Illinois Employers Continue to Challenge Overtime Inclusion

Wednesday, April 16, 2008 | 0

By Michael Rusin

For years we have been fighting the inclusion of overtime hours in the average weekly wage calculation.

The Workers’ Compensation Act specifically provides that the average weekly wage calculation “excludes overtime and bonus.” However, in 1990 the appellate court issued a decision in the case of Edward Hines Lumber and they included overtime hours in the average weekly wage calculation. In that case, the claimant testified that his overtime hours were mandatory. He was regularly scheduled to work 60 hours a week. In fact, petitioner in that case averaged 66 hours per week. In that circumstance, the court included the overtime hours at the straight time rate.

Since then, the Commission has tended to include overtime hours in the average weekly wage calculation if the overtime hours were “regular.” The Commission began to include a claimant’s overtime hours in any circumstances where the claimant worked overtime in more than 50% of the weeks worked in the year prior to the accident.

Employers and insurance carriers began to regularly include overtime hours in the wage calculation based on Commission rulings, although some employers continued to challenge this issue. In 2003, the appellate court issued a ruling in the case of <i>Edward Don Company v. Industrial Commission</i>. In that case, petitioner worked overtime in every week that he worked in the year prior to the accident.

However, petitioner admitted that the overtime hours were voluntary and the number of hours petitioner worked every week varied. In that circumstance, the appellate court excluded the overtime hours. The court indicated that in order for overtime hours to be included in the average weekly wage calculation, they had to be mandatory and consistent.

The Commission essentially ignored that Edward Don case. The Commission began to reconsider this issue, but continued to include overtime hours if they were mandatory and/or consistent.

In March 2007, the appellate then issued its decision in the case of <i>Airborne Express, Inc. v. Illinois Workers’ Compensation Commission</i>. In that case, the Court again restated their prior holding and ruled that overtime hours should only be included in the average weekly wage calculation if the overtime hours were mandatory and consistent.

I was given the opportunity to litigate this issue on behalf of Dominick’s Finer Foods, a division of Safeway. We disputed the inclusion of overtime earnings with respect to warehouse employees. We successfully defeated a claim for the inclusion of overtime in the case of <i>Dominick’s Finer Foods v. Jose Orozco</i>, 1-07-0429 WC. In my case, petitioner worked as a warehouse worker. He admitted that he was regularly scheduled to work 40 hours per week.

However, petitioner claimed that he was also required to work overtime. Petitioner claimed that he worked overtime in almost every week and that all of the overtime was mandatory. The payroll records show that petitioner did work a lot of overtime and he worked overtime in almost every week. However, the number of hours of overtime varied greatly. Petitioner did not have a
consistent number of overtime hours.

We presented the testimony of the warehouse manager. He stated that pursuant to union contract, the company could mandate overtime hours. However, he testified that overtime hours were generally mandatory over holiday weekends. Other than that, overtime hours were first offered on a seniority basis. Overtime was only mandated when there were insufficient numbers
of senior workers to work the overtime shifts.

The arbitrator ruled in our favor and rejected the overtime hours. However, the Commission reversed and included the overtime hours. We appealed to the circuit court who affirmed. We appealed to the appellate court, and the appellate court reversed on the overtime issue. The appellate court for the first time clearly stated that in order for overtime hours to be included, the
overtime hours had to be both mandatory and consistent.

The court held, “In Airborne Express, we reviewed prior cases involving the issue of overtime and determined that ‘overtime’ includes those hours in excess of an employee’s regular weekly hours of employment that he or she is not required to work as a condition of his or her employment or which are not part of a set number of hours consistently worked each work. Thus, if an employee’s overtime shows either of the aforementioned characteristics, it falls within the definition, and the overtime should not be included in the calculation of the employee’s average weekly wage.”

This decision firmly establishes the precedent stated by the court in Airborne Express. It means that we should definitely change the way we calculate an employee’s average weekly wage. In each case, we should carefully examine the overtime hours and determine whether the overtime hours meet the criteria set forth in the cases. Overtime hours should only be included in the
average weekly wage calculation if the overtime hours are both mandatory and consistent. It doesn’t matter whether the employee works overtime every week. The frequency of working overtime hours is not a consideration in determining inclusion of overtime hours. If either of the criteria, mandatory or consistent, is not met, then all of the overtime hours should be excluded
from the average weekly wage calculation.

<i>Michael Rusin is a partner in Rusin, Maciorowski, Friedman Attorneys at Law in Chicago. This column was reprinted from the law firm's newsletter with his permission.</i>