Paying Partial Disability? Don’t Pay Too Much!
There is a Silver Lining in the Economy’s Dark Cloud
There is a useful tool in the world of Pennsylvania workers’ compensation defense that is not known very well. It can help Employers limit the amount of partial disability benefits they have to pay to injured workers who have returned to work with a loss of earnings. Particularly in this weak economy, the tool that is known as the “fellow worker rule” is more available than otherwise. The rule is that an injured worker (a claimant) is not allowed to receive more in wages and benefits combined than what his fellow workers receive in wages alone. Section 306(b)(1) of the Pennsylvania Workers’ Compensation Act, 77 P.S. 512(1).
At White and Williams, we recently litigated a case using this rule and obtained a Judge’s decision that granted the Employer a complete suspension of wage loss benefits. The Employer is an electronics manufacturer who no longer has to pay partial disability benefits to a mechanical inspector who returned to work with a loss of earnings because he was limited by his work injury from performing overtime. We established that the other mechanical inspectors were also not performing overtime because it was no longer available given the existing economic circumstances. With that set of facts, the Judge concluded that the mechanical inspector’s loss of earnings was not due to his work injury, and therefore partial disability benefits were not payable.
There are some key elements that need to be met in order to have the “fellow worker rule” apply, and these are set forth in the Commonwealth Court’s decision in Verizon v. WCAB (Baun), 863 A.2d 1247 (Pa. Cmwlth. 2004). In Verizon, the claimant had a low back injury, went out from work, and returned to work at his pre-injury position as a splicing technician. However, he was not allowed to climb poles or work overtime because of his work injury, according to his physicians. When he returned to work, he had a loss of earnings in comparison to his pre-injury average weekly wage.
The employer in the Verizon decision was not able to convince the Workers’ Compensation Judge, the Appeal Board, or the Court that it was entitled to an application of the fellow worker rule. The Court set forth four elements that are essential to an application of the rule.
In our case, we were able to meet all four elements by presenting testimony from the Claimant’s supervisor, the payroll supervisor, and the human resource manager. The four elements needed to reduce benefits with the rule are as follows:
Similar Employment at Time of Injury
In Verizon, the Judge had incorrectly looked at the claimant’s job when he returned to work with his restrictions, which included the inability to work overtime or to climb poles. The Court held that this was not the proper basis to define the class of workers for comparison. Instead, the other workers needed to be comparable to the Claimant’s position at the time of his work injury, which was a splicing technician, working regular duty and able to work overtime.
In our case, we provided a class of fellow workers who were all mechanical inspectors on the injury date in 2003, with the ability to work overtime.
Similar Employment-comparison of Individuals or Averages
In Verizon, the employer had presented the averages of fellow workers’ earnings, rather than the individual earnings for each worker. The Court held that averages or individual earnings will depend on the number of fellow workers that are available for comparison, and what the Judge considers to be persuasive enough.
In our case, we provided the individual earnings of the fellow workers and the averages already calculated for the Judge’s comparison.
Comparison-economic Distress
In Verizon, it was undisputed that overtime was less available after the claimant’s injury. However, the Workers’ Compensation Judge and the Board had erred in concluding that it was necessary for the lack of overtime to result from economic distress. The Court held that economic circumstances were not a necessary element. It just needs to be established that there are wage reductions among other workers for any reason.
In our case, we showed that the loss of overtime for workers was the result of economic circumstances, even though we were not required to do so. It is generally helpful to show the Judge the reason for the reduction in earnings, and it supports another basis for a suspension if the claimant has returned to his pre-injury, regular duty job.
Comparison-current Compensation and Wages Combined
In Verizon, the Court held that the employer failed to compare the correct class of workers, so this last element about their wages was not addressed. The rule requires that the current wages of the claimant, combined with his partial disability benefits, be compared with the current wages of the fellow workers.
In our case, we presented the details of the Claimant’s partial disability benefits combined with his earnings at the time he returned to work in 2010. We compared those figures to the 2010 earnings of his fellow workers (with figures for each individual and with the averages, on a weekly basis). We demonstrated that the Claimant was receiving an unfair windfall compared to his fellow workers.
In summary, our advice to Employers is to NOT let your injured workers receive any windfalls. Keep an eye on their earnings and partial disability benefits combined, in comparison with their fellow workers. There may be an opportunity to limit the benefits paid. This not only avoids an unnecessary expense, but it applies common sense and fairness for the Employer’s work force as a whole.
For more information on this alert, please contact Sandy Niemotka at 215.864.6338 or niemotkas@whiteandwilliams.com.
