Hilyer v. Morrison-Knudsen Const. Co.

Decision Date01 December 1981
Docket NumberNos. 80-1388,MORRISON-KNUDSEN,80-1440 and 80-1504,s. 80-1388
Citation216 U.S.App.D.C. 50,670 F.2d 208
PartiesSonia HILYER (Widow of James H. Hilyer), Petitioner, v.CONSTRUCTION COMPANY and Argonaut Insurance Company, Respondents.CONSTRUCTION COMPANY and Argonaut Insurance Company, Petitioners, v. Sonia HILYER (Widow of James H. Hilyer), Respondent. DIRECTOR, OFFICE OF WORKERS' COMPENSATION, UNITED STATES DEPARTMENT OF LABOR, Petitioner, v.CONSTRUCTION COMPANY and Argonaut Insurance Company, Respondents.
CourtU.S. Court of Appeals — District of Columbia Circuit

Petitions for Review of Orders of the Benefits Review Board.

Catherine A. Giacona, Atty., Dept. of Labor, Washington, D. C., for Director, Office of Workers' Compensation Programs, Dept. of Labor, petitioner in No. 80-1504. Joshua T. Gillelan, II, Atty., Dept. of Labor, Washington, D. C., also entered an appearance for Director, Office of Workers' Compensation Programs, Dept. of Labor.

Richard W. Galiher, Jr., Washington, D. C., for Morrison-Knudsen Const. Co., et al., petitioners in No. 80-1440 and respondents in No. 80-1504.

George S. Leonard, Washington, D. C., for Sonia Hilyer, cross-respondent in No. 80-1440 and petitioner in No. 80-1388.

Before ROBINSON, Chief Judge, SWYGERT, * Senior Judge, and ROBB, Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge SWYGERT.

SWYGERT, Senior Circuit Judge:

In these consolidated appeals we are asked to review a final order of the Benefits Review Board of the United States Department of Labor. The case presents a question of first impression concerning construction of the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. §§ 901 et seq. (1976), as extended by the District of Columbia Workmen's Compensation Act, 36 D.C.Code §§ 501, 502 (1973) ("the Act" or "the Longshoremen's Act").

The claimant in this case is Sonia Hilyer. On April 19, 1974 her husband, James H. Hilyer, was fatally injured during the course of his employment with respondent Morrison-Knudsen Company. 1 At the time of his death, Hilyer was a member of Local 456 of the Laborers' District Council of Washington, D.C. and Vicinity, an AFL-CIO affiliate. In addition to the covered employees' hourly rates of pay, the collective bargaining agreement between the union and Morrison-Knudsen provided that the company would pay fixed sums of money into three union trust funds. Specifically, the company agreed to pay twenty-eight cents into the health and welfare fund, thirty-five cents into the pension fund, and five cents into the training fund, for each hour that each employee worked.

Morrison-Knudsen began paying death benefits under the Act to the claimant immediately upon her husband's death. A dispute arose, however, over the amount of benefits to which she was entitled. Hilyer had been employed by Morrison-Knudsen for only five months when he died. During the year before his death, he had also been employed as a security guard and a grocery clerk, at substantially lower wages. In figuring his average weekly wage, the company took into account his prior employment. The claimant contended that her husband's average weekly wage should be based only on his employment with Morrison-Knudsen. She also contended that the company's contributions to the three union trust funds should be included as part of her husband's "average weekly wage" under the Act. 2

Following a hearing, an administrative law judge agreed with the claimant that the average weekly wage should reflect only the deceased's earnings as a construction worker for Morrison-Knudsen. Accordingly, pursuant to section 10(b) of the Act, the average weekly wage was determined by reference to the average yearly wages of a fellow employee whose wages most closely resembled those of the deceased during the period he worked for Morrison-Knudsen. 3 The administrative law judge further ruled, however, that the contributions to the union trust funds were not includable in the average weekly wage. At the hearing, the claimant also presented a claim for attorney's fees pursuant to section 28 of the Act. Although she requested $7,530, the administrative law judge awarded a fee of $2,988.80.

On cross-appeals to the Benefits Review Board, the Board upheld the administrative law judge's ruling with respect to the amount of benefits to which the claimant was entitled. The Board rejected the company's contention that section 10(b) should not be applied, and also rejected the claimants' contention that fringe benefit payments should have been included in the average weekly wage. The Board remanded the case, however, ordering that the administrative law judge give detailed reasons for the substantial reduction of the attorney's fee award. On remand, the case was assigned to a different administrative law judge. 4 The new administrative law judge increased the attorney's fee award to $4,000. The claimant again appealed to the Board, contending that the award was still inadequate. The Board modified the fee award to $6,215. Both parties thereafter petitioned this court for review of the Board's order. The claimant contends that the Board should have included the employer's trust fund contributions in computing her husband's average weekly wage; the company contends that the Board's modification of the attorney's fee award was clearly erroneous.


We address first the claimant's contention that the fringe benefits provided to her husband by means of the company's contributions to the union trust funds are a part of her husband's "average weekly wage" within the meaning of the Act. This issue has apparently not been addressed before. We begin our analysis with the specific language of the statute.

The term "wages" is defined at section 2(13) of the Act:

"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.

33 U.S.C. § 902(13). We agree with the Board that this definition "clearly implies that values received by an employee that are readily identifiable and calculable should be included in the determination of the average weekly wage." App. I at 51. Thus, for example, vacation pay constitutes wages, Baldwin v. General Dynamics Corp., 5 BRBS 579, BRB No. 76-271 (March 15, 1977), as does overtime pay, Gray v. General Dynamics Corp., 5 BRBS 279, BRB No. 76-105 (December 21, 1976), although neither is explicitly mentioned in section 2(13). 5 The question, then, is whether the benefit fund contributions are identifiable, calculable values received by the employees. We hold that they are.

We recognize that, as Morrison-Knudsen emphasizes, the contributions are made to the union funds, not to the employees, and that the individual employees have no voice in the day-to-day operation of the funds. The company cannot seriously maintain, however, that because the union funds receive the contributions, then the funds are the beneficiaries of the company's payments. The beneficiaries are the employees. The funds are no more than a channel; they are merely a means by which the company provides life insurance, health insurance, retirement benefits, and career training for its employees.

Further, it is indisputable that each of these benefits has substantial economic value to the employees. If they were not provided at the company's expense, each employee would have to spend his or her own money to acquire them. The Board apparently felt that it would be impossible to determine the "value" to an employee of the insurance policies, the career training, or the pension because whether and to what extent the employee might use them is highly speculative. This reasoning ignores the fact that an insurance policy must be bought and paid for whether or not a claim is ever made upon it. The economic advantage lies in the employer's provisions of such a policy at no cost to the employee. See W. W. Cross v. NLRB, 174 F.2d 875, 878 (1st Cir. 1949). 6 The same is true of the retirement pension and the career training. With respect to the pension, we agree with the Michigan appellate court's statement in Hite v. Evart Products Co., 34 Mich.App. 247, 191 N.W.2d 136 (1971):

We may only speculate whether plaintiff would have worked a full 10 years for defendant (and thereby obtained a vested interest in the pension fund) had she not been injured. However, the facts are that at the time of the injury her employer was putting aside this potential benefit for her and that the injury prevented a continuation of this potential toward a vested interest. As the result of her injury she must find some other way of providing income for retirement. The pension payment was a part of her weekly wage.

191 N.W.2d at 139 (emphasis in original). 7 As for career training, that too is something the employee would have had to spend his or her own money to acquire. It is therefore as much an economic advantage as are the insurance policies and the pension. That an employee may choose not to participate in the career training opportunity does not make the opportunity any less valuable, for it is of course up to each employee to decide what to do with the consideration tendered by the employer in return for services rendered.

The Supreme Court's reasoning in United States v. Carter, 353 U.S. 210, 77 S.Ct. 793, 1 L.Ed.2d 776 (1957), is instructive. In Carter, the Court found contributions of seven and one-half cents per hour to a union health and welfare fund to be part of the "sums justly due" to employees under the Miller Act, 40 U.S.C. §§ 270a et seq., and held accordingly that a federal contractor's surety was liable for such contributions when the contractor failed to...

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