SCOTTY'S CONSTRUCTION AND STONE v. TERESA A. MUSICK; HON. A. THOMAS DAVIS, ADMINISTRATIVE LAW JUDGE; AND WORKERS' COMPENSATION BOARD
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RENDERED: NOVEMBER 21, 2007; 2:00 P.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2007-CA-000871-WC
SCOTTY'S CONSTRUCTION AND STONE
v.
APPELLANT
PETITION FOR REVIEW FROM A DECISION
OF THE WORKERS' COMPENSATION BOARD
ACTION NO. WC-04-88398
TERESA A. MUSICK;
HON. A. THOMAS DAVIS,
ADMINISTRATIVE LAW JUDGE; AND
WORKERS' COMPENSATION BOARD
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: DIXON AND KELLER, JUDGES; GRAVES,1 SENIOR JUDGE.
KELLER, JUDGE: Scotty's Construction and Stone (Scotty's) petitions this Court for
review of an opinion of the Workers' Compensation Board (the Board) affirming the
Administrative Law Judge's (the ALJ) opinion and award regarding the calculation of
Teresa A. Musick's (Musick) average weekly wage (AWW). Scotty's argues on appeal
Senior Judge John W. Graves sitting as Special Judge by assignment of the Chief
Justice pursuant to Section 110(5)(b) of the Kentucky Constitution and KRS 21.580.
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that the Board incorrectly affirmed the ALJ's inclusion of "fringe benefits" in his
calculation of Musick's AWW. We affirm. Because the AWW calculation is the only
issue raised on appeal, we will only summarize the evidence as it relates to that issue.
FACTS
Musick suffered a work-related left knee injury on April 16, 2004, while
working as a "traffic flagger" for Scotty's, an asphalt company. In her Application for
Resolution of Injury Claim, Musick alleged that she had an AWW of $350.00. In its
Notice of Claim Denial or Acceptance (Form 111), Scotty's stated that Musick had an
AWW of $92.39. Scotty's attached a wage statement to its Form 111 showing that
Musick earned $8.00 per hour from April 20, 2003, through June 7, 2003, and $8.75 per
hour from June 8, 2003, through the date of the injury. Furthermore, the wage statement
showed that Musick worked very few, if any, hours from August 31, 2003, through the
date of injury, and that she earned $6,928.49 in the 50 weeks preceding the injury for an
AWW of $133.24. The parties failed to reach an agreement regarding AWW and
Musick ultimately filed copies of paycheck stubs for the year preceding her injury.2
Musick provided the only testimony regarding wages at the hearing. On
direct examination, Musick stated that:
depending on what county we are in, we have a set scale pay
per county -- for whatever county we're in. The county that I
2
We note that the wage statement filed by Scotty's with its Form 111 grossly understated
Musick's actual wages as reflected on Musick's paycheck stubs, even if the wages disputed
herein are excluded. While we recognize that employers and/or their insurers often perform a
quick calculation of AWW so that the payment of temporary total disability benefits can be
initiated, employers and/or their insurers should review those calculations and make adjustments
as necessary prior to filing wage statements with the Office of Workers' Claims.
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was in when I got hurt, which was Edmonson County -- when
I got hurt, that was twenty-one dollars an hour -- twenty-one
fifty an hour. If we're on a private job, then my pay is nine
dollars an hour . . . [b]ut, I am not under nine dollars an hour
at any time.
On cross-examination, Musick testified as follows:
Attorney:
Okay; the information he (Travis Johnson,
Director of Human Resources and Safety) provided in the
wage records show [sic] that your normal hourly rate was
eight dollars, seventy-five cents an hour.
Musick:
That is incorrect.
Attorney:
Okay; now, when you filed your application you
alleged that your average weekly wage was three hundred and
fifty dollars, which is the number that you get when you
multiply forty hours a week times eight dollars and seventyfive cents an hour. So, how did you come up with the three
dollars and fifty -- I mean, the three hundred and fifty dollars
a week that was alleged in your application?
Musick:
I'm not sure.
Attorney:
Okay; and, it's your contention now that you
never earned less than nine dollars?
Musick:
Nine dollars an hour.
Attorney:
And, that sometimes you earned as much as
twenty-one dollars?
Musick:
Right -- correct.
Attorney:
And, you're going to provide us with a W2 form
for the year what?
Musick:
It will be the year of 2003.
Attorney:
Okay; now, that's not going to tell us, though,
how many weeks you worked or anything like that.
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Musick:
Actually, I can provide you with my paycheck
stubs for the year of 2003 also, if you -- if you need them. I
have all of my paycheck stubs from 2003.
...
Attorney:
If you would, have you got all -- in fact -- all of
your paycheck stubs, if you would, up until the date of your
injury, even including the few in 2004?
Musick:
Uh-huh.
Attorney:
If you'll provide those to your attorney and then
he can provide copies to us.
Musick:
I will -- be glad to.
Following the hearing, Musick filed the requested paycheck stubs from April 22, 2003,
through December 16, 2003. The last paycheck stub shows total earnings of $15,918.07,
total deductions of $4,648.68, and net pay of $11,269.39.
The ALJ, after summarizing the evidence, found that Musick's employment
was seasonal; therefore, KRS 342.140(2) controlled AWW calculations. Taking that
statute into consideration and looking at Musick's last paycheck stub, the ALJ determined
that Musick earned total wages of $15,918.07 in the 50 weeks preceding her injury. The
ALJ then divided that total amount by 50 and determined that Musick's AWW was
$318.36. The ALJ then based his award of permanent partial disability and temporary
total disability benefits on that AWW. Scotty's filed a petition for reconsideration,
requesting a re-calculation of the AWW. In doing so, Scotty's argued that $3,866.01 of
the total earned by Musick represented "fringe benefits" and that fringe benefits are not
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properly included as part of AWW. Excluding the fringe benefits, Musick earned
$12,052.06 in the 50 weeks preceding her injury, which translates to an AWW of
$160.69. The ALJ denied Scotty's petition for reconsideration and Scotty's appealed to
the Board.
In its brief to the Board, Scotty's argued that Musick's paycheck stubs
contained three types of earnings, "straigh", [sic] "overtim", [sic] and "fringe." Because
the paycheck stubs did not show any deductions for health insurance, Scotty's argued that
the fringe payments represented "additional amounts to compensate [employees] for their
'fringe benefits.'" Musick argued before the Board, as she does here, that the fringe pay
represented the additional pay rate she received depending on where she worked. The
Board affirmed the ALJ, finding that the fringe payments were made directly to Musick,
not to a third party on behalf of Musick, thus becoming part of Musick's "discretionary
income." Furthermore, although the Board stated that Scotty's argument that the fringe
payments represented payment in lieu of health insurance premiums was a reasonable
interpretation, the Board found no evidence of that in the record. Finally, the Board
found that "[a]bsent compelling evidence to the contrary, this Board is satisfied the
definition of wages, which includes 'money payments for services rendered,' is broad
enough to include the payment made to Musick in addition to her hourly wage." It is
from this opinion by the Board that Scotty's appeals.
STANDARD OF REVIEW
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The ALJ has the sole discretion “to determine the quality, character, and
substance of the evidence . . . .” Paramount Foods, Inc. v. Burkhardt, 695 S.W.2d 418,
419 (Ky. 1985). "[T]he ALJ, as fact-finder, has the sole authority to judge the weight,
credibility and inferences to be drawn from the record." Miller v. East Kentucky
Beverage/Pepsico, Inc., 951 S.W.2d 329, 331 (Ky. 1997). When reviewing the ALJ's
findings, we must determine whether those findings are so unreasonable under the
evidence that it must be viewed as "erroneous as a matter of law." Ira A. Watson
Department Store v. Hamilton, 34 S.W.3d 48, 52 (Ky. 2000).
ANALYSIS
Scotty's argues before us, as it did before the ALJ and the Board, that the
payments designated "fringe" on Musick's paycheck stub represent "fringe benefits."
Furthermore, Scotty's argues that it was Musick's burden to clarify what those fringe
payments were and her failure to do so means that those payments cannot be used in
calculating AWW. Musick argues that, regardless of how the payments are
characterized, the language of KRS 342.140(2) means that the fringe payments must be
used to calculate her AWW.
At the outset, we note that Scotty's is correct that fringe benefits may not be
used in calculating AWW. Rainey v. Mills, 733 S.W.2d 756, 758 (Ky.App. 1987).
However, Scotty's argument notwithstanding, we hold that the evidence supports the
ALJ's finding that the fringe payments were wages, not fringe benefits.
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Because the ALJ determined that Musick was a seasonal employee, we
must look to KRS 342.140(2) and (6) to determine if the fringe payments amounted to
wages. KRS 342.140(6) defines wages as:
in addition to money payments for services rendered, the
reasonable value of board, rent, housing, lodging, and fuel or
similar advantage received from the employer, and gratuities
received in the course of employment from others than the
employer to the extent the gratuities are reported for income
tax purposes.
KRS 342.140(2) provides that, for seasonal occupations, "the average weekly wage shall
be taken to be one-fiftieth (1/50) of the total wages which the employee has earned from
all occupations during the twelve (12) calendar months immediately preceding the
injury."
As noted above, a review of the paycheck stubs reveals that there are three
types of payments to Musick listed under "EARNINGS." Those payments are "straight,"
"overtime," and "fringe." The paycheck stub from April 29, 2003, reveals that Musick
worked 32 hours straight time at the rate of $8.00 per hour, eight hours straight time at
$16.41 per hour, two hours of overtime at $12.00 per hour ($8.00 x 1.5), and two and a
half hours of overtime at $24.61 ($16.41 x 1.5) per hour. She also received $64.89 as a
fringe payment at the rate of $6.18. Although the hours are not shown for the fringe
payment, simply dividing the total amount paid, $64.89, by the rate, $6.18, reveals that
the total fringe payment represents ten and a half hours of work at $6.18 per hour. Since
Musick worked ten and a half hours at the rate of $16.41 per hour, it can be inferred that
the fringe payment is related to those hours and that it is wages. Although we will not do
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so in detail herein, we performed the same analysis on all of the paycheck stubs Musick
filed. That analysis revealed that the total fringe payment amount, when divided by the
fringe payment rate, corresponded exactly with the number of hours Musick worked at
the higher hourly rate. Furthermore, the higher hourly rate ($16.41) plus the fringe rate
($6.18) equals a rate in excess of $20.00 per hour, which is consistent with Musick's
testimony that she made in excess of $20.00 per hour on some jobs. Therefore, there was
more than sufficient evidence to support the ALJ's conclusion that the fringe payments
constituted wages not fringe benefits. Because the ALJ's opinion is supported by
evidence of substance, we cannot reverse it on appeal.
Finally, we note Scotty's argument that "in black and white, on the face of
each document filed by the Appellee, it was noted precisely how much of the payment
received by the Appellee was designated for fringe benefits." However, we note that the
phrase "fringe benefits" does not appear anywhere on the paycheck stubs in the record
before us. Musick's earnings are designated as "straigh," [sic] "overtim," [sic] and
"fringe." Scotty's simply added the word "benefits" when making its argument.
Although, we agree with Scotty's that Musick bears the burden of proof for every element
of her claim, Scotty's could have clarified the meaning of "fringe" had it chosen to do so.
Having chosen otherwise, Scotty's cannot now complain that the ALJ drew a reasonable
inference from the evidence that differs from the one Scotty's preferred.
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CONCLUSION
The ALJ's finding that the fringe payments were wages for average weekly
wage purposes is supported by the evidence. Therefore, the Board's opinion affirming
the ALJ is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Douglas A. U'Sellis
Louisville, Kentucky
Jeffrey T. Sampson
Louisville, Kentucky
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