Joyner v. Ribicoff

• Decision Date: 10 July 1962
• Docket Number: Civ. A. No. 1159.
• Parties: Charles E. JOYNER, Plaintiff, v. Abraham RIBICOFF, Secretary of Health, Education and Welfare, Defendant.
• Court: U.S. District Court — Western District of Virginia

206 F. Supp. 874

Charles E. JOYNER, Plaintiff, v. Abraham RIBICOFF, Secretary of Health, Education and Welfare, Defendant.

Civ. A. No. 1159.

United States District Court W. D. Virginia, Roanoke Division.

July 10, 1962.

William B. Poff and Woods, Rogers, Muse & Walker, Roanoke, Va., for plaintiff Joyner.

H. Garnett Scott, Asst. U. S. Atty., Roanoke, Va., for defendant United States.

MICHIE, District Judge.

The question for decision in this case is whether, when an employee is paid $1,415.90 by his employer in one calendar year but in connection with his work had to spend $543.38 for traveling expenses for which under his contract of employment he had no right to reimbursement, his "earnings", as the word is used in section 203(e) of the Social Security Act (42 U.S.C.A. § 403(e)), are $1,415.90 or $872.52. The common sense answer is, of course, that his earnings are $872.52 and I believe the common sense answer is correct. But the problem is somewhat more complicated than is suggested by the rather simplified form of the question posed above.

Charles E. Joyner, a recipient of Social Security benefits under § 202(a) of the Act (old age benefit payments) worked as a salesman for Electrolux Corporation in 1957 and 1958. The corporation paid him in 1957 as "commissions" a total of $1,415.90 but in earning this amount he incurred traveling expenses of $872.52 which were not reimbursable to him under his contract with Electrolux. The same situation existed in 1958, the comparable figures being $1,353.98 for commissions and $531.45 for expenses.

Section 203(e) of the Act (42 U.S.C.A. § 403(e)) provides for certain deductions from the old age benefit payments when the recipient's "earnings" exceed $1,200.00 in a taxable year. Claiming that Mr. Joyner had "earnings" of $1,415.90 in 1957 and $1,353.98 in 1958 the Secretary of Health, Education and Welfare determined that he had been overpaid in the sum of $517.50 during the two years in question and deducted this amount from payments subsequently falling due him.

After unsuccessfully exhausting his administrative remedies, Mr. Joyner brought this action to review the final decision of the Secretary.

Section 203(e) (4) (A) of the Act (42 U.S.C.A. § 403(e) (4) (A)) provides that:

"An individual's earnings for a taxable year shall be (i) the sum of his wages for services rendered in such year and his net earnings from self-employment for such year, minus (ii) any net loss from self-employment for such year."

The argument in this case is largely whether Joyner's income in the years in question was from wages or from self-employment. If it was from self-employment the reference to "net earnings" in section 203(e) (4) (A) plainly provides that his non-reimbursable expenses would be deductible so that his earnings would have been less than $1,200.00 in each of the years in question. But the argument of the case has seemed to assume that if Joyner was not self-employed the entire payments made him by Electrolux must be "wages" from which his expenses could not be deductible under the provisions of § 203(e) (4) (A) above quoted.

I do not believe that this last assumption is correct. "Wages" is not defined in the Act. But Social Security Administration Regulation No. 4 § 404.1026, 42 U.S.C.A.Appendix, defines "wages" in part as follows:

"(2) The term `wages' means all remuneration for employment unless specifically excepted under section 209 of the act (see sec. 404.1027).

* * * * * *

"(7) Amounts paid specifically — either as advances or reimbursements — for traveling or other bona fide ordinary and necessary expenses incurred or reasonably expected to be incurred in the business of the employer are not wages. Traveling and other reimbursed expenses must be identified either by making a separate payment or by specifically indicating the separate amounts where both wages and expense allowances are combined in a single payment."

It will be observed that under the last quoted paragraph reimbursements for expenses are not included as "wages" if they are "specifically" earmarked as such by the employer. But by some administrative legerdemain such reimbursements become "wages" if they are not specifically earmarked. No provision in the Act makes this distinction and while it would doubtless simplify the administration of the Act (at the expense of imposing injustices upon the taxpayers) if the Act did so provide, the Secretary has no authority to write such a provision into the Act.

Regulation or no regulation I do not believe that sums received in reimbursement of expenses constitute "wages" or "earnings". There was testimony to the effect that Electrolux had, for reasons of convenience, set the commissions paid to its salesmen at a figure which was deemed high enough to permit them to pay expenses they incurred in the work and still have, over and above expenses, sums that were deemed to be adequate compensation for their services.

Webster's New International Dictionary, Second Edition, Unabridged, defines "wages" as follows:

"Pay given for labor, usually manual or mechanical, at short stated intervals, as distinguished from salaries or fees."

Money paid in part as reimbursement of expenses does not, to the extent of that part, come within that definition.

Black's Law Dictionary, 4th Edition, has the following to say of "wages":

"Wages. A compensation given to a hired person for his or her services; the compensation agreed upon by a master to be paid to a servant, or any other person hired to do work or business for him. * * * Every form of remuneration payable for a given period to an individual for personal services, including salaries, commissions, vacation pay, dismissal wages, bonuses and reasonable value of board, rent, housing, lodging, payments in kind, tips, and any other similar advantage received from the individual's employer or directly with respect to work for him. * * *

"In a limited sense the word `wage' means pay given for labor usually manual or mechanical at short stated intervals as distinguished from salary, but in general the word means that which is pledged or paid for work or other services; hire; pay. In its legal sense, the word `wages' means the price paid for labor, reward of labor, specified sum for a given time of service or fixed sum for a specified piece of work. * * *"

Again there is no suggestion that reimbursement for expenses incurred could be deemed to be "wages".

Furthermore it is simply inconceivable that Congress could have intended that an employee who grossed $1,400.00 but netted only $800.00 from his work would forfeit his right to social security payments while a self-employed man who grossed and netted precisely the same amounts could continue to draw old age benefits.

The government stresses the fact that under § 203(e) (4) (A) earnings are defined on the one hand as "the sum of his wages" or on the other "his net earnings from self-employment". And from the failure of Con...