office 194, 103 S. Ct. 624, 76 L. Ed. 2d Comp. Programs, 461 U.S. (1983).

Facts defendant-employer U.S. Plaintiff, a service worker fleet July injury 2000 while compensable back on Airways, suffered a heavy baggage from a belt. piece luggage attempting to lift a laminectomy a fusion and injury, plaintiff had a disc Following the injury-related pain, of his implantation. Because with hardware injections, undergone radio- plaintiff received nerve root has At medication. procedures, and taken frequency nerve obliteration May deputy on 25 commissioner hearing of the before the time disability temporary due to receiving total 2005, plaintiff was still injury. July 2000 in the “1999 employment were set out plaintiffs The terms of Associa- Airways, The International Inc. and Between U.S. Agreement Under Aerospace (the “Agreement”). Workers” of Machinists tion separate in two participate plaintiff was entitled Agreement, “Employee an “Employee Savings Plan” and programs: retirement Pension Plan.” employees to defer plan allows 401(k) Savings Plan is a income for retirement. eligible their percentage of

a certain employee’s turn, will match 50% of Defendant-employer, income, employee’s eligible contribution, up to 4% personal employee’s savings “matching” sum into deposit the and will defendant-employer is words, amount that other account. In vary between savings account could deposit into the obligated to employee per- and how much depending on whether and 2% 0% sonally contributed. entirely by Plan, is funded Plan, Savings unlike

The Pension work- defendant-employer. Because fleet service from contributions Plan, defendant- Pension eligible for the plaintiff are ers such plain- into automatically obligatory made the THE COURT OF APPEALS pension employee’s tiff’s account. The amount contributed to each employee’s age. account is calculated based on the income and Despite differences, Savings their and Pension Plans have Fidelity some common features. Investment Services administers the plan. Fidelity pre-selected accounts in each offers a mix of invest- options, including funds, stocks, bonds, ment mutual in which employees personal can invest their contributions as well as defendant-employer’s Although op- contributions. the investment employees tions available to are the Savings same under both the Plan, Fidelity and the Pension maintains the accounts for each plan separately.

Shortly plaintiff’s injury, after 22 defendants filed a Form that reported plaintiff’s weekly average wage $825.55, omitting a sum defendant-employer’s plaintiff’s Savings contributions Plan plaintiff’s account and to Plan pre- Pension account. In the 52 weeks plaintiff’s injury, ceding defendant-employer had contributed $1,798.33 plaintiff’s $899.17 Pension Plan account and an additional plaintiff’s Savings Plan account. Inclusion of these contributions plaintiff’s weekly by $51.87 would have average wage increased or the total defendant-employer’s amount of retirement contributions by divided 2004, plaintiff

On requested 23 November hearing because the parties were to agree defendant-employer’s unable on whether retire- ment weekly contributions were average wage. his Following May a 25 hearing, Deputy Phillip Commissioner A. Holmes opinion entered an and award concluding defendant-employer’s contributions to the retirement accounts should not be included in plaintiff’s weekly average calculation of wage. appealed Commission,

Plaintiff to the Full opin- which entered an agreeing deputy ion and award with the commissioner. The represented Commission held that the retirement contributions “fringe benefit . . . that should not be included in the calculation of [plaintiff’s] weekly average wage” and further determined that “[p]laintiff’s weekly average wage $825.55,” correct the amount originally reported by timely appealed defendants. Plaintiff to this opinion Court from the Commission’s and award.

Discussion only question appeal arising in this is whether defendant- employer’s plaintiff’s contributions to two retirement accounts THE OF APPEALS COURT

SHAW v. U.S. AIRWAYS, weekly “average Pension) should be included his (Savings and injured worker’s under of an wage.” The calculation “average on or her Compensation Act is based his our Workers’ by weekly 97-2(5).1 § Gen. Stat. wage” as defined N.C. five meth- priority sequence 97-2(5) “sets forth Gen. Stat. weekly are to injured employee’s average wages be

ods which states lines, this statute defines or computed, opening and in its County weekly ‘average wages.’ McAninch v. Buncombe meaning of case, plain- In this Sch., (1997). defendant-employer’s retirement should argues tiff pursuant calculating when his included “ method, wages’ ‘[ajverage the first method. Under first injured employee employment in earnings of in the shall mean the injury period working during time of the which he was immediately injury . . . divided preceding the date of 52 weeks 97-2(5). McAninch, N.C. at See also 52.” N.C. Gen. Stat. method, in the first (noting primary “the set forth

S.E.2d at 377 fifty- for the sentence, calculate the total is to year prior injury to divide that to the date two weeks of by fifty-two”). sum concept in “earnings” appears key to be the defin- word

While the Compensation Act does weekly wage,” ing “average the Workers’ encompassed term “earn- is, not, what is within the specify what intended to legislature is to determine whether ings.” Our task plain- to defendant-employer’s “earnings” exclude from Laughlin Co., 217 N.C. Chevrolet accounts. Morris v. tiff’s retirement object interpretation of ‘The of all 428, 484, (“ S.E.2d 485 430, (1940) 8 Legislature, the meaning to ascertain and intention of the statutes is Vann, 311, 315, Kearney (quoting it.’ 70 and enforce (1911))). S.E. jurisdictions, not, in its Workers’ other North Carolina has

Unlike Compensation expressly fringe benefits from Act, chosen to exclude weekly See, e.g., Laws ch. wage § 76 Del. an calculation. ‘Average weekly 2302) (“ § Del. Ann. tit. (2007) (amending Code by time employee at the wage’ earned means injured, employee’s injury job employee which the in . . . paid but pay, gratuities regularly bonuses including overtime defendants, brief, Curiously, defend decision in the Commission’s their though matching contributions, respect Savings even Plan with to the exclusion Savings plaintiff challenged and Pension the omission of contributions both the has Plan accounts. IN THE COURT OF APPEALS excluding fringe employment all or other in-kind benefits.”); N.M. Stat. Ann. (2003) (“ ‘average weekly 52-1-20 wage’ § means the wage earned the worker at the time injury, of the worker’s includ- ing pay gratuities overtime excluding but all fringe or other bonuses”); benefits and 77 Pa. Stat. Ann. § (“The ‘average weekly terms wage’ and ‘total . wages,’ . . [shall not] fringe benefits, include including, to, employer pay- but not limited ments for retirement, or contributions to a pension, health and wel- fare, insurance, security life any plan social or other for the benefit of employee dependents or his . . . .”). The Congress United States fringe has also excluded purposes benefits for calculating com- pensation under Longshore the federal and Harbor Workers’ Compensation Act. See 33 U.S.C. 902(13) (2000) (“The § wages term does not fringe benefits, include including (but to) limited employer payments for or retirement, contributions to a pension, welfare, health and insurance, life training, security social or other dependent plan or .”). benefit . . . Although Assembly expressly our General did not address Compensation Act, Workers’ it did so Employment Security Employment Act. The Security specifically Act many fringe excludes benefits from the definition of “wages” set out in that Act: ‘wages’ “The term shall any not include the pay- amount of respect to, ment with of, services or on behalf individual its employ plan system under a or established an employing unit. . . on (i) retirement, account of (ii) or disability, sickness or accident or (iii) hospitalization medical and expenses in connection with sick- disability ness or accident (iv) death.” N.C. Gen. Stat. 96-8(13)(a) (2005). See also N.C. Gen. Stat. 96-8(13)(b) (excluding other employee benefits from “wages” definition of Employment under Security Act). Employment Security Act demonstrates that the Assembly General knows that benefits are an issue with respect concept wages specifically and knows how to exclude them from a definition of when it intends We, to do so. therefore, cannot, respect with Compensation Act, simply presume Assembly the General intended to all fringe exclude benefits from “earnings.” the term See Deese v. Southeastern Lawn & Expert Co., 275, 278, Tree 143 (1982) (“[I]t not reasonable to assume legislature that the impor- would leave an tant matter regarding the administration of [Workers’ Compensation] open Act to inference speculation; consequently, judiciary ‘ingrafting upon should avoid something law that has omitted, been which ought believes to have been embraced.’ [it] APPEALS 479 THE COURT OF v. TJ.S.

SHAW App. N.C. 474 741, Shealy Transport, Inc., 738, 252 N.C. 114 (quoting v. Associated 702, (I960))). 705 S.E.2d

Indeed, fringe indicates that at least some bene- statute itself encompassed weekly average wage fits within the calculation. any of provides The “Wherever allowances character statute that: part wage specified in lieu of are of the made to an they contract, earnings.” shall of his N.C. Gen. be deemed 97-2(5).2 Stat. § principal consider whether an

The North Carolina case to employer-funded should be included within an aver fringe benefit weekly Dep’t Corr., 121 age wage calculation is Kirk v. N.C. 129, improvidently (1995), N.C. 465 S.E.2d 301 disc. review Kirk, allowed, 624, plaintiff— (1996). 476 S.E.2d sought kin of a state include the next of deceased worker — employee’s health insurance in the com State’s contributions to the putation weekly average wage. While this Court concluded that when cal the health insurance contributions should not be included employee’s average weekly sug culating wage, nothing Kirk gests fringe that all benefits should be excluded from the weekly computation. wage opinions

Accordingly, prior neither the statute nor this Court’s supports defendant-employer’s the Full Commission’s conclusion that aver- plans to the two should not be included within the contributions they simply age because constituted calculation question 97-2(5) encompasses whether N.C. Gen. Stat. § benefits. case of first such as those in this is one retirement contributions impression. jurisdictions question have Other considered Seagraves v. conflicting See Austin Co. reached conclusions. 228, 230, 397, (con- Greensboro, 123 N.C. 472 S.E.2d question impression of first under sulting foreign case law to address Compensation Ins. Co. Act); South Carolina North Carolina Workers’ (“As particu- Smith, App. 632, 313 S.E.2d this lar before never been the courts of question us has confronted authority, we pertinent Carolina State, reviewing in addition North plaintiff presented law, no noted that 2. In its first conclusion of Commission argue Savings Plan were and did not that the and Pension contributions evidence any assignment wages.” on also did include of error allowances “in lieu Plaintiff argue defendant-employer’s appeal purporting contributions were allowances Accordingly, wages. case to whether lieu we have no occasion consider Co., might qualify allowances. Greene v. Conlon Constr. as such Cf. payment $320.00 App. 364, (2007) (holding that lodging wages). was an allowance in lieu of for meals and 480 IN THE COURT OF APPEALS INC. App. (2007)] 474

[186 jurisdictions have examined cases from other . . . .”), disc. review denied, 306, (1984). 682 leading compensation

The treatise on workers’ law makes the fol lowing general observation: “In computing earnings actual as the beginning point wage-basis calculations, there should be included salary wages any thing but value received as consid work, as, example, tips, eration for bonuses, commissions and for board, constituting gain room and real employee” economic to the 5 Arthur Larson, Compensation Larson and Lex K. Larson’s Workers’ 93.01[2][a], Law (2005) (emphasis at 93-19 added). Nonetheless, many jurisdictions pension have held that plan or retirement contri butions do not belong category “things” valuable that form purposes the basis of compensation of calculating workers’ See, e.g., benefits. v. Corp., 126, Luce United Techs. 247 133-41, Conn. 747, (1998) 717 A.2d 752-55 (construing “average Connecticut’s weekly wage” pension definition to exclude insurance and benefits); Corp., Barnett v. Sara Lee 140, 148, 86, 97 Md. 627 A.2d 90-91 (holding that “average wage” pension does not include contri noting butions and intended, Maryland it so legislature “[h]ad specified could pension have benefits such as ‘wages’ within the definition”), denied, 702, cert. 332 Md. 632 A.2d (1993); Highway Dep’t, Antilion v. N.M. 2, 5-6, State N.M. 436, P.2d (holding that contributions to state retire ” plan ment “are not within the ‘wages’ definition of under New Mexico’sworkers’ scheme). leading

The espousing case the view that the value of “fringe benefits,” employer-funded pension such as benefits, insurance should not be factored into calculations is the United States Supreme Court’s decision Dir., Morrison-Knudsen Constr. Co. v. Comp. Programs, 624, 461 U.S. L. 76 Ed. 2d Office of 103 S. Ct. 2045 (1983). case, Supreme Court held that employer contributions to union trust welfare, funds for health and pensions, training encompassed by were not then-existing “wages” definition of Longshore and Harbor Workers’ Compensation Act, 33 U.S.C. 902(13). 629-30, Id. at L. 76 Ed. 2d at 199, 103 S. Ct. at 2048-49. “ “wages” money statute defined ‘the rate which the

service recompensed rendered is . . . including the reasonable value board, rent, housing, lodging, or similar advantage received from employer ....’” Id. at 76 L. Ed. 2d at 103 S. Ct. at 2048 (quoting 902(13)). Thus, question” 33 U.S.C. § the “narrow before the COURT OF APPEALS

IN THE SHAW U.S. AIRWAYS, advan- “contributions are ‘similar Court was whether such ‘board, 630, 76 L. 2d at

tage’ rent, housing, lodging.’ Id. at Ed. [or] (alteration Although Court original). 103 S. Ct. at 2048 statutory history as legislative reviewed relevant well as structure underlying policy primarily as a matter goals, the Court decided meaning employer to the union trust plain of that the because, lodging, not or these con- “wages” funds were unlike board readily . . “present did a value . into tributions not have convertible] equivalent.” Id., a 103 S. at 2049. cash Ct.

According Larson’s, Supreme to Court’s examination of the “[t]he majority represents Act ‘wages’ Longshore definition within Larson’s, position 93.01[2][b], of fringe § on treatment benefits.” with the Morrison-Knudsen generally agrees 93-22.Larson’s itself judicial interpretation concept of ruling against and cautions indiscriminately fringe “wages” to include benefits: compensation has in force in the United States for been eighty years,.and fringe benefits have been common fea- over period. most of of ture of American industrial life for that Millions paid during this time. Whether benefits have been adjudicated cases, they paid voluntarily have or contested always wage “wage” begun with a basis calculation that made that the worker lives on and not miscellaneous “wages” mean may someday may a value to him or her “values” that or have depending contingencies. number of Before on a uncontrollable say, you that, tell single court it on itself to “We now takes you it, you wrongly know have calculat- although didn’t all been now, cases, eighty ing wage in these millions of and so after basis years, have discovered the pleased we are announce we you rest for meaning ‘wage’that somehow eluded the true much eight decades,” that court would do well to undertake a analysis is in the Circuit penetrating more than visible [D.C.] opinion [i.e., opinion reversed Court’s [Morrison-Knudsen] Supreme why was this revelation denied Court] everyone long. so else for 93.01[2][b],

Id., at 93-21to -22. § Contrary jurisdictions majority view, have held that some calculating be included when the amount of fringe benefits should compensation benefit, right to at least where the worker’s workers’ on or where the amount of benefits based such benefits vested Co., 724 Ragland time v. Morrison-Knudsen units of worked. See IN THE COURT OF APPEALS P.2d (Alaska 1986) (holding readily “that the identifiable and fringe benefits,” calculable value of indisputably in which worker was product vested and which were the of a bargaining collective agree- ment, “should be included in the determination”); Ashby v. Rust Eng’g Co., 559 A.2d (Me. 1989) (where 774-76 bargain- collective ing agreement pay committed a certain amount “to vari- ous union-established funds for benefits, pension health benefits, etc.,” payments and where such were based on “unit of worked,” time payments court held that “such fall under the definition ‘average wages, earnings salary’ pur- poses calculating compensation benefits”), superceded by statute as stated in Co., Hincks v. Robert 172, 9, Mitchell 1999ME 740A.2d (1999) (“shortly Ashby, after our decision in Legislature 615, A-20, enacted P.L. ch. providing not be employee’s included in an wage”).

We do not entirely consider this issue on an blank slate. Kirk, This Court in although not bound Morrison-Knudsen in construing the North Compensation Carolina Act, found Supreme analysis the United States Court’s relevant to the determi- nation whether it would be “unfair”to exclude Kirk’shealth insurance benefits from the calculation of average weekly his wage. More specifically, the Kirk Court relied on the “reasoning” in Morrison- money Knudsen “that means ‘the rate at which service is recompensed of, under the hiring’ contract ‘fringe and not ” that cannot equivalent.’ be converted into a Kirk, cash 136, at 465 S.E.2d at 306 (quoting Morrison-Knudsen, 461 U.S. 629, at 76 L. 199, Ed. 2d at 2048). 103 S. Ct. at Applying this reason- ing, Kirk held:

A State receives the benefits of the State Health Plan only when needed. The value of quantified. this benefit cannot be carefully After considering evidence, say we cannot that the Commission’s failure to produced include such allowance an plaintiff. unfair result for the Thus, finding absent a that method produces two result, unfair Commission did not err excluding the State’s contributions to Kirk’s Health Plan in the calculation of Kirk’saverage wages.

Id. Kirk, plaintiff argue did not that the health insurance con- “earnings”

tributions were plaintiff under N.C. Gen. Stat. 97-2(5), § Rather, plaintiff has in this case. in Kirk contended that these con- THE COURT OF APPEALS pursuant tributions should included be the “fourth method” for computing average weekly wage 97-2(5), arguing § under that it would be “unfair” to exclude them. Id. at 465 S.E.2d at 305. The method,” explicitly “fourth which a incorporates compo- “fairness” nent, provides: exceptional “where foregoing for reasons the [meth- unfair, employee, would be either such other ods] computing average weekly may method of be resorted to as nearly approximate will most injured employee the amount which the earning injury.” would be it were not N.C. Gen. 97-2(5).3 Stat. directly analyze While “earnings” Kirk did not the term as used may within N.C. 97-2(5), fairly Gen. Stat. the decision be read as holding State-provided that the health insurance contributions were “ they not “earnings” ‘fringe because were benefits that cannot be equivalent.’ a Kirk, converted into cash 121 N.C. at Kirk, therefore, employee at 305. Under be benefits must considered case-by-case on a they basis to determine whether can be converted equivalent. so, into a cash If such benefits be considered as average weekly wage. worker’s Neither Kirk nor Morrison-Knudsen elaborated on what it means capable equivalent. to be of conversion into a cash Although pension plans Morrison-Knudsen concluded that the at issue in equivalent that case could “converted into cash on the values,” basis their market 461 U.S. 76 L. at 199, at Ed. 2d Ct. reasoning necessarily appear applica- 103 S. does not Supreme ble the terms of the retirement accounts in this case. The rejected respondent’s Court Morrison-Knudsen suggestion “by that the benefits could be converted into cash value reference employer’s to maintaining cost of funds these or to the value of employee’s expectation Id., . interests in them . . .” 76 S.E.2d at 199-200,103 S. Ct. employer’s at 2049. The Court concluded that the compensation.” cost “measures employee’s neither the benefit his nor explained: The Court employee

It does not measure the benefit to the because his family per Hilyer by could take Mr. not the 684: hour earned to open purchase private policies offering market to similar policies group benefits to the administered union’s trustees. It does measure because the collec- Kirk, Although at 465 S.E.2d at also held that “contri- employee plan a butions the State to insure an under health is not an allowance wages’ meaning statute,” made ‘in lieu of wages provision, within the this allowance-in-lieu-of- above, at reasons discussed is not issue here. OF APPEALS IN THE COURT v. U.S. AIRWAYS,

SHAW petitioner’s costs its not tie agreement does tive-bargaining from the Pension and ... derives benefit labors. He workers’ he earns. “pension credits” Disability according Fund to the amount are not correlated pension These credits every employer pays benefits for employer’s contribution; the employee works, earns credits while hour the year. Furthermore, given in a 1,600 first hours of work for the money that has been refunded is never although if he works less than contributed, employee can lose credit years. year credit for four or fails to earn 200 hours in his advantage all if he leaves Significantly, the loses 40 and 10 credits. age he attains accumulates before at S. at 2049. 630-31,76 L. Ed. 2d 103 Ct. Id. at from case, record contains evidence By contrast, employer’s cost in at least could find that the the Commission which compensa- his employee’s benefit and Plan measures the the Pension paid was tied his that the amount tion. Plaintiff offered evidence According words, that he worked. specific other the hours labors—in specific every worked, he received a hour that he plaintiff, for money. money was he earned then The amount of amount of plaintiff’s own, account and not an overall deposited individual into directly, he invest it he were this amount could given trust fund. If plaintiff Savings Plan in which account, 401(k) such as the a similar deposit pri- or a already permitted percentage earnings of his Contrary Disability and Fund in IRA to the Pension vate account. any the amounts Morrison-Knudsen, plaintiff will not lose employment. The deposited if he leaves his in those accounts Supreme Court’s discussion of the did not consider the Commission reasoning fits the evidence “employer’scost” whether that plan. regarding the case rejected Morrison-Knudsen, Supreme Court also argument value of the trust funds

respondent’s alternative that the employee’s expecta- the value of “the could be calculated based on them, employee’s is “at holding that the interest best tion interest” employees in the administration speculative,” because have no voice funding plans no over the level of these and thus have control depends on provided because “the value of each fund the benefits unpredictable.” 631, 76 L. Ed. 2d at 103 S. are Id. at factors that case, Disability Fund at issue in that Ct. 2049. For the Pension and “depends its value on whether the Court observed that [the . . .” employee’s] vested . Id. interest

IN THE COURT OF APPEALS Commission, case, appears entirely The to have focused on “speculative” employee, this allusion to benefit to a factor also Yet, considered this Court in Kirk. the Commission did not address plaintiffs that benefits, fact interest the retirement in contrast Morrison-Knudsen, vested, eliminating was thus the sole concern Supreme respect pension plans. with Court speculative any The primary nature of benefit concern of this Court in Kirk. Kirk found that the Although value the benefits having derived from quanti- state-funded health insurance “cannot be fied,” unquantifiable such benefits were deemed because the state employee only would if, benefit from the insurance contributions if, only he became Kirk, sick and needed to visit a doctor. (“A 465 S.E.2d at employee State receives the bene- only

fits of the State Plan needed.”). Health when Similarly, parsing Congress’ exclusion of fringe benefits from “wages” Longshore Act, under the the Fourth Circuit in Universal Corp. Wright, Maritime Serv. (4th F.3d 1998) Cir. (emphasis explained added), value “[t]he retirement, derives from pension, contributions to life insurance, plans and similar speculative readily benefit is too to be equivalent a employee’s right converted into cash because the tangible obtain contingent fulfilling on conditions that might never ultimately The Fourth Circuit concluded: satisfied." an employee’s right “When a tangible depend benefit does on contingent ., factors . . speculative value the benefit is not too into, readily to be converted a cash equivalent [Longshore] under the long Act. As earns an unconditional entitlement to tangible (even though not be received until benefit benefit future), sometime in the the value can be benefit identified employee’s wages." calculated as a Id. at 324 n.14 (emphasis added). however, Commission, determining that the value of the feasibility speculative benefit was considered estimating plaintiff actually how much could withdraw from his retirement any given future, accounts at time in the following as reflected in the findings of fact: period days participant’s There was of 30 between a ter- employees actually gain

mination when date and could access to period the funds in their retirement account. This allowed defendant-employer’s payroll any department time to make nec- OF APPEALS THE COURT INC.

SHAW U.S. AIRWAYS, N.C. [186 was with- employee’s account essary adjustments before the the Also, employee terminated before if an drawn. account, he had out his retirement and chose to cash age of 55 subject an addi- and was of withheld for taxes 20% the value early penalty. withdrawal tional 10% up possible to add all of the various it would be Although employee’s retirement made into an and deferrals contributions employment, the finds of Commission actually fund over course his the. employee withdraw could estimating how much an virtually impossible the any because given time would be at employee’s upon based the higher could be or lower amount addition, any plaintiff amount has gains and losses. In investment subject applicable and fed- state his retirement account is penalty early if he cashed taxes, as as a 10% withdrawal well eral complicating quantification prior age of further out his actual benefit. of point some in time focusing question quantification on the important question: future, sight the more Commission lost County capacity. Derebery v. Pitt Fire earning See

plaintiff’s actual 192, 197, (explaining Marshall, average wage basis” is to serve “as purpose that “the capacity”). The injured employee’s earning issue of the measure subject employer’s will be to “investment contributions whether the factor. be the determinative gains and in the future cannot losses” plain- example, dispute portion here that the is no For there Plan Savings to contribute to the should wages that he chose tiffs analysis Yet, wage. the Commission’s included in his equally to Just like defendant- apply those contributions. would personal will be employer’s contributions, plaintiff’s subject and would be subject of the stock market to the vicissitudes early. Commission’s penalties if withdrawn Under the to taxes and Savings rationale, personal contributions to his Plan plaintiff’s his inter- “earnings” from because account would have be excluded gains in “investment might market fluctuations result vening employee’s Nevertheless, we of course include as losses.” he to contribute to portion wages of his seeks earnings the Savings Plan in this case. plan, such as 401(k) “valuation” of those volun- point The relevant in time for paid tarily Savings Plan is the amount contributed to the Logically, therefore, ques- employer payday. on IN THE COURT OF APPEALS

SHAW v. U.S. AIRWAYS, (20Ó7)] paid employer tion whether a benefit convertible into a cash equivalent should be considered as of date made the unspecified contribution and not some date in the future. See Morrison-Knudsen, 461 U.S. at 76 Ed. at 199, L. 2d 103 S. Ct. at 2049 (focusing present on whether value” ben- “[t]he “readily efits is converted into a equivalent”). cash appropriate We believe the Universal test Maritime is an first step determining in whether an can benefit meet the stand- ard set out in adopted Morrison-Knudsen and in Kirk: Did the employee earn “an unconditional a tangible entitlement to benefit (even though [might] the benefit not be until in received sometime future)?” Maritime, the Universal so, 155 F.3d at 324 n.14. If then speculative Morrison-Knudsen’s and Kirk’s concern about the na- ture of a benefit will have determining been addressed. In further present readily the whether value of the benefit converted into a equivalent, apply cash reasoning Commission should in proposed Morrison-Knudsen to see whether the valuation “meas- . . employee’s compensation.” ures . the benefit his 461 U.S. at [or] 630, 200, 76 L. Ed. 2d at 103 S. atCt. analysis upholds an purpose

Such the basic Gen. N.C. Stat. 97-2(5), that, which is to in determining ensure the amount of com: pensation due, just injured the result achieved is fair and both employer. worker and McAninch, 130, See N.C. S.E.2d (“Ultimately, primary at 378 intent of this statute is that results are just reached which fair parties.”); are to both v. Loch Entm’t Partners, App. 106, 110, (“The pri- 148N.C. 557 S.E.2d mary intent the N.C. Gen. Stat. is to make 97-2(5) certain that the just results are fair parties.”). reached to both tangible, The exclusion of from an unconditional benefits employee’s pre-injury “earnings” could, view, unfairly in our hurt greater workers whose contracts call amounts of so- “fringe” called benefits and lesser amounts of cash remuneration. weekly wage necessarily provide Such an would an accu- earning capacity. hand, by rate On limiting measure of the other inclu- sion benefits that meet the concerns set forth in Morrison- Kirk, employers protected Knudsen and are from unreasonable expansion concept of “earnings.” hold, short,

We in misappre- that the Commission acted under a it defendant-employer’s hension of law when concluded that con- plaintiff’s tributions two retirement accounts be should not OF APPEALS IN THE COURT v. U.S.

SHAW plaintiffs average wage. To included in the calculation be fringe benefits should believed that no that the extent Commission prior case supported is not statute included, that conclusion proper factors Further, did not consider law. the Commission readily could not be determining the retirement contributions case, respondent in equivalent. In this like the a cash converted into paid by the Morrison-Knudsen, plaintiff argues that the amount determining of value. After whether proper is a measure benefit, tangible plaintiff entitled an unconditional reasoning have followed the in Morrison- Commission should employer’s measure assessing whether the Knudsen compensation. plaintiffs benefit or his of the Commis- that where “the conclusions It is well established law, case upon misapprehension a... should sion are based [may] be considered its true remanded so ‘that the evidence 491, 492 Wal-Mart, legal v. light.’ Clark Lumberton, 754, 3 (2005) (quoting McGill Town of we the (1939)). Accordingly, reverse Commission’s S.E.2d so that the Commission opinion and award and remand this matter proper legal may under the standard. consider the evidence anew not con- that, findings, We in of its the Commission did note some plans individually. remand, On the of the retirement sider each relating to specific findings of fact each Commission should make separate employer plan a determination as to whether the and make in the aver- plan calculating be included contribution for that should weekly discretion the Commission age wage. We leave to the of accept relating to this issue. additional evidence whether Assembly to review N.C. matter, urge As final we the General Compensation comprehen- Act is a 97-2(5). Gen. Stat. Our Workers’ statutory “compromise employer’s employee’s between the and sive Mfg. Co., 98, 348 Whitley v. Lumber interests.” Columbia weekly wage” of (1986). “average The definition S.E.2d compromise. of 97-2(5) is a central element this N.C. Gen. Stat. states, legislature has clarified its intent after their states’ other struggled benefits. appellate have decide how treat courts case, we prevalence such as those of the of benefits Because Assembly in this area is critical. guidance believe the General remanded with instructions. Reversed and Judge ELMOREconcurs.

IN THE COURT OF APPEALS Judge separate opinion. HUNTERdissents in HUNTER,Judge, dissenting. holding

Because I would affirm the Full Commission’s case, I respectfully dissent. majority

I opinion believe the is on misinterpretations based of law, the relevant statute and expanding meaning case of each to impermissible illogical Any and extent. more detailed mandates on may computations what and not be included in these must come from our legislature, Court, not from this and such remand to the inappropriate. Commission is

I. 97-2(5) N.C. Gen. Stat. § Here, portions removed, with irrelevant statute at issue: Weekly Average Wages. “Average [First method:] — wages” injured shall mean earnings employee in the

employment working he which the time injury during period immediately of 52 preceding weeks injury the date .... Where the [Second method:] employment prior injury period extended over a 52weeks, dividing fewer than the method earnings dur- period by ing parts the number of weeks thereof dur- ing followed; pro- which the earned shall wages vided, just parties thereby results to both will be fair Where, obtained. reason of a shortness of [Third method:] during time which has been in the employ- his casual or nature terms of his impractical ment, compute it is defined,

as above shall regard average be had the previous injury amount which the 52 during weéks by person earned being grade a of the same and character employed in the class same of in the same local- ity community. or exceptional where But reasons the [Fourth method:]

foregoing unfair, be employer employee, would either to the computing may such other method of nearly approximate be to as resorted will most amount the injured employee earning which the would be were it not for the injury. APPEALS THE COURT OF

SHAW U.S. AIRWAYS, any to an made of character Wherever allowances contract, they wage shall specified part the wages are in lieu of earnings. a of his be deemed (2005) (emphasis added).4 97-2(5) Stat. §

N.C. Gen.

A. “Unfairness” the statute majority opinion fact the makes much statutory methods of calculation the of the authorizes modification plain misinterpretation of the This is a unfairness would result. where language of the statute. only above sections portions of the statute are

The italicized noted, Supreme has As our Court is discussed. which “fairness” of calcu- preference” for which method provides an “order of statute sen- method, set forth the first used, primary and “the lation is to be fifty-two employee for wages of the tence, is to calculate the total by injury and that sum year prior to date of to divide of the weeks 126, 129, County Schools, 347 N.C. fifty-two.” v. Buncombe McAninch method, “The final as set forth (1997). [as clearly may used unless has been above], not be there fourth method previously enu- unjust using the finding a results would occur Thus, at the fourth Id. S.E.2d 378. merated methods.” prevent unfair result— authorizing modification method—that remedy exceptional option those cases where is a failsafe produced a result first three methods one calculated alternative, equal to the is, That is not fourth party. either it unfair to to do would cre- others; provision to resort to when otherwise it is evaluating individual benefits injustice. It also not a method for ate in this calculation. for inclusion language

B. Plain types 97-2(5) does not cover the Carolina General Statute North note, when the As defendants at issue case. benefits enacted, type of Compensation Act was North Carolina nonexistent, and plans were almost none pension at issue here many years have held that amendments in the since ensuing provides quoted, types language two of com- statute As is clear from the “weekly computation (1) wages wages”: pensation that included in a be majority notes, plaintiff wages.” does “in lieu of As the received compensation “in argue issue should be considered this Court that the benefits .at way such, calcu- wages,” could included in this lieu of and as “wages.” term included in the if we were to consider them lation is 491 IN THE COURT OF APPEALS SHAW Ü.S. AIRWAYS, 474 pur “wages” be for the plans to such should considered

contributions pose Act, have addressed though even such contributions been e.g., (2005) See, 96-8(13)(b)(l) statutes. N.C. Gen. Stat. other “ Any to, payment include: made or on (stating ‘[w]ages’shall not qualifies of, employee . . . from or trust that under the behalf an to a and the Internal 401(a)(1) conditions set forth in sections nothing itself or the Code”). Revenue in either statute There expansion majority supports of the law. case law that such As many jurisdictions have question that have this notes, considered compensation general statutes should language held that workers’ See, “wages.” pension not read to include contributions as Corp., App. 140, 148-50, 627 A.2d e.g., Barnett v. Sara Lee Md. Maryland intended, legislature (holding that it so 90-91 “[h]ad specified pension fringe could have benefits such not, ‘wages’ and, Court would within the definition” since it did denied, not include Md. expand it) the definition to cert. Corp., (1993);

A.2d 1207 Luce v. United Techs. Conn. (1998); Highway Dep’t, v. N.M. 820 P.2d A.2d 747 Antillon State Ct. (N.M. 1991). Compensation quoted by portion Workers’ oí Larson’s Law majority repeating bears here: compensation in force in States has been the United have a common eighty years, over been period. most industrial life for of that feature American paid during been benefits have Millions voluntarily adjudicated paid in contested and time. Whether or they always calculation cases, begun with a basis have “wage” “wages” that the worker lives on made mean may someday have a “values” not miscellaneous con- depending him on number of uncontrollable value to or her say, itself “Wenow single court takes it on tingencies. Before you it, you all been you that, didn’t know have although tell cases, and so wage basis in these millions of wrongly calculating pleased we have eighty years, we are to announce that now, after eluded the meaning ‘wage’ that somehow discovered true decades,” would well to under- you for that court do eight rest of analysis in the penetrating than is visible a much more take Morrison-Knudsen, by the opinion in Court reversed [Circuit everyone why was denied to Supreme Court,] of this revelation long. for so else IN THE COURT OF APPEALS INC. AIRWAYS, (2007)]

[186 5 Arthur Larson, Compensation Larson and Lex K. Larson’s Workers’ 93.01[2][b],'at Law 93-21to -22 (2005). Even as it cites to this trea- n tise, majority opinion runs afoul of warning. its Guiding principles

C. majority The Expert cites to Deese v. Co., Lawn and Tree (1982), support 293 S.E.2d 140 for its statement presume that this Court cannot legislature that our intended to fringe benefits, exclude all including those at issue in the case at hand, from the “wages.” conclusion, definition of however, goes This against Deese’s statement principles of this Court’s guiding type interpretation: interpreted

This Court has statutory provisions of North Carolina’s many workers’ law on occasions. In every instance, wisely we have been guided several sound statutory rules of construction which repeating bear at the outset First, Compensation here. the Workers’ liberally Act should be construed, appropriate, whenever so that benefits will not be upon denied mere technicalities or interpre- strained and narrow provisions. Second, tations of its liberality such not, should how- ever, beyond clearly extend expressed language pro- of those visions, and our courts enlarge ordinary meaning of the terms used legislature any or engage in method of “judicial legislation. Third, it is not reasonable to assume that the legislature important would leave an regarding matter the admin- open istration of the Act to inference or speculation; conse- quently, judiciary should “ingrafting upon avoid a law something omitted, that has been which ought believes [it] have been embraced.’’ 277-78,

Id. at (citations omitted; at 142-43 alteration in original; emphasis added). majority’s opinion engages pre- cisely type judicial legislation upon and “ingrafting law” [the] principles that these Compensation forbid. The Workers’ statute types makes no mention of the here, benefits at issue and it is not place of this impose Court to concept on the statute a language that it legislature believes the should have included. As can be seen quote from above, a alternative to basic calculation is when certain benefits have been offered “in lieu of wages,” and that portion of the put statute has not been in issue in this case. N.C. Gen. Stat. 97-2(5). For this Court to hold that the statute does fact cover range of other benefits is tantamount to imposing our own language onto the statute.

IN THE COURT OF APPEALS SHAW U.S.

II. Kirk Morrison-Knudsen majority Essentially, here, the has taken two cases that exclude them and Kirk —and cobbled fringe benefits —Morrison-Knudsen support holding that the benefits at issue here should together they in-depth An at these two cases shows that not be excluded. look support majority’s holding. do not

A. Morrison-Knudsen majority opin- briefly, the Kirk mentions Morrison-Knudsen and this case of the foundation on ion in treats Morrison-Knuden opinion specific However, its is built. that case dealt with a fed- which Compensa- Longshoremen’s statute —the and Harbor Workers’ eral closely Act, 902(13) language tion 33 U.S.C. the that the Court —and different substantially analyzed was than here: that at issue “ money ‘Wages’means the rate at which the service rendered recompensed of force time hiring is under contract at the board, rent, hous- injury, including the reasonable value of of employer, ing, advantage or similar received from lodging, of gratuities received in the course from others employer.” than the Director, 624, 629, OWCP, 461

Morrison-Knudsen Constr. Co. v. U.S. (1983) (quoting 902(13)). L. Ed. 2d 33 U.S.C. The essence “ only ‘board, rent, holding was of the Court’s that benefits similar “ ” ‘wages’ part of under housing, lodging’ would be considered [or] statute, important were quality that those benefits shared and the readily equiva- “present that can converted into cash their value be Id. 76 L. Ed. 2d at 199. on the basis of their market values.” at lent analysis point subsequent on this show Court’s elaboration The easily quan- if a can be this statement does mean that benefit included; rather, with it means that benefits tified it should be future, opposed present value —as to a theoretical some ascertainable may is, types included calculation. That value — example compensation housing, for for rent —that benefits — be frequently payments added are) simple translated into cash (and paycheck. are employee’s an These the kinds on to provided to him as in all likelihood choose to have could payment. a cash in the types of benefits at issue in Kirk or

This is not true of Kirk, employer’s hand. the benefit was contribution case at In insurance; employee’s in Morrison- fund health a trust THE COURT OF APPEALS SHAW v. -U.S. N.C.

Knudsen, variety it was a union trust fund for a of health-related costs, including disability; here, insurance and it is the contribution to pension funds. In neither case go could the and demand that the and, instead, benefits be ceased that the em- ployee begin receiving equivalent. the benefits’ cash

B. Kirk majority opinion ways misconstrues in several holding Kirk Dept. v. State Correction, 121 App. 129, (1995), S.E.2d 301 disc. improvidently allowed, review 344 N.C. (1996). not, 476 S.E.2d 105 Kirk majority as the suggests, a mandate analyze case-by-case various benefits on a basis to determine they whether can be equivalent, converted into a cash nor does it provide authority for this Court to do so. Kirk, presented this Court was with several issues related to a

workers’ holding the Industrial Commission. The last such issue related to whether it was error for the Commission not to include in paid by calculation the amount State, employer, Kirk’s Kirk, for his health insurance.

134, 465 S.E.2d at 305. Kirk argued that the Commission erred mak- ing the calculation based on by the method portion outlined statute, which the Court refers to as “method two”: employment prior

Where the injury period extended over a weeks, of fewer6 than 52 the method dividing the earnings dur- ing period by that parts number of weeks and thereof during employee which the earned followed; shall be provided, just results fair parties thereby both will be obtained. N.C. 97-2(5). Gen. Stat. Kirk contended that the Commission should have instead made its provision: calculations based on this “But exceptional where for reasons foregoing unfair, would be either employee, such other computing method of aver- age wages may be nearly resorted to as will approximate most injured the amount which would be earning were it not injury.” for the Id.

This Court held that the latter method “should not be used -unless the result under unjust.” method two would be Kirk, 135, 465 S.E.2d at 305. such, As the Court concluded, “absent find- only 6. Kirk was statute; decided based on the 1994 version of this difference between that version and the 2005 version at issue in the case here is that the later ver- sion uses “fewer” where the earlier version used “less.” OF APPEALS IN THE COURT SHAW v. Ü.S. did result, the Commission produces an unfair that method two

ing Plan in to Kirk’sHealth the State’s contributions excluding not err 136, weekly wages.” Id. at average Kirk’s the calculation at 306. Supreme Court’s to the United States Kirk, the Court cited its 624, 76 L. Ed. 2d Morrison-Knudsen, 461 U.S.

holding in rec- money at which service is ‘the rate reasoning “wage that means ‘fringe not benefits that hiring’ ompensed under the contract App. at Kirk, 121 N.C. equivalent.’ a cash be converted into cannot reasoning same The Court then stated 136, 465 S.E.2d at 306. “[t]he case law by holding that no present case[,]” followed applies in the position unfair result is reached support[s] plaintiff’s that an care. A employer’s to Kirk’shealth contribution including Plan the State Health the benefits of State receives quantified. After cannot be The value of this benefit when needed. say that evidence, we cannot carefully considering the produced an allowance failure to include such Commission’s plaintiff. for the unfair result

Id. with it clear that the ease portion opinion makes

This dispositive quantified factor is not a benefit which quantify or if a can hold in Kirk that court The Court did not issue. you quan- rather, says if cannot included; it benefit, it must be value a excluding the benefit tify benefit, is one factor to consider that this calculation. from all suggests in Kirk majority’s “nothing statement from the should be excluded

fringe benefits summary holding. of that case’s very misleading computation” is a all of inclusion for question does not consider The Court Instead, the weekly wages in Kirk. the calculation of benefits for type of of a certain briefly whether the exclusion considers Court primary statu- under one of an unfair result fringe benefit renders calculating wages. tory methods Effect

III. Practical judicial expansion, without type engaging Court’s This drawbacks, to benefits and legislature as of debate the benefit compensation: receiving workers’ employees not will harm those pension plans due to their encouraged to abandon Employers will be THE COURT OF APPEALS IN RE J.G. unanticipated Any holding gen- increase in costs this would allow. expansion types compensation eral to be covered this any time, legislature. employers statute must come from our employees At and more, private parties are free to contract for than what required by statute; is, clarify if legislature were to statutory certain “wages,” pri- benefits are not covered term parties may certainly vate execute an providing contract that, employee’s case, part such benefits will be considered employee’s wages purposes of calculating wages under the workers’ statute.

IV.Conclusion majority opinion I believe the misconstrues the existing law in an attempt to it extend to cover benefits the statute itself does not con- template. Any further clarification on this issue must come from our legislature, not ingrafting language upon from this Court the statute. Action on our in the absence of the debate of merits and draw- legislature backs inherent to the inappropriate will result in an interpretation uneven such, respectfully of this statute. As I dissent. J.M.S.)

IN THE MATTER OF: J.G. J.M.G. (a.k.a. No. COA06-752 (Filed 2007) 6 November Appeal appealability 1. and Error— of child’s social se- — use curity right benefits — substantial interlocutory

An involving order DSS’s use of child’s Social Security benefits and its Humanity failure to make Habitat for payments mortgage immediately appealable. A substantial right is right affected that it involves DSS’s to use its discretion in disposing of funds capacity repre- that it receives in its aas payee; sentative that substantial right will be lost without imme- diate review because the DSS will not be able to recover the required pay funds it was for the mortgage. Appeal necessary and Error— issue — other issues

addressed pivotal appeal issue on an was whether the trial court properly DSS, representative payee ordered as the of a child’s

Case Details

Case Name: Shaw v. U.S. Airways, Inc.

Court Name: Court of Appeals of North Carolina

Date Published: Nov 6, 2007

Citation: 652 S.E.2d 22

Docket Number: COA06-1407

Court Abbreviation: N.C. Ct. App.