Shaw v. U.S. Airways, Inc.

• Decision Date: 06 November 2007
• Docket Number: No. COA06-1407.,COA06-1407.
• Parties: Curry SHAW, Employee, Plaintiff, v. U.S. AIRWAYS, INC., Employer, American Protection Insurance Company, Carrier, Defendants.
• Court: North Carolina Court of Appeals

652 S.E.2d 22

Curry SHAW, Employee, Plaintiff, v. U.S. AIRWAYS, INC., Employer, American Protection Insurance Company, Carrier, Defendants.

No. COA06-1407.

Court of Appeals of North Carolina.

November 6, 2007.

Appeal by plaintiff from opinion and award entered 13 September 2006 by the North Carolina Industrial Commission. Heard in the Court of Appeals 9 May 2007.

The Sumwalt Law Firm, by Vernon Sumwalt and Mark T. Sumwalt, Charlotte, for plaintiff-appellant.

Littler Mendelson P.C., by Kimberly A. Zabroski, Pittsburg, PA, for defendants-appellees.

GEER, Judge.

Plaintiff Curry Shaw appeals from an opinion and award of the North Carolina Industrial Commission in which the Commission concluded that employer-funded contributions to plaintiff's two retirement accounts should not be included in the calculation of plaintiff's "average weekly wage," a term defined under N.C. Gen.Stat. § 97-2(5) (2005). Whether retirement contributions ought to be considered as part of an injured worker's average weekly wage is a question not previously considered by the North Carolina appellate courts. Because we have concluded that not all fringe benefits are required to be excluded from an average weekly wage calculation and because the Commission did not apply the proper analysis in determining whether the contributions at issue in this case should be excluded, we reverse and remand the matter to the Commission so that it may undertake the proper inquiry.

Contrary to the suggestion in the dissenting opinion, nothing in this opinion holds that the benefits at issue in this case should be included in calculating plaintiff's average weekly wage. We leave that question for the Commission to decide after applying the test mandated by Kirk v. N.C. Dep't of Corr., 121 N.C.App. 129, 465 S.E.2d 301 (1995), disc. review improvidently allowed, 344 N.C. 624, 476 S.E.2d 105 (1996), and Morrison-Knudsen Constr. Co. v. Dir., Office of Workers' Comp. Programs, 461 U.S. 624, 103 S.Ct. 2045, 76 L.Ed.2d 194 (1983).

Facts

Plaintiff, a fleet service worker for defendant-employer U.S. Airways, suffered a compensable back injury on 12 July 2000 while attempting to lift a piece of heavy luggage from a baggage belt. Following the injury, plaintiff had a disc laminectomy and a fusion with hardware implantation. Because of his injury-related pain, plaintiff has received nerve root injections, undergone radio-frequency nerve obliteration procedures, and taken medication. At the time of the hearing before the deputy commissioner on 25 May 2005, plaintiff was still receiving temporary total disability due to the 12 July 2000 injury.

The terms of plaintiff's employment were set out in the "1999 Agreement Between U.S. Airways, Inc. and The International Association of Machinists and Aerospace Workers" (the "Agreement"). Under the Agreement, plaintiff was entitled to participate in two separate retirement programs: an "Employee Savings Plan" and an "Employee Pension Plan."

The Savings Plan is a 401(k) plan that allows employees to defer a certain percentage of their eligible income for retirement. Defendant-employer, in turn, will match 50% of the employee's personal contribution, up to 4% of the employee's eligible income, and will deposit the "matching" sum into the employee's savings account. In other words, the amount that defendant-employer is obligated to deposit into the savings account could vary between 0% and 2% depending on whether and how much the employee personally contributed.

The Pension Plan, unlike the Savings Plan, is funded entirely by contributions from defendant-employer. Because fleet service workers such as plaintiff are eligible for the Pension Plan, defendant-employer automatically made the obligatory contributions into plaintiff's pension account. The amount contributed to each employee's account is calculated based on the employee's income and age.

Despite their differences, the Savings and Pension Plans have some common features. Fidelity Investment Services administers the accounts in each plan. Fidelity offers a mix of pre-selected investment options, including mutual funds, stocks, and bonds, in which the employees can invest their personal contributions as well as defendant-employer's contributions. Although the investment options available to employees are the same under both the Savings and the Pension Plan, Fidelity maintains the accounts for each plan separately.

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

On 23 November 2004, plaintiff requested a hearing because the parties were unable to agree on whether defendant-employer's retirement contributions were part of his average weekly wage. Following a 25 May 2005 hearing, Deputy Commissioner Phillip A. Holmes entered an opinion and award concluding that defendant-employer's contributions to the retirement accounts should not be included in the calculation of plaintiff's average weekly wage.

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

Discussion

The only question arising in this appeal is whether defendant-employer's contributions to plaintiff's two retirement accounts (Savings and Pension) should be included in his "average weekly wage." The calculation of an injured worker's compensation under our Workers' Compensation Act is based on his or her "average weekly wage" as defined by N.C. Gen.Stat. § 97-2(5).¹

N.C. Gen.Stat. § 97-2(5) "sets forth in priority sequence five methods by which an injured employee's average weekly wages are to be computed, and in its opening lines, this statute defines or states the meaning of `average weekly wages.'" McAninch v. Buncombe County Sch., 347 N.C. 126, 129, 489 S.E.2d 375, 377 (1997). In this case, plaintiff argues that defendant-employer's retirement contributions should be included when calculating his average weekly wage pursuant to the first method. Under the first method, "`[a]verage weekly wages' shall mean the earnings of the injured employee in the employment in which he was working at the time of the injury during the period of 52 weeks immediately preceding the date of the injury ... divided by 52." N.C. Gen.Stat. § 97-2(5). See also McAninch, 347 N.C. at 129, 489 S.E.2d at 377 (noting "the primary method, set forth in the first sentence, is to calculate the total wages of the employee for the fifty-two weeks of the year prior to the date of injury and to divide that sum by fifty-two").

While the word "earnings" appears to be the key concept in defining "average weekly wage," the Workers' Compensation Act does not specify what is, or what is not, encompassed within the term "earnings." Our task is to determine whether the legislature intended to exclude from "earnings" defendant-employer's contributions to plaintiff's retirement accounts. Morris v. Laughlin Chevrolet Co., 217 N.C. 428, 430, 8 S.E.2d 484, 485 (1940) ("`The object of all interpretation of statutes is to ascertain the meaning and intention of the Legislature, and to enforce it.'" (quoting Kearney v. Vann, 154 N.C. 311, 315, 70 S.E. 747, 749 (1911))).

Unlike other jurisdictions, North Carolina has not, in its Workers' Compensation Act, chosen to expressly exclude fringe benefits from an average weekly wage calculation. See, e.g., 76 Del. Laws ch. 1, § 5 (2007) (amending Del.Code Ann. tit. 19, § 2302) ("`Average weekly wage' means the weekly wage earned by the employee at the time of the employee's injury at the job in which the employee was injured, including overtime pay, gratuities and regularly paid bonuses ... but excluding all fringe or other in-kind employment benefits."); N.M. Stat. Ann. § 52-1-20 (2003) ("`average weekly wage' means the weekly wage earned by the worker at the time of the worker's injury, including overtime pay and gratuities but excluding all fringe or other employment benefits and bonuses"); 77 Pa. Stat. Ann. § 582 (2001) ("The terms `average weekly wage' and `total wages,' ... [shall not] include fringe benefits, including, but not limited to, employer payments for or contributions to a retirement, pension, health and welfare, life insurance, social security or any other plan for the benefit of the employee or his dependents...."). The United States Congress has also excluded fringe benefits for purposes of calculating compensation under the federal Longshore and Harbor Workers' Compensation Act. See 33 U.S.C. § 902(13) (2000) ("The term wages does not include fringe benefits, including (but not limited to) employer payments for or contributions to a retirement, pension, health and welfare, life insurance, training, social security or other employee or dependent benefit plan....").

Although our General Assembly did not expressly address fringe benefits in the Workers' Compensation Act, it did so in the Employment Security Act. The Employment Security Act specifically excludes many fringe benefits from the definition of "wages" set out in that Act: "The term `wages' shall not include the amount of any...