Bonuses Part of Compensation

Employer Did Not Include Bonuses in Annual Wage Calculations
Court of Appeals of Indiana Affirms that Bonuses Are Part of Compensation

The Injured Person  

James was a warehouse supervisor for an equipment and supply company when he was injured unloading cargo. He had been working for his employer for 10 years, and had been promoted from receiving clerk to a warehouse supervisor. As part of his employment, he received annual profit sharing and performance bonuses.

The Facts of the Case 

After suffering a work-related injury, James filed a claim for Workers Compensation benefits. His employer calculated his average weekly wages using the regular wages he had earned over the course of the past 52 weeks.

James believed that his employer should have calculated his Workers Compensation benefits based upon his regular wages PLUS his bonuses. He filed an application for an adjustment of his claim. A hearing was conducted before a hearing member of the Workers Compensation Board regarding, in part, whether James’ bonuses should have been included in his employer’s calculations of his average weekly wages. The hearing member determined that both of his bonuses (a shipping bonus of $1,750 and profit-sharing bonus of $20,000) should have been included in the calculation, and the hearing member awarded James additional benefits as a result of that determination.

His employer unsuccessfully appealed this decision to the full Workers Compensation Board , who affirmed the hearing member’s opinion.

The employer appealed this decision to the Court of Appeals of Indiana. James enlisted the counsel of Klezmer-Maudlin to help him navigate this appeal.

The Resolution 

While there were several arguments and case law presented to the Court by both sides, the Court of Appeals of Indiana was guided by the Indiana’s Workers Compensation Act in making its decision to uphold the previous rulings. The Court’s responsibility is only to review whether or not the previous rulings properly interpreted the Act in arriving at a decision.

The Act says that the purpose of Workers Compensation benefits is “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.”

Unpersuaded by the employer’s appeal, the Court of Appeals upheld the previous rulings that James was entitled to benefits that were calculated based upon his wages and both of his bonuses. The Court said, “Workers 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.”

Because of Klezmer Maudlin’s effective counsel and defense of the previous decisions, James received the benefits he was entitled to.