Employer that Paid Full Salary to Teacher Entitled to Credit

Tuesday, May 10, 2011 | 0

By Matthew Ignoffo
Keefe, Campbell & Associates

The Appellate Court reversed the Circuit Court and the Illinois Workers' Compensation Commission on the issue of whether an employer was entitled to a credit for a Section 8(j)2 credit for salary paid to Petitioner in lieu of temporary total disability benefits in Elgin Board of Ed. V. IWCC and Linder Weiler, No. 1-09-3446WC (April 25, 2011). The Commission and Circuit Court rulings on causation and Petitioner's average weekly wage calculation were upheld.

Petitioner was a teacher and underwent an arthroscopic procedure on her right knee which was unrelated to her work duties on Nov. 7, 2002. After returning to work on Nov. 13, 2002 she struck her knee on a desk and the surgical incision opened up and the knee began to swell. Her doctor diagnosed hemarthrosis which is "blood in a joint creating some inflammation." Petitioner was not released until March 31, 2003.

During the year preceding the injury Petitioner was required to work 40 weeks and the parties stipulated she received an annual salary of $61,459.00. She received her annual salary year round even though she had the option of only being paid during the academic year. Petitioner testified she received her regular salary through the use of accumulated sick pay for the period of time she was off work. She claimed her sick pay had not been reinstated.

The Arbitrator ruled Petitioner sustained a compensable accident on Nov. 13, 2002 and the hemarthrosis was causally connected to the accident. In calculating Petitioner's average weekly wage (AWW) the Arbitrator inexplicably determined Petitioner worked 42 weeks during the school year and therefore divided her annual salary by 42, yielding an average weekly wage of $1,463.31. The Arbitrator also determined Respondent was entitled to a credit for the salary paid to the extent of its TTD liability pursuant to section 8(j)2 of the Act.

The Commission modified the arbitration ruling with respect to the AWW calculation and the 8(j)2 credit. The Commission noted Petitioner only was required to work 40 weeks during the school year and the relevant inquiry was the number of days an employee worked, not the fact he or she may have an annual contract. Therefore, Petitioner's annual salary was divided by 40 yielding an AWW of $1,536.48.

Regarding the credit, the Commission examined the decision in Tee-Pak, Inc. v. Industrial Comm'n, 141 Ill.App. 3d 520 (1986) and stated an employer receives no credit for benefits which would have been paid irrespective of the occurrence of a workers' compensation accident. Petitioner testified she had to utilize earned sick pay to receive her full salary and her sick pay carried value as it impacted her retirement benefits. The Commission held Respondent was not entitled to a section 8(j)2 credit for salary paid to Petitioner in lieu of TTD benefits. The Circuit Court confirmed the Commission's ruling. This appeal followed.
 
In regard to the AWW issue the Appellate Court examined the language of Section 10 of the Act which notes in relevant part:
 
[3] Where the employment prior to the injury extended over a period of less than 52 weeks, the method of dividing the earnings during that period by the number of weeks and parts thereof during which the employee actually earned wages shall be followed.

The Court noted Petitioner's employment prior to the injury extended over a period of less than 52 weeks and Petitioner was required to devote or apply her time and energy teaching for less than 52 weeks. See Washington District 50 Schools v. Workers' Compensation Comm'n, 394 Ill.App.3d 1087 (2009). As such, the Commission did not err in dividing Petitioner's annual salary by 40 to calculate her AWW. The Court noted its ability to address Respondent's position Petitioner was employed pursuant to an annual contract was "hampered" because the contract was not made a part of the record.

Regarding the 8(j) credit issue, Respondent argued it was entitled to a credit because Petitioner received full salary payments in lieu of TTD benefits. The Court looked to Section 8 of the Act and noted,
 
"The first clause of section 8(j)2 states that an employer is entitled to a credit only for compensation payments made pursuant to the Act. 820 ILCS 305/8(j)2 (West 2002); see also World Color Press, 125 Ill. App. 3d at 471 ("The statute clearly credits the employer with any payments made by the employer as compensation payments"). The second clause of section 8(j)2 states when an employer pays money other than compensation payments under the Act, the employer "shall receive credit for each such payment only to the extent of the compensation that would have been payable during the period covered by such payment."
 
The Court discussed its decision in Tee Pak, Inc. and noted it determined because the employer in Tee Pak "failed to show that the salary payments the employee received were limited to occupationally-related disabilities, the employer was not entitled to a credit under section 8(j) or the Act." The Court stated in Tee Pak there was evidence the employer intended its employees to collect both TTD and salary for the same period of time. There was no such evidence in the present case. As such, Respondent was entitled to credit for the salary paid, but only to the extent of its TTD liability.

Justice Holdridge dissented regarding the credit issue. He noted, according to Tee Pak, an employer can receive credit for benefits paid to an employee only where the benefits "are limited to occupationally related disabilities." He stated because Petitioner, in the present case, could access her sick leave benefits without regard to the occupational nature of her disability Tee Pak should apply and prohibit the employer from taking the credit.
 
We are pleased with the majority decision as we feel the school should be given credit due to the fact it paid Petitioner for the time she was off. We note the majority did not address the reimbursement of Petitioner's sick time which is likely an issue which will require litigation outside of the workers' compensation arena.

The appellate court decision is here: http://www.workcompcentral.com/pdf/2011/misc/weiler042811.pdf
 
Matthew Ignoffo is an attorney for Keefe, Campbell & Associates, a workers' compensation defense firm in Chicago. This column was reprinted with the firm's permission from its client newsletter.