Midwest Equipment & Supply Co. v. James Garwood , 87 N.E.3d 33 ( 2017 )

FILED
Nov 16 2017, 5:25 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE
Donald S. Smith Nathan B. Maudlin
Laura S. Reed Klezmer Maudlin, P.C.
Miranda W. Bernadac New Harmony, Indiana
Riley Bennett Egloff LLP
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Midwest Equipment & November 16, 2017
Supply Co., Court of Appeals Case No.
Appellant-Respondent, 93A02-1705-EX-1140
Appeal from the Indiana Worker’s
v. Compensation Board
The Honorable Linda Peterson
James Garwood, Hamilton, Chairperson
Appellee-Claimant Application No.
C-229439
Baker, Judge.
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[1] James Garwood was an employee of Midwest Equipment & Supply Co.
(Midwest) when he was injured on the job. He was awarded worker’s
compensation benefits pursuant to the Worker’s Compensation Act.1 Midwest
appeals the award Garwood received, arguing that the Worker’s Compensation
Board (the Board) erred when it determined that Garwood’s two bonuses
should be considered earnings for purposes of calculating Garwood’s average
weekly wage, a calculation that determined the amount of benefits Garwood
received. Garwood argues that this Court should affirm the Board’s decision
and increase his award pursuant to the Act. Finding no error with the Board’s
decision and that Garwood is entitled to an increased award, we affirm the
Board’s decision and remand with instructions to increase Garwood’s award by
5%.
Facts
[2] Garwood began working at Midwest in 2004 as a shipping and receiving clerk.
He received a promotion to warehouse supervisor in 2013. On November 1,
2013, Garwood received a $20,000 profit sharing bonus. Midwest’s profit
sharing bonus is tied to the company’s profits. On April 4, 2014, Garwood
received a $1,750 shipping bonus. The shipping bonus is tied to the work an
individual performs in the warehouse. On July 24, 2014, Garwood suffered an
injury while unloading cargo at work.
1
Ind. Code § 22-3-1-1 et seq.
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[3] At some point, Garwood filed a claim for worker’s compensation benefits.
Following his filing, Midwest calculated Garwood’s average weekly wages
using the regular wages Garwood earned in the fifty-two weeks immediately
preceding his injury. Midwest did not include Garwood’s two bonuses in this
calculation.
[4] On March 14, 2016, Garwood filed an application for adjustment of his claim.
On November 7, 2016, a hearing was conducted before a hearing member of
the Board regarding, in part, whether Garwood’s bonuses should have been
included in Midwest’s calculations of his average weekly wages. On December
8, 2016, the hearing member determined that Garwood’s shipping bonus of
$1,750 and profit sharing bonus of $20,000 should have been included in the
calculation, and the hearing member awarded Garwood additional benefits as a
result of that determination.
[5] On January 9, 2017, Midwest appealed the hearing member’s order to the full
Board. On March 13, 2017, a hearing took place with the full Board. On April
28, 2017, the full Board affirmed the hearing member’s opinion. Midwest now
appeals.
Discussion and Decision
[6] Midwest argues that the Board erred when it included Garwood’s bonuses in its
calculations of Garwood’s average weekly wages. Our standard of review of a
decision of the Board is well established:
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In reviewing a worker’s compensation decision, an appellate
court is bound by the factual determinations of the Board and
may not disturb them unless the evidence is undisputed and leads
inescapably to a contrary conclusion. We examine the record
only to determine whether there are any substantial evidence and
reasonable inferences that can be drawn therefrom to support the
Board’s findings and conclusion. As to the Board’s interpretation
of the law, an appellate court employs a deferential standard of
review to the interpretation of a statute by an administrative
agency charged with its enforcement in light of its expertise in the
given area. The Board will only be reversed if it incorrectly
interpreted the Worker’s Compensation Act.
Christopher R. Brown, D.D.S., Inc. v. Decatur Cty. Mem’l Hosp., 892 N.E.2d 642,
646 (Ind. 2008) (internal citations omitted).
[7] Indiana’s Worker’s Compensation Act serves “to aid workers and their
dependents and shift the economic burden for employment related injuries from
the employee to the employer and consumers of its product and services.”
Tunny v. Erie Ins. Co., 790 N.E.2d 1009, 1013 (Ind. Ct. App. 2003). It is
intended to provide an expeditious remedy that will guarantee the injured party
some recovery for an industrial accident. Id. “Worker’s compensation is for
the benefit of the employee, and the Act should be liberally construed . . . so as
to not negate the Act’s humane purposes.” DePuy, Inc. v. Farmer, 847 N.E.2d
160, 170 (Ind. 2006) (internal quotation marks and citation omitted). Doubts in
the application of the Act’s terms are to be resolved in favor of the employee.
Brown, 892 N.E.2d at 649.
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[8] The Act defines “average weekly wages” as “the earnings of the injured
employee in the employment in which the employee was working at the time of
the injury during the period of fifty-two (52) weeks immediately preceding the
date of injury, divided by fifty-two (52).” I.C. § 22-3-6-1(d). The Act does not
define “earnings.” There is nothing in the Act that excludes a bonus already
awarded to an employee—whether it is awarded based on an individual’s
productivity or a company’s profit—from being considered as earnings and
therefore included in the calculation of average weekly wages.
[9] In this case, during the fifty-two weeks immediately preceding Garwood’s
injury, he received two bonuses totaling $21,750. Deeming these bonuses to be
earnings and including them in the calculation of Garwood’s average weekly
wages increases his worker’s compensation award, thereby shifting any
economic burden Garwood may have during his physical recovery from
Garwood to Midwest. This result effectuates the Worker’s Compensation Act’s
humane purpose and goal of benefitting the employee.
[10] Midwest contends that Garwood’s bonuses should not be included in the
calculations of his average weekly wages because his bonuses were not
governed by a written agreement, were not automatically paid, and were
awarded through discretionary decisions made by Midwest’s management, and
the profit sharing bonus was not based on his output or performance. True as
those statements may be, the statute defining average weekly wages specifies
only one condition for its calculation—that the calculation include the earnings
of the injured employee during the period of fifty-two weeks immediately
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preceding the date of injury. I.C. § 22-3-6-1(d). It is undisputed that Garwood
received his bonuses during the fifty-two weeks that immediately preceded his
injury. To require any additional conditions would go beyond the express
language of the statute. As our Supreme Court has stated, because the
Worker’s Compensation Act “is uniquely legislative . . . appellate courts should
be hesitant to disturb the delicate balance the General Assembly has reached
and thus refrain from applying provisions not expressly included in the
statutory scheme.” Brown, 892 N.E.2d at 649. Midwest’s argument is therefore
unavailing.
[11] Midwest directs our attention to two cases that consider whether a bonus is a
wage for purposes of Indiana’s Wage Payment Statute; each found that a bonus
was not a wage. See Herremans v. Carrera Designs, Inc., 157 F.3d 1118, 1121 (7th
Cir. 1998); Highhouse v. Midwest Orthopedic Inst., P.C., 807 N.E.2d 737, 739-40
(Ind. 2004). In its analysis, however, Midwest discounts the different purposes
and goals of the Worker’s Compensation Act and the Wage Payment Statute.
Whereas the Worker’s Compensation Act serves to aid employees following
employment-related injuries, the Wage Payment Statute “governs both the
frequency and amount an employer must pay its employee” for regular work
done by the employee. McCausland v. Walter USA, Inc., 918 N.E.2d 420, 424
(Ind. Ct. App. 2009). These two statutes are dissimilar and entirely
independent of one another, and as a result, we do not find the reasoning in
Herremans or Highhouse to be persuasive in the context of the Worker’s
Compensation Act.
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[12] Midwest also relies on cases from Illinois and Iowa in which the courts
considered whether a bonus should be calculated as part of an employee’s
earnings for worker’s compensation benefits; in each case, the court found that
the bonus should be excluded from the calculation. See Levkovitz v. Indus.
Comm’n, 628 N.E.2d 824, 827 (Ill. Ct. App. 1993); Noel v. Rolscreen Co., 475
N.W.2d 666, 667-68 (Iowa Ct. App. 1991). Again, we find the cases on which
Midwest relies unpersuasive. As Midwest itself notes, the Illinois worker’s
compensation statute specifically excludes bonuses from its definition of
“average weekly wages,” Levkovitz, 628 N.E.2d at 827, and the Iowa worker’s
compensation statute specifically excludes “irregular bonuses” from its
definition of “gross earnings.” Noel, 475 N.W.2d at 667-68. Unlike those
statutes, Indiana’s statute does not exclude bonuses from the calculation of
average weekly wages. Accordingly, the other jurisdictions’ analyses do not aid
our analysis of Indiana’s Worker’s Compensation Act.
[13] Finally, we will address Garwood’s request that his award be increased by 10%.
Indiana Code section 22-3-4-8(f) provides that “[a]n award of the full board
affirmed on appeal, by the employer, shall be increased thereby five percent
(5%), and by order of the court may be increased ten percent (10%).”
Generally, an order to increase the award by 10% is not warranted unless the
issues presented upon appeal are frivolous, appellate review is thwarted by the
employer’s actions, or there has been an extended period of time within which
the injured worker has been prevented from obtaining worker’s compensation
benefits. Inland Steel Co. v. Pavlinac, 865 N.E.2d 690, 703 (Ind. Ct. App. 2007).
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Here, it is undisputed that the full Board granted Garwood’s award, and as we
are affirming his award, we order his award to be increased by 5% as required
by the Act.
[14] Garwood argues that this Court should increase his award by 10% because
Midwest’s argument on appeal was frivolous. We disagree. This case is one of
first impression; neither Indiana’s Worker’s Compensation Act nor Indiana
case law provides guidance on whether a bonus should be included in the
calculation of an average weekly wage. Thus, the issue presented upon appeal
was not frivolous, but rather was a genuine legal issue that required
clarification. Accordingly, we decline to exercise our discretion to increase
Garwood’s award by more than the 5% required by the Act.
[15] The award of the Worker’s Compensation Board is affirmed and remanded
with instructions to increase Garwood’s award by 5%.
Bailey, J., and Altice, J., concur.
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