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SPLIT SCT HOLDS CONTRIBUTIONS TO RETIREMENT ACCOUNTS NOT PART OF WORKERS' COMP. AVERAGE WEEKLY WAGE

By Sean E. Andrussier

In Shaw v. U.S. Airways, Inc., the NC SCT overruled the NC COA, holding that employer contributions are not to be included in "average weekly wage" in determining workers' compensation benefits.

Shaw, an airline worker, hurt his back lifting luggage. The parties didn't dispute Shaw's entitlement to workers' compensation -- they did, though, disagree about whether the airline's contributions to Shaw's 401(k) and pension were part of Shaw's weekly wage from which the level of Shaw's workers' comp. benefits were computed.

A divided NC COA panel (with Judges Geer and Elmore in the majority and Judge Hunter dissenting) held that not all fringe benefits should be excluded from calculating "average weekly wage" and remanded to the Industrial Commission for reconsideration.

A split NC SCT reversed. Justice Newby, writing for the majority, determined that contributions to retirement accounts, "fringe benefits," are not part of an employee's "earnings," a term used to define "average weekly wage" in the Workers' Compensation Act. Holding otherwise would graft onto workers' comp. law something otherwise not there -- which only legislature can do.

Justices Timmons-Goodson and Hudson dissented. Not least because prior case law indicates that pensions are deferred compensation, and because the Workers' Compensation Act is to be construed broadly, they would have affirmed the COA majority.

Full post as published by North Carolina Appellate Blog on August 27, 2008 (boomark / email).