Construction Company v. Director, Office of Workers Compensation Programs, United States Department of Labor

• Citation: 76 L.Ed.2d 194,103 S.Ct. 2045,461 U.S. 624
• Decision Date: 24 May 1983
• Docket Number: No. 81-1891,MORRISON-KNUDSEN,81-1891
• Parties: CONSTRUCTION COMPANY, et al., Petitioners v. DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, UNITED STATES DEPARTMENT OF LABOR, et al
• Court: United States Supreme Court

461 U.S. 624

103 S.Ct. 2045

76 L.Ed.2d 194

MORRISON-KNUDSEN CONSTRUCTION COMPANY, et al., Petitioners

v DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, UNITED STATES DEPARTMENT OF LABOR, et al.

No. 81-1891.

Argued March 21, 1983.

Decided May 24, 1983.

Syllabus

Section 2(13) of the Longshoremen's and Harbor Workers' Compensation Act (LHWCA) defines "wages" for the purpose of computing compensation benefits under the Act as meaning "the money rate at which the service rendered is recompensed under the contract of hiring in force at the time of the injury, including the reasonable value of board, rent, housing, lodging, or similar advantage received from the employer, and gratuities received in the course of employment from others than the employer." An employee of petitioner construction company (employer) was fatally injured while working on the District of Columbia Metrorail System. At the time of his death, the employee was covered by the District of Columbia Workmen's Compensation Act, which incorporates the LHWCA, and he was also a beneficiary of a collective-bargaining agreement between the employer and his union. The employer began to pay 66 2/3% of the employee's "average weekly wage" in death benefits to his widow and minor children pursuant to the LHWCA. The widow disputed the amount of the benefits, claiming that her husband's average weekly wage included not only his take-home pay but also the 68¢ per hour in contributions the employer was required to make to union trust funds under the collective-bargaining agreement for health and welfare, pensions, and training. The Administrative Law Judge rejected the widow's claim and the Benefits Review Board affirmed, holding that only values that are readily identifiable and calculable may be included in the determination of wages and that the employee's rights in his union trust funds were too speculative to meet this definition. The Court of Appeals reversed, holding that the employer's contributions were a reasonable measurement of the value of the benefits to the employee.

Held: Employer contributions to union trust funds are not included in the term "wages" as defined in § 2(13). Pp. 629-637.

(a) The contributions are not "money . . . recompensed" or "gratuities received . . . from others" nor are they a "similar advantage" to "board, rent, housing [or] lodging." Board, rent, housing or lodging are benefits with a present value that can readily be converted into a cash equiva- lent on the basis of their market values, whereas the present value of the trust funds is not so easily converted into a cash equivalent. The employer's cost of maintaining the funds is irrelevant in this context, since it measures neither the employee's benefit nor his compensation. Nor can the value of the funds be measured by the employee's expectation of interest in them, for that interest is at best speculative. Pp. 630-632.

(b) The legislative history of the LHWCA, its structure, and the consistent policies of the agency charged with its enforcement, all show that Congress did not intend to include employer contributions to union trust funds in the statutory definition of "wages." Pp. 632-635.

(c) A comprehensive statute such as the LHWCA is not to be judicially expanded because of "recent trends." To expand the meaning of the term "wages" to include employer contributions to union trust funds would significantly alter the balance achieved by Congress between the concerns of longshoremen and harbor workers on the one hand, and their employers on the other. Such an expanded definition would also undermine the goal of providing prompt compensation to injured workers and their survivors. Pp. 635.637. SC2Q!]] 216 U.S.App.D.C. 50, 670 F.2d 208, reversed.

Arthur Larson, Durham, N.C., for petitioners.

Alan I. Horowitz, Washington, D.C., for the federal respondent supporting petitioners.

Geo. Stephen Leonard, Washington, D.C., for respondent Hilyer.

Chief Justice BURGER delivered the opinion of the Court.

The question presented is whether employer contributions to union trust funds for health and welfare, pensions, and training are "wages" for the purpose of computing compensation benefits under § 2(13) of the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. 902(13) (the Compensation Act).

I

James Hilyer, an employee of petitioner Morrison-Knudsen Construction Company, was fatally injured while working on the construction of the D.C. Metrorail System. At the time of his death, Hilyer was covered by the District of Columbia Workmen's Compensation Act, 36 D.C.Code § 301, which incorporates the provisions of the Compensation Act. He was also a beneficiary of a collective bargaining agreement between Morrison-Knudsen and his union, Local 456 of the Laborers' District Council of Washington, D.C. and Vicinity (AFL-CIO).

Immediately upon Hilyer's death, petitioner ¹ began to pay 66 2/3% of Hilyer's "average weekly wage" in death benefits to his wife and two minor children pursuant to 33 U.S.C. § 909(b).² Respondent Hilyer disputed the amount of benefits paid, claiming, among other things, that her husband's average weekly wage included not only his take-home pay, as petitioner contended, but also the 68¢ per hour in contributions the employer was required to make to union trust funds under the terms of the collective bargaining agreement.³ The Administrative Law Judge rejected Mrs. Hilyer's contention and the Benefits Review Board affirmed. The Board reasoned that only values that are readily identifiable and calculable may be included in the determination of wages. Hilyer's rights in his union trust funds were speculative. It was not clear from the record whether his pension rights had vested, and even if they had, the value of his interest in the Pension and Disability Fund depended on his continued employment with petitioner, while the value of his interest in the health, welfare, and training funds was contingent on his need for these benefits. The Board also rejected the notion that the values could be computed from the amounts contributed by the employer, noting that the family in all likelihood would not have been able to purchase similar protection at the same cost.

Mrs. Hilyer ⁴ sought review of the Benefits Review Board's decision in the Court of Appeals for the District of Columbia Circuit, reiterating her contention that her husband's wages included the contributions that his employer made to the union trust funds.⁵ The Court of Appeals re- versed. It agreed with the Board that the term wages includes only values that are readily identifiable and calculable, but held that the benefits at issue here met that definition. The court reasoned that since the contributions were intended for the benefit of the workers, the trustees could be viewed as "no more than a channel; . . . a means by which the company provides life insurance, health insurance, retirement benefits, and career training for its employees." Hilyer v. Morrison-Knudsen, 670 F.2d 208, 211 (CADC 1981). Although the court conceded that the family would not be able to use the employer's contribution to purchase benefits of equivalent value, it relied on United States ex rel. Sherman v. Carter, 353 U.S. 210, 77 S.Ct. 793, 1 L.Ed.2d 776 (1957), for the proposition that the employer's contributions were a reasonable measurement of the value of the benefits to the employees.

We granted certiorari, --- U.S. ----, 103 S.Ct. 49, 74 L.Ed.2d 56 (1982), and we reverse.

II

This case involves the meaning of 33 U.S.C. § 902(13), a definitional section that was part of the Compensation Act in 1927, when it became law, and that has remained unchanged through 10 revisions of the Act.⁶ The section provides:

" 'Wages' means the money rate at which the service rendered is recompensed under the contract of hiring in force at the time of the injury, including the reasonable value of board, rent, housing, lodging, or similar advantage received from the employer, and gratuities received in the course of employment from others than the employer."

A

We begin with the plain language of the Compensation Act. Since it is undisputed that the employers' contributions are not "money . . . recompensed" or "gratuities received . . . from others," the narrow question is whether these contributions are a "similar advantage" to "board, rent, housing [or] lodging." We hold that they are not. Board, rent, housing or lodging are benefits with a present value that can be readily converted into a cash equivalent on the basis of their market values.

The present value of these trust funds is not, however, so easily converted into a cash equivalent. Respondent urges us to calculate the value by reference to the employer's cost of maintaining these funds or to the value of the employee's expectation interests in them, but we do not believe that either approach is workable. The employer's cost is irrelevant in this context; it measures neither the employee's benefit nor his compensation. It does not measure the benefit to the employee because his family could not take the 64¢ per hour earned by Mr. Hilyer to the open market to purchase private policies offering similar benefits to the group policies administered by the union's trustees. It does not measure compensation because the collective bargaining agreement does not tie petitioner's costs to its workers' labors. To the contrary, the employee enjoys full advantage of the Training and Health and Welfare Funds as soon as he becomes a beneficiary of the collective bargaining agreement. App. 37-38 and 40. He derives benefit from the Pension and Disability Fund according to the "pension credits" he earns. These pension credits are not correlated to the amount of the employer's contribution; the employer pays benefits for every hour the employee works, while the employee earns credits only for the first 1,600 hours of work in a given year. Furthermore, although the employer...