A California Court of Appeal recently considered the issue of whether an employer that is required to pay vocational rehabilitation maintenance allowance benefits to an injured worker should be allowed to receive credit for wages the worker earns at his concurrent employment with another employer. The Court held that the worker’s earnings from his second job should not be considered in calculating the former employer’s liability for vocational rehabilitation maintenance allowance benefits. (Gamble v. Workers’ Compensation Appeals Board, (— Cal.Rptr.3d —, 2006 WL 2734274, Cal.App. 4 Dist., Sept. 26, 2006).)
Facts
Clifford Gamble (“Gamble”) worked for United Airlines (“United”) for twenty-two years as an air freight agent before he injured his back at work. At the time of his injury, Gamble was concurrently employed by a school district as a teacher and a dean. Although his back injury prohibited him from continuing his work at United, Gamble was able to continue working for the school district. Gamble and United stipulated to a permanent disability indemnity award, but disagreed over Gamble’s claim for vocational rehabilitation maintenance allowance benefits. United claimed that it was entitled to receive a credit for the wages Gamble received from the school district.
A workers’ compensation administrative law judge found that Gamble was entitled to receive vocational benefits and denied United’s request for a credit for Gamble’s wages from the school district. The Workers’ Compensation Appeals Board affirmed the finding that Gamble was entitled to benefits but found that United should be allowed a credit for the wages paid by the school district to Gamble “on a wage-loss basis.”
Decision
The Court of Appeal noted that California’s workers’ compensation scheme allows for four distinct classes of benefits: (1) temporary disability, (2) permanent disability, (3) vocational rehabilitation temporary disability, and (4) vocational rehabilitation maintenance allowance. Temporary disability benefits are designed “to provide interim wage replacement assistance to an injured worker during the period he or she is healing.” Permanent disability benefits “are intended as reimbursement for the employee’s impaired future earning capacity or decreased ability to compete in the open labor market.” If a worker is unable to return to his or her former position because of industrial injury, vocational rehabilitation is designed “to restore the worker to as near his or her previous income-producing status as can be reasonably and properly done.” Temporary disability benefits received in conjunction with a vocational rehabilitation program are classified as vocational rehabilitation temporary disability (“VRTD”). If vocational rehabilitation services are provided after a worker’s disability become permanent, the benefits are classified as a vocational rehabilitation maintenance allowance (“VRMA”).
The issue before the Court of Appeal was whether United should receive a credit for wages paid by the school district to Gamble while he was receiving VRMA benefits due to his injury at United. The Court noted that a wage credit does not apply when calculating permanent disability benefits. However, in the case of temporary disability benefits, a wage credit may be applicable. Temporary disability payments are calculated according to a worker’s average weekly earnings. If a worker is temporarily totally disabled, the benefit scheme does not contemplate a wage credit because the worker is not expected to be capable of earning supplemental wages. When an injured worker is temporarily partially disabled, the benefit calculation must take into account any wages earned “in an alternative lower-paying job.” This type of benefit is called a “wage-loss” benefit because an employer of a worker that falls into this category receives a credit for any wages earned by the worker who is working less hours or at a lower-paying position.
The payment to a worker under the “wage loss” benefit method is the difference between the worker’s average weekly earnings and the amount the injured worker will be able to earn during his or her disability. This same method of calculating benefits is also applied to workers who receive VRTD benefits. A worker who is “receiving VRTD benefits can participate in vocational rehabilitation programs while continuing to collect temporary disability indemnity payments calculated on a ‘wage-loss basis.'”
United argued the same “wage-loss” calculation of benefits formula should be applied for a worker collecting benefits for VRMA. The Court of Appeal rejected this argument. The Court found that Labor Code section 139.5 does not contemplate a wage credit for employers in such situations. Section 139.5 sets VRMA benefits at two-thirds of the worker’s average weekly earnings at the date of his or her injury. The Court noted that VRMA benefits are measured in the same way as permanent disability payments. Section 139.5 also provides a worker who receives VRMA benefits the option of combining that benefit with permanent disability benefits as long as the total combined payment does not exceed the payment the worker would receive under VRTD benefits. Furthermore, the Legislature makes no reference to a wage credit reduction for VRTD.
The Court concluded that Gamble can continue to earn wages from the school district while he seeks a second job under the VRMA scheme to replace his job at United. However, the Court did note that Gamble’s VRMA benefits can terminate if he secures alternative work from United or another employer.
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