Swearingen v. Industrial Comm'n

August 24, 1998


                              NO. 5-97-0160WC

                                  IN THE 

                        APPELLATE COURT OF ILLINOIS

                              FIFTH DISTRICT

                      INDUSTRIAL COMMISSION DIVISION
_________________________________________________________________

DONNA SWEARINGEN and RONALD SCROGGINS,) Appeal from the 
                                      ) Circuit Court of
     Appellants,                      ) Marion County.
                                      ) 
v.                                    ) Nos. 96-MR-48 & 96-MR-66
                                      )  
THE INDUSTRIAL COMMISSION et al.      ) Honorable 
(T.T.C. OF Illinois, d/b/a            ) David Sauer, 
Henderson Trucking, Appellee).        ) Judge, presiding.  
_________________________________________________________________

     JUSTICE RARICK delivered the opinion of the court:  
     Claimants, Donna Swearingen and Ronald Scroggins, sought
benefits pursuant to the Workers' Compensation Act (Act) (820 ILCS
305/1 et seq. (West 1992)) for injuries received while in the
employ of Henderson Trucking (Henderson).  Both were long-haul
truck drivers.  Swearingen was a "second driver" on a two-person
crew and was earning 11 cents per mile.  Scroggins was a driver-in-
training earning 10 cents per mile.  Both were paid approximately
$400 per week.  In addition, drivers who completed one year of
employment during which they logged 140,000 miles were eligible for
one week's vacation pay of $400.  Swearingen was injured while
lifting the bunk in the tractor of her truck in Salinas,
California, on November 6, 1992.  Scroggins was injured when he
fell from a loading dock while unloading a truck in Torrance,
California, on August 6, 1992.  Arbitration hearings were held in
each case.  In both cases, the claimant's average weekly wage for
temporary total disability (TTD) purposes was determined to be
approximately $200.  This determination was based upon the
testimony of Terry Burnett, Henderson's safety director.  Burnett
testified that Henderson treats 50% of all drivers' gross pay as
reimbursement for travel expenses, rather than earned income.  This
money was to cover drivers' personal expenses.  Drivers were not
required to turn in any expense report or receipts.  The travel
expense allowance did not cover the cost of fuel, tolls, or
repairs; lead-seat drivers were reimbursed separately for those
expenses.  Swearingen testified that she was not reimbursed for
lodging or meals or other expenses, except fuel and truck-related
expenses.  She did not pay income taxes on the expense-
reimbursement portion of her check.  Scroggins paid income taxes on
the expense reimbursement, based on the advice of his accountant. 
The only other travel expense incurred by either claimant was for
meals.  Swearingen was awarded 82 2/7 weeks of TTD benefits, based
on an average weekly wage of $412.02.  Scroggins was awarded 45 3/7
weeks of TTD benefits based on an average weekly wage of $196.86. 
The arbitrator calculated Scroggins' average weekly wage to be one-
half of his gross pay.  The arbitrator determined that one-half of
Scroggins' gross pay was not earned income but was reimbursement
for travel expenses.  The arbitrator also awarded Scroggins
permanent partial disability (PPD) benefits, finding him to be
permanently partially disabled, to the extent of 5% of the person
as a whole, and to have suffered a 10% loss of the use of his left
arm.
     The Illinois Industrial Commission (Commission) reversed the
arbitrator's decision in Swearingen's case, finding Swearingen's
average weekly wage to be $207.01.  The Commission found that half
of Swearingen's pay constituted a reimbursement for per diem travel
expenses and as such constituted fringe benefits excluded under
section 10 of the Act (820 ILCS 305/10 (West 1992)).  In Scroggins'
case, the Commission modified the PPD award, finding that Scroggins
had lost 15% of the use of his left arm.  The Commission otherwise
affirmed and adopted the decision of the arbitrator.  Commissioner
Kinnamon dissented, disagreeing with the majority's conclusion that
50% of Scroggins' pay represented per diem travel expenses.  The
cases were consolidated for purposes of judicial review, and the
circuit court of Marion County confirmed both decisions.
     On appeal, claimants argue that the Commission erred in
determining that the 50% of their pay designated by Henderson as a
reimbursement for travel expenses did not constitute compensable
income under the Act.  Specifically, claimants contend that the per
diem allowance was not and did not constitute a reimbursement for
any actual travel expenses, but Henderson merely designated half of
their pay as a reimbursement for travel expenses in order to reduce
the amount of State and Federal withholdings and workers'
compensation benefits it had to pay.
     Section 10 of the Act provides in pertinent part:
          "The compensation shall be computed on the basis of the
     `Average weekly wage' which shall mean the actual earnings of
     the employee in the employment in which he was working at the
     time of the injury during the period of 52 weeks ending with
     the last day of the employee's last full pay period
     immediately preceding the date of injury, illness[,] or
     disablement[,] excluding overtime[] and bonus[,] divided by
     52."  820 ILCS 305/10 (West 1992).
The average weekly wage includes "anything of value received as
consideration for the work, as, for example, tips, bonuses,
commissions[,] and room and board."  5 Larson, Larson's Workers'
Compensation 60-12(a), at 10-648 through 10-655 (1993).  The
question of whether a travel expense reimbursement should be
considered when calculating the average weekly wage appears to be
one of first impression in Illinois.  It has, however, been
addressed in numerous other jurisdictions.
     In Ernie Baylog, Inc. v. Industrial Claim Appeals Office of
State of Colorado, 923 P.2d 361 (Colo. App. 1996), the claimant,
Sally Olney, was an over-the-road truck driver.  She was paid eight
cents per mile as wages and an additional four cents per mile to
cover all personal expenses incurred while driving, such as meals,
showers, and an occasional motel room.  Her employer deducted
income taxes and social security taxes from the eight cents per
mile designated as wages, but not from the four cents per mile paid
to cover personal expenses.  The court in Ernie Baylog, Inc. held
that the four-cent-per-mile payment should not be included in
Olney's weekly wage.  The court based this conclusion on statutory
provisions which provided that a per diem payment was not
considered "wages" for purposes of computing workers' compensation
benefits unless it is also considered "wages" for Federal income
tax purposes.
     In McGinnis v. Metro Package Courier, Inc., 5 Neb. App. 538,
561 N.W.2d 587 (1997), the claimant, DeLoris McGinnis, was a
courier for Metro Package Courier, Inc. (Metro).  She used her own
vehicle to make deliveries.  She was given two paychecks, one for
salary and one for "mileage reimbursement."  The court in McGinnis
held that McGinnis's paycheck for "mileage reimbursement" should be
included in the calculation of her average weekly wage.  The court
reasoned that the evidence demonstrated that Metro was not actually
reimbursing McGinnis for her car expenses, because her mileage
reimbursement check did not necessarily correspond to the miles she
reported to Metro.  The court concluded that Metro had labeled a
majority of its drivers' pay as "mileage reimbursement", rather
than salary, in order to maximize tax benefits for both parties.  
     In Scyphers v. H & H Lumber, 237 Mont. 424, 774 P.2d 393
(1989), the claimant was a long-haul truck driver.  He was paid 14
cents per mile plus 3 cents per mile per diem.  Drivers were not
reimbursed for meals and lodging and were not required to turn in
expense reports.  Taxes were withheld from the 14-cent-per-mile
payment, but not from the 3-cent-per-mile per diem, and it was paid
by separate check.  Following several other jurisdictions, the
court held that 3 cents per mile paid to a truck driver as "per
diem" compensation should be included in his wages for the purpose
of determining workers' compensation benefits, because such
compensation was not an actual reimbursement for out-of-pocket
expenses but, rather, constituted real economic gain to the driver.
     In Ridgway v. Board of Ford County Commissioners, 12 Kan. App.
2d 441, 748 P.2d 891 (1987), claimant was a process server for the
sheriff's department.  He used his own car, for which the county
paid him $225 per month pursuant to a leasing agreement.  The court
held that an employee's car allowance should be included in the
calculation of his average weekly wage because the evidence
demonstrated that the allowance represented real economic gain to
the employee and was not simply reimbursement for out-of-pocket
expenses.  
     In Logan v. Rocky Mountain Rental, 3 Neb. App. 173, 524 N.W.2d 816 (1994), claimant was an interstate truck driver.  His pay
included a per diem of $44.  The employer did not withhold Federal
social security or income taxes from this amount, and the claimant
did not report it as income.  There was no evidence that the
claimant needed to actually incur $44 per day in road expenses in
order to receive the reimbursement.  The court held that because
the evidence failed to establish that a $44 per diem "road
expenses" payment constituted an actual reimbursement for actual
incurred expenses, such amounts therefore represented real economic
gain and should be included in the driver's weekly wage.
     In Antillon v. New Mexico State Highway Department, 113 N.M.
2, 820 P.2d 436 (1991), the court declined to include the
claimant's per diem reimbursement for travel expenses in his wages
for purposes of calculating workers' compensation benefits.  After
noting that, by law, a State employee's per diem is a reimbursement
for travel expenses incurred in the performance of public business,
the court held that a reimbursement for expenses incurred in the
performance of the job is not considered a part of the worker's
wage unless the reimbursement is in excess of the employee's actual
expenses and thus constituted a real economic gain to the employee. 
Because the employee failed to provide any evidence to show that
the per diem he received was in excess of his actual expenses and
therefore constituted real gain to him, such per diem could not be
included in his wage for purposes of calculating workers'
compensation benefits.  Antillon is clearly distinguishable from
the present case because the characterization of the per diem was
controlled by statute.
     In Moorehead v. Industrial Comm'n of Arizona, 17 Ariz. App.
96, 495 P.2d 866 (1972), the court held that before any part of
travel allowances or reimbursements for travel expenses could be
considered as a part of an employee's wages, there should be some
showing that the payments are more than sufficient to reimburse the
employee for the work-related expenses, so that the excess can be
considered as extra compensation to the employee.
     Henderson cites Layne Atlantic Co. v. Allen Eugene Scott, 415 So. 2d 837 (Fla. App. 1982), for the proposition that out-of-town
expenses should not be considered when computing the claimant's
average weekly wage.  In Layne Atlantic Co., the court held that
out-of-town motel expenses could not be considered wages because
they were solely a creature of the job.  Because Scott, the
claimant, no longer worked for Layne Atlantic Co., he was no longer
incurring the out-of-town motel expenses.  Because he was no longer
incurring these expenses, the court reasoned, he suffered no
economic loss as a result of his failure to receive reimbursement. 
The court in Layne Atlantic Co. went on to distinguish its prior
decision in Viking Sprinkler Co. v. Thomas, 413 So. 2d 816 (Fla.
App. 1982), wherein the court held that a $90 weekly expense
allowance was found to be includable in the average weekly wage. 
The court noted that in Viking Sprinkler Co., "the uniformity and
regularity of the expense payments[,] coupled with the employee's
broad discretionary ability in putting the money to use[,] was
sufficient evidence from which the deputy [Commissioner] could
conclude that the allowance was not a bona fide make[-]whole
reimbursement and that the employee had received independent
personal benefit."  Layne Atlantic Co., 415 So. 2d  at 839.
     Layne Atlantic Co. does not support Henderson's position in
the present case.  Indeed, the situation in the present case seems
far more analogous to that in Viking Sprinkler Co.  Although
claimants herein did not receive a set dollar amount for expenses,
neither did they receive a dollar-for-dollar reimbursement for
actual expenses.
     The general rule that most jurisdictions seem to have adopted
is that payments designated as a "reimbursement" for travel
expenses should be included when calculating an employee's average
weekly wage to the extent that such payments represent real
economic gain rather than the actual reimbursement for actual
travel expenses.  As in many of these cases, the claimants in the
present case were not required to keep any kind of expense records
or turn in any receipts in order to receive the "reimbursement." 
It appears that Henderson simply designates a percentage of its
employees' salaries as "reimbursement" in order to take advantage
of Internal Revenue Service tax regulations.  Henderson is not
required to withhold Federal social security or income taxes from
the "reimbursement" portion of claimant's pay, and the claimants
are not required to pay income taxes on this money.  Although
Henderson maintains that it carefully calculated the per diem
reimbursement so as to reflect the amount its employees actually
spent on lodging, meals, and incidental expenses, there is no
evidence in the record to support this contention.  We also find
significant that eligible drivers were entitled to a one-week paid
vacation at $400.  If one-half of the amount Henderson paid its
drivers was reimbursement for expenses, then vacation pay would
have been $200, because the drivers would not have been incurring
any expenses while on vacation.  That Henderson paid its drivers
$400 per week while on vacation suggests that that portion of
drivers' wages which Henderson designated as "reimbursement" was
actually in the nature of wages constituting real economic gain to
the drivers.
     For the foregoing reasons, the judgment of the circuit court
of Marion County is reversed, and both cases are remanded to the
Commission for a determination of whether, and to what extent, the
"reimbursements" constitute real economic gain and for a
recalculation of the average weekly wage based upon such
determination.

     Reversed and remanded with directions.

     McCULLOUGH, P.J., and RAKOWSKI, COLWELL, and HOLDRIDGE, JJ.,
concur.