- Wage Differential Without a Change in Wages?
- July 27, 2016 | Author: Joseph Guyette
- Law Firm: Heyl, Royster, Voelker & Allen Professional Corporation - Champaign Office
- Jackson Park Hospital v. Illinois Workers' Compensation Comm'n
What is the difference between the amount a claimant is currently earning and the amount the claimant is capable of earning? According to the Appellate Court, Workers' Compensation Commission Division, the answer is, "a lot." In Jackson Park Hospital v. Illinois Workers' Compensation Comm'n, 2016 IL App (1st) 142431WC, the appellate court addressed whether a claimant can be entitled to a wage differential award, where the amount she is earning after the accident is the same as the amount she earned before the accident. In finding that the claimant was entitled to a wage differential award, the appellate court specifically distinguished between earnings and earning capacity.
In Jackson Park Hospital, the claimant, a stationary engineer, was injured when she attempted to gain entry into a locked office through a sliding glass window. The claimant was able to get into the office, but fell when she was attempting to get down from a desk below the window. The claimant had stepped onto a desk chair, which rolled away. Initially, the claimant noticed pain in her left lower back, through her left leg, and in her left knee. Ultimately, she underwent very extensive physical therapy and surgery to repair a torn meniscus. After the accident of October 25, 2005, and the surgery of April 29, 2006, the claimant was released to work in a sedentary position as of June 1, 2006. The employer was unable to accommodate those restrictions and the claimant remained off work.
While off work, the claimant underwent a functional capacity evaluation in February 2007, that placed her at the light physical demand level. It was undisputed that she was not going to be able to return to her regular position as a stationary engineer. The claimant was incapable of prolonged stooping, kneeling or squatting and was unable to perform any prolonged standing or walking. Following the evaluation, her surgeon cleared her to return to work at the sedentary level on a permanent basis.
Shortly after her release, the employer returned the claimant to a light-duty position in its accounting department where her duties were clerical, including sorting, stapling, and filing papers. Although she experienced some discomfort in her left knee and low back, she performed this job for approximately three months, and the employer paid her at the same rate she had previously been paid as a stationary engineer.
In May of 2007, the claimant was transferred to the employer's health department, where she performed similar clerical duties. Once again, the claimant was being paid at the same rate she had earned as a stationary engineer.
Finally, in July of 2007, the claimant was transferred to the employer's security department, where she worked as a public safety officer. In this position, the claimant continued to experience pain in her low back and left knee, but she was able to complete the necessary job duties. The claimant continued working in this position, despite the fact that she did not meet necessary qualifications to hold that job. Further, the claimant continued to receive a pay rate of $23.61 per hour, despite the fact that public safety officers started at a wage of $8.34 per hour.
As the claimant continued in her work as a public safety officer, the parties agreed that it was time to resolve the claim. In preparation for trial, the parties agreed to stipulate that the claimant was working in a light-duty position, while maintaining the pay rate associated with the stationary engineer position. Further, the parties stipulated that public safety officers were normally paid between $8 and $10 per hour. According to the appellate court, the purpose of these stipulations was to avoid the need for witnesses to appear and testify in person.
While there was no dispute as to the content of these stipulations, the parties disagreed about the use of the stipulated facts. The claimant's attorney wanted the stipulated facts to be admitted for all purposes, including for a potential wage differential award. The arbitrator ruled that the stipulated facts were relevant only for purposes of an award based upon a percentage loss of use of a person as a whole. The arbitrator concluded that the facts would not be relevant for a wage differential claim, because "she doesn't have a wage loss, at this time." Jackson Park, 2016 IL App 142431WC, ¶ 26.
At trial, the claimant testified that she was licensed as a stationary engineer, but she did not have any qualifications to work as a security guard. Specifically, the claimant established that her employer required security guards to complete a certification course and have a high school diploma. The claimant never took the certification course, and twice failed to pass the G.E.D. test.
The claimant also presented testimony from a vocational rehabilitation counselor. That counselor testified that security guard positions usually pay between $9 and $11 per hour, and that a rate of pay in excess of $23 per hour was "not indicative of other security positions." Id. ¶ 28. The vocational counselor further explained that the claimant's lack of education and transferrable skills would make her suitable for employment as a cashier, gas station attendant, or parking lot attendant, with pay between $8 and $9 per hour.
The arbitrator found that the claimant was no longer capable of performing the necessary physical activities of a stationary engineer. The arbitrator further found that the claimant had not proven an impairment in earning capacity, "as she continues to earn the same rate of pay that she would have been earning as a [s]tationary [e]ngineer." Id. ¶ 29. The arbitrator rejected the claimant's request for a wage differential award, and instead provided the claimant with an award based on 40 percent loss of use of a person as a whole.
While the claim was on review, the employer terminated the claimant's employment. The claimant's attorney sought to re-open proofs to submit evidence of the termination. The Commission denied the motion, noting the claimant had already failed to prove a wage differential award, given the claimant was earning her same wages when working in security under permanent light duty restrictions. According to the Commission, reopening proofs would give the claimant an unfair second chance at proving a wage differential award.
The Commission affirmed and adopted the arbitrator's decision and the claimant appealed to the circuit court, additionally arguing that the Commission incorrectly refused to reopen proofs and that the arbitrator erred in limiting the use of the factual stipulation of the parties at trial.
The circuit court held that the claimant should have received a wage differential award and remanded the case to the Commission for a new award to be issued. On remand, the Commission "found no evidence in the record that warranted altering its prior decision." Despite that finding, the Commission awarded a wage differential of $389.60 per week based on two-thirds of the difference between the stationary engineer wages of $23.61 per hour and the rate of $9 per hour, which represented the claimant's current earning capacity. The employer appealed the Commission's new decision, which was affirmed by the circuit court. The employer then appealed to the appellate court.
Appellate Court Decision
The appellate court initially examined whether a wage differential award is appropriate, rather than an award based on a percentage loss of a person. In doing so, the court stated "the crucial issue in the present case in determining which type of PPD award is appropriate is whether the claimant has suffered an impairment of her 'earning capacity.'" Id. ¶ 42. The court recognized the Illinois Supreme Court had previously held that "although wages are indicative of earning capacity, they are not necessarily dispositive." Cassens Transport Co. v. Industrial Comm'n, 218 Ill. 2d 519, 531 (2006). The appellate court concluded that "whether the claimant has sustained an impairment of earning capacity cannot be determined by simply comparing pre- and post-injury income," but rather the analysis requires "consideration of other factors, including the nature of the post-injury employment in comparison to wages the claimant can earn in a competitive job market." Jackson Park, 2016 IL App (1st) 142431WC, ¶ 45. The court concluded the Commission failed to properly evaluate the claimant's "earning capacity" by relying only on her actual wages after the accident. The appellate court also found that the Commission abused its discretion in limiting the admission of the stipulation regarding wages.
In explaining its rationale for requiring more than an examination of post-accident wages to evaluate earning capacity, the court explained that, if post-accident wages were the sole consideration, "an injured worker could be denied a wage differential award simply because the employer pays the injured worker an inflated wage in an employer-controlled job that does not otherwise exist in the labor market and which may be temporary in duration." Id. ¶ 51. The court dismissed the employer's argument that failing to consider post-accident wages could result in a situation where wage differential benefits are awarded where there is no change in wages earned. An impairment in earning capacity is the necessary element, held the court, and a wage differential award would be appropriate if there was evidence of such an impairment, even if the claimant's wages remained the same.
In a footnote to its decision, the court described the potential benefit of its analysis to employers. Specifically, the appellate court explained how lower wages after an accident might not be sufficient to establish a wage differential award:
Although this case involves a claim where the claimant's wages were artificially inflated, we also note that an employer who believes that a claimant's current earnings are artificially low should be allowed to present evidence that those earnings do not represent the claimant's true earning capacity. Such evidence should be considered by the Commission to determine whether the claimant is entitled to a wage differential award and, if so, in what amount.
Id. ¶ 51, FN 1.
While the holding in this case does not represent a revolutionary change in the evidence necessary to establish a wage differential award, employers will need to present additional evidence of a claimant's earning capacity especially when the claimant is earning pre-accident wages in a different, post-accident job.
From an employer's perspective, this case can be used as both a shield and a sword. Unfortunately, this decision also leaves a number of unanswered questions about when a claimant's post-accident wages are truly indicative of earning capacity, and when they are not. Regardless of the facts of your case, it is necessary to consider the applications of this decision whenever a wage differential award may be possible.
The most important outcome of this decision is that it will likely afford claimants a stronger argument for a wage differential award when he or she has not returned to pre-accident job duties, even if the claimant's wages remain the same after the accident. A claimant could rely upon the opinions of a vocational expert to establish that permanent restrictions will make it impossible to return to his or her regular job and that a suitable job would result in a lower wage rate.
To counter this testimony, the employer would need to have its own vocational expert to establish that the post-accident wages are consistent with the claimant's capabilities. While retaining a vocational expert obviously represents an additional cost of defense, those expenses could be dwarfed by the present cash value of a wage differential award. In Jackson Park Hospital, the initial wage differential award came to nearly $400 per week. It would not take too many months of those benefits to pay for an appropriate expert, along with any costs associated with the expert's deposition.
Employers should rely on the court's logic in this case to reduce its exposure for a wage differential award. If a claimant had been making $1,000 per week, and finds a new job at minimum wage, the employer could argue that the new wage is not indicative of the claimant's earning capacity. Once again, this type of argument would require a vocational expert to establish that the claimant is "under-employed." A successful argument would probably require identifying several jobs in the claimant's geographic region, within the claimant's physical abilities and significantly higher wages than the claimant's present post-accident employment. An employer may be able to take a wage differential off the table even where the claimant has not earned at or near his pre-accident wages since the accident.
This decision does not provide much guidance for when to take a closer look at whether a claimant's post-injury wage is truly inflated, as opposed to being justified by unique skills or experience. There was no dispute in Jackson Park Hospital that the claimant was being overpaid as a security guard. The claimant continued to make more than $23 per hour, while all of her colleagues in the same position were making between $8 and $10 per hour. An inconsistency may be more difficult to determine where the claimant has a unique job title, a one-of-a-kind position or has unique managerial responsibilities. If the claimant in Jackson Park Hospital had been "promoted" to the position of Security Officer Manager, an assessment of her wage rate would be more difficult, thus likely creating more difficulty in proving entitlement to wage differential benefits. The court's concern that an employer could temporarily pay the claimant an inflated wage to avoid a wage differential award would still be valid, but it would be much more difficult to establish the employer's intent to purposefully overpay the claimant to avoid wage differential exposure. As the Commission and courts get additional opportunities to evaluate this issue, it should become easier to identify where a new job with an old wage rate will be scrutinized.
Under the right set of facts, Jackson Park Hospital can be used as a weapon. For example, there are instances where a claimant cannot return to his former employment and after a self-directed job search secures a "sham job" (perhaps one making minimum wage) to increase the value of the potential wage differential award. Arguably under Jackson Park Hospital the earnings from such a sham job would not represent the claimant's true earning capacity, and thus, fail to support a wage differential claim.