Gallo v. Department of Labor and Industries

• Decision Date: 29 September 2005
• Docket Number: No. 75071-8.,No. 75064-5.,No. 75088-2.,No. 74849-7.,No. 75070-0.,74849-7.,75064-5.,75070-0.,75071-8.,75088-2.
• Citation: 120 P.3d 564,155 Wn.2d 470
• Court: Washington Supreme Court
• Parties: Paula K. GALLO, Petitioner, v. DEPARTMENT OF LABOR AND INDUSTRIES, Respondent, Kenneth Barber, Fred Jones, and Daniel Renshaw, Appellants, v. Department of Labor and Industries, Respondent, and James A. Dumont, Appellant, v. Supervalu, Inc., and Department of Labor and Industries, Respondents.

120 P.3d 564

155 Wn.2d 470

Paula K. GALLO, Petitioner, v. DEPARTMENT OF LABOR AND INDUSTRIES, Respondent, Kenneth Barber, Fred Jones, and Daniel Renshaw, Appellants, v. Department of Labor and Industries, Respondent, and James A. Dumont, Appellant, v. Supervalu, Inc., and Department of Labor and Industries, Respondents.

No. 74849-7.

No. 75064-5.

No. 75070-0.

No. 75071-8.

No. 75088-2.

Supreme Court of Washington, En Banc.

Argued November 16, 2004.

Decided September 29, 2005.

Terry James Barnett, Rumbaugh Rideout & Barnett, Tacoma, Robert Charles Milhem, Spokane, for Petitioner.

John R. Wasberg, Office of the Attorney General, Amy L. Arvidson, Keehn Arvidson PLLC, Seattle, for Respondents.

Kristopher Ian Tefft, Association of Washington Business, Olympia, for Amicus Curiae Associated General Contractors of Washington, Association of Washington Business, Washington State Farm Bureau.

Lisa Daeley Kelley, Tacoma, Laura Therese Morse, Lane Powell PC, Seattle, for Amicus Curiae Washington Self-Insurers Association.

MADSEN, J.

¶ 1 In these five consolidated cases, the Department of Labor and Industries (Department) issued orders excluding employer contributions to retirement trust funds, apprenticeship training trust funds, the Laborers-Employers Cooperation and Education Trust (LECET), and life insurance and disability insurance trust funds made pursuant to the collective bargaining agreements from its time-loss compensation calculations because it ruled that the payments did not constitute "wages" as defined in RCW 51.08.178(1) and Cockle v. Department of Labor & Industries, 142 Wash.2d 801, 16 P.3d 583 (2001). We hold that these contributions must be analyzed under the test set forth in Cockle for determining whether they constitute "other consideration of like nature" and are thus a part of wages. Further, we hold that the contributions in these cases do not constitute "wages." We affirm the Court of Appeals in Gallo v. Department of Labor & Industries, 119 Wash.App. 49, 81 P.3d 869 (2003) and the superior court decisions in Renshaw, Barber, Jones, and Dumont.

STATEMENT OF CASE

¶ 2 In each of these five consolidated cases the workers suffered an industrial injury while acting in the course of employment pursuant to a collective bargaining agreement (CBA). The facts relevant to each worker are set out below.

Gallo

¶ 3 On August 29, 1997, Paula K. Gallo was injured in the course of her employment with Murphy Brothers, Inc. Gallo's employment was subject to the terms of the International Union of Operating Engineers' CBA. "Schedule A" of the CBA stated Gallo's base wage as $18.10 per hour. Certified Appeal Board Record (CABR Gallo) ex. 1, at 19-25; Clerk's Papers (CP) at 60; CABR (Gallo) at 15-16. The same schedule also classified health and security, pension, and apprentice training as "fringe benefits." CABR (Gallo) ex. 1, at 24. For every compensable hour that Gallo worked, Schedule B of the CBA required Murphy Brothers to pay $2.55 into the health and security trust fund, $2.50 into the pension trust fund, and $.30 to the apprentice and training trust fund.

¶ 4 In late 1997, Gallo was granted benefits. The monthly wage order did not include the value of employer contributions for pensions, health, and security or apprenticeship and training benefits. Gallo appealed to the Board of Industrial Insurance Appeals. For purposes of computing Gallo's time-loss compensation and loss of earnings power pursuant to RCW 51.08.178, the Board's industrial appeals judge (IAJ) included Gallo's medical insurance benefits as wages but excluded contributions for pension and apprenticeship training. The IAJ reasoned that Gallo's medical insurance was a "core benefit of like nature to food, shelter, and fuel." CABR (Gallo) at 29-30. However, because Gallo's pension benefit and apprentice-program-contribution benefit were not similarly critical, the IAJ reasoned they were "fringe benefit[s]." Id. Gallo petitioned for review to the Board, which adopted the IAJ's order.

¶ 5 Gallo then appealed to the superior court, which affirmed the Board. The Court of Appeals also affirmed. Gallo, 119 Wash.App. 49, 81 P.3d 869. Gallo subsequently sought review in this court and her petition was consolidated with four other cases.¹

Renshaw

¶ 6 On September 27, 2001, Daniel A. Renshaw was injured while working as a full time union apprentice laborer for J.R. Hayes & Sons, Inc., under a CBA between the Washington Northern Idaho District Counsel of Laborers and the Associated General Contractors.

¶ 7 Under the CBA, Renshaw's wage rate was $16.74 per hour. The CBA also required Renshaw's employer to make after-tax deductions from his net pay and remit them to the following: $1.00 per hour worked to a credit union savings account, $.55 per hour worked to the union for union dues, and $.04 per hour worked to the Northwest Fair Contracting Industry Improvement Committee (NWFCA). For every hour Renshaw worked, Schedule B of the CBA required his employer to contribute $3.10 to the health and security trust fund, $2.40 to the pension trust fund, $.25 to the training trust fund, and $.05 to the LECET account (for management-labor promotion).² The CBA categorized the health and security contributions and the pension, apprenticeship/training and LECET payments as "fringe benefits." Certified Appeal Board Record (CABR Renshaw) ex. 1, at 25; ex. 2.

¶ 8 Renshaw was granted benefits but disagreed with the Department's calculation of his monthly wage for purposes of computing his time-loss compensation and appealed. The IAJ found that Renshaw's wage included "$18.33/hour ($16.74 in take home pay, $1 for vacation, $.04 for NWFCA and $.55 for union dues)." CABR (Renshaw) at 57. The IAJ also concluded that monthly payments into the union trust funds for health, dental, and vision insurance were part of Renshaw's wage pursuant to RCW 51.08.178 because those benefits were critical to Renshaw's health and survival. However, the IAJ excluded payments for pension, sick pay, life insurance, training, and LECET pursuant to this court's ruling in Cockle, 142 Wash.2d 801, 16 P.3d 583.

¶ 9 Renshaw petitioned for review to the Board, which adopted the IAJ's order. He then appealed to the superior court, which ruled for the Department. Renshaw then filed an appeal in the Court of Appeals and this case was consolidated with four others.

Barber

¶ 10 Kenneth J. Barber was injured on June 5, 2000, while in the course of his employment with Hensons Masonry, Inc., as a full time journeyman hod carrier.³ At the time of injury, Barber was a member of the same union as Renshaw and subject to the same CBA. Under that agreement Barber's wage rate was $23.40 per hour. Barber was granted benefits but disagreed with the Department's calculation of his monthly wage and he appealed.

¶ 11 The IAJ found that the monthly payments by Barber's employer for health and security benefits constituted a portion of his wages for the purposes of computing his rate of time-loss compensation because these benefits were critical to Barber's health and survival. However, applying the Cockle test the IAJ declined to include the employer's payments into union trust funds for life insurance, disability insurance, pension benefits, training benefits and LECET as part of wages.

¶ 12 Barber petitioned for review to the Board, which adopted the IAJ's order in a split decision. Barber then appealed to the superior court. The court reversed the Board's exclusion of payments for life and disability insurance, but otherwise affirmed the Board.⁴ Barber's motion for direct review in this court was granted and his case was consolidated with four others.

Jones

¶ 13 On October 18, 2001, Fred L. Jones was injured while working as a union carpenter for Swinerton Builders on a public works project. At the time, Swinerton employed Jones under a CBA between Jones's union, The Pacific Northwest Regional Council of the United Brotherhood of Carpenters & Joiners of America, and the Oregon-Columbia Chapter of The Associated General Contractors of America, an employer bargaining group of which Swinerton was a member.

¶ 14 Under the CBA, Jones's base wage was $23.78 per hour. His taxable wage was $26.03.⁵ For every hour Jones worked, the CBA required Swinerton to deposit into union trust accounts $1.25 for vacation, $1.00 for union dues, $3.28 for health and welfare (health insurance, life insurance, and death and dismemberment insurance), $3.81 for pension, and $.40 for apprenticeship training. Jones's gross wage was $33.52, which met the prevailing wage requirement for public works projects at the time.

¶ 15 Jones was granted benefits but he disputed the Department's calculation of his monthly wage for purposes of determining his time-loss compensation and appealed to the Board. The IAJ reversed and remanded with instructions to recalculate Jones's time-loss compensation based on his marital status, the number of hours worked, and to include his employer-paid health insurance. The IAJ concluded that the payments Jones's employer made into the union trust funds for health, dental, and vision insurance constituted a portion of Jones's wages for the purposes of computing time-loss benefits because those benefits were critical to the worker's health and survival. The IAJ excluded the employer's payments for pension, death and dismemberment, sick pay, life insurance, and training, however, because these benefits did not meet the Cockle test.

¶ 16 Jones petitioned for review but the Board found that Jones's health and welfare benefits (including employer contributions for health care, life insurance, and death and dismemberment insurance) should be excluded in the calculation of his "wages" because he had not lost the coverage during the relevant disability period. Certified Appeal Board Record (CABR Jones) at 4, 8. The Board also ruled that the value of Jones's union dues and training benefits were not properly...