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Haller v. Champlain College

Supreme Court of Vermont

September 29, 2017

Kimberly Haller
Champlain College

         On Appeal from Commissioner of Labor Anne M. Noonan, Commissioner

          William B. Skiff, Burlington, for Plaintiff-Appellee.

          J. Justin Sluka and Alycia M. Sanders of Ellis Boxer & Blake PLLC, Springfield, for Defendant-Appellant.

          PRESENT: Reiber, C.J., Dooley, Skoglund, Robinson and Eaton, JJ.

          ROBINSON, J.

         ¶ 1. The question in this workers' compensation case is whether employer Champlain College is obligated to include in claimant Kimberly Haller's average weekly wage calculation the value of tuition-free college credits she earned in accordance with employer's graduate tuition policy. On cross-motions for summary judgment, the Commissioner of the Department of Labor concluded that the tuition benefits provided by employer and used by claimant was an "other advantage" that constituted part of claimant's wages. 21 V.S.A. § 601(13). We agree and affirm.

         ¶ 2. The relevant facts here are undisputed. At all times relevant to these proceedings claimant was an employee of Champlain College for purposes of Vermont's workers' compensation laws. On March 10, 2014, claimant suffered a work-related injury, which employer has accepted. At the time of her injury, claimant was employed as employer's Recruitment Director.

         ¶ 3. Since May 2012, claimant had taken numerous courses at Champlain College pursuant to its "Tuition Benefits" policy. That policy allows college employees, their spouses, and eligible dependent children to take undergraduate and graduate courses on a space-available basis, tuition free. In relevant part, section 4.3.1 of employer's Tuition Benefits policy provides[1]:

Employees of the College may normally take for-credit Graduate courses tuition-free on a "space-available" basis. If an individual is matriculating in a degree program every effort will be made to accommodate that student in the current term and if space prohibits then the student will be seated in the following terms for that course . . . .
Books, residency costs, labs, fees and other non-tuition expenses are not paid for by the College. IRS regulations determine the maximum amount of tuition value, per calendar year, that need not be reported as taxable wages. Note: IRS regulations stipulate that tuition benefits valued at over $5, 250 per calendar year are to be reported as taxable wages on the employee's W-2 form unless the amount is excludable as a "working condition fringe."
Champlain College pays the employer FICA taxes on taxable wages. The employee is responsible for all other taxes. Employee taxes are deducted during normal payroll cycles. This benefit is not available to retirees.

         ¶ 4. During the twenty-six weeks prior to her work-related injury, claimant completed ten and one half credits of classwork at Champlain College. She paid no money for these course credits. Claimant considered the free tuition policy to be one of the benefits of working for employer as it allowed her to work toward, and earn, a graduate degree without paying any tuition. This free tuition was a substantial financial benefit to claimant and was one of the reasons she chose to work for employer.

         ¶ 5. The issue presented to the Commissioner on cross-motions for summary judgment was whether the value of these tuition benefits should be included in the calculation of claimant's average weekly wage for the purposes of her permanent partial disability benefit.[2] "Wages" are defined to include "bonuses and the market value of board, lodging, fuel, and other advantages which can be estimated in money and which the employee receives from the employer as a part of his or her remuneration." 21 V.S.A. § 601(13). The specific issue in this case is whether claimant's tuition benefits fall within "other advantages which can be estimated in money and which the employee receives from the employer as part of his or her remuneration." Id.

         ¶ 6. In analyzing this question of first impression, the Commissioner first distinguished this Court's recent decision that the value of employer-provided health insurance benefits should not be included in the calculation of wages. See Lydy v. Trustaff, Inc., 2013 VT 44, 194 Vt. 165, 76 A.3d 150. In determining whether the tuition benefit should be included in the wage calculation, the Commissioner considered three questions gleaned from prior Department decisions: First, is the benefit a "significant part" of the compensation? Second, does the employee derive true value from the offered benefit or is it a benefit that means little to the employee except as an enhancement to an average weekly wage? And third, is the value of the benefit reasonably subject to objective valuation?

         ¶ 7. Noting the remedial nature of the workers' compensation laws, the Commissioner answered the above questions in the affirmative. The free tuition was a substantial benefit to claimant and was one of the reasons she worked at Champlain College. She derived true value from the program; she had taken advantage of it from 2012 until 2014 and was using it to acquire a master's degree. And, finally, the benefit was subject to simple valuation.[3] The Commissioner explained that including the value of the free tuition in claimant's wage calculation would not upset the "delicate balance" struck between employees and employers in the workers' compensation setting and concluded that the free tuition benefit claimant received qualified as an "other advantage" that can be easily estimated and that was paid to her as remuneration for her work.

         ¶ 8. Employer appealed, and the Commissioner certified for our review the question of whether employer was obligated to include in claimant's average weekly wage calculation the value of tuition-free college credits earned by claimant in accordance with its employee tuition policy.

         ¶ 9. On appeal, employer argues first and foremost that this Court's recent ruling that employer-provided health insurance benefits are not "other advantages" included within the definition of wages dictates the outcome of this case. See Lydy, 2013 VT 44. Employer further argues that the benefit in question did not amount to "remuneration, " 21 V.S.A. § 601(13), that the Commissioner's determination that the tuition benefit was capable of simple valuation was based on a mistake of fact, and that the Commissioner's decision will upset the "delicate balancing" between an injured worker's right to compensation and an employer's right to limited and determinate liability. Lydy, 2013 VT 44, ¶ 19.

         ¶ 10. In construing a statute, "[o]ur paramount goal . . . is to give effect to the Legislature's intent." State v. Deyo, 2006 VT 120, ¶ 14, 181 Vt. 89, 915 A.2d 249. In interpreting the workers' compensation statute, "we will defer to the Commissioner's construction of the Workers' Compensation Act, absent a compelling indication of error." Lydy, 2013 VT 44, ¶ 4 (quotation omitted). Our deference is not unlimited, however, and "we will not affirm an interpretation that is unjust or unreasonable." Clodgo v. Rentavision, Inc., 166 Vt. 548, 550, 701 A.2d 1044, 1045 (1997). Moreover, in reviewing the Commissioner's determination, we must be mindful that our workers' compensation laws are "remedial in nature and must be liberally construed to provide injured employees with benefits unless the law is clear to the contrary." St. Paul Fire & Marine Ins. Co. v. Surdam, 156 Vt. 585, 590, 595 A.2d 264, 266 (1991).

         ¶ 11. We conclude there was no compelling indication of error in the Commissioner's determination for several reasons. First, this case is different from Lydy in several notable and significant ways. While our analysis in Lydy may shed some light on the applicable standards, Lydy is in no way controlling in this case. Second, the Commissioner's analysis gives effect to the language of the workers' compensation statute and is consistent with that law's purposes. Third, the Commissioner's decision is consistent with the Department's own caselaw on the subject.

         ¶ 12. This Court's decision in Lydy does not control the outcome of this case. In Lydy, the Court, in a 3-2 decision, concluded that employer-provided health insurance benefits were not an "other advantage" received as part of the employee's remuneration. 2013 VT 44, ¶ 19. Several considerations that do not apply here weighed heavily in the Court's analysis in that case.

         ¶ 13. In Lydy, the Commissioner ruled that the health insurance benefit was not an "other advantage" for the purposes of the wage calculation. Id. ¶ 1. The deference we afford to the Commissioner's construction of the workers' compensation laws, absent a compelling indication of error, supported exclusion of health insurance benefits from the definition of wages in Lydy, but supports inclusion of the free tuition benefit in this case. Id. ¶ 4. Moreover, the Commissioner's determination that health insurance was not an "other advantage" was consistent with twenty years of established, and unappealed, departmental case law. Id. ¶ 18; see also Pelissier v. Hannaford Bros., No. 26-11WC (Sept. 11, 2009), wordpress/wp-content/uploads//PelissierDecision.pdf [] (citing a series of decisions dating back to 1990 in which the Commissioner rejected argument that value of health insurance should be included in wage calculation). A decision to the contrary would have upset long-settled expectations and actuarial calculations with potentially a substantial impact on the workers' compensation system. Lydy, 2013 VT 44, ¶ 18.

         ¶ 14. Plus, the prevalence of health insurance as an employment benefit across sectors and through most of the labor market lent particular support to the notion that if the Legislature had intended to include this widely provided benefit as part of wages, it would not have relied on the catch-all "other advantages, " but would have expressly included health insurance in the definition of wages. See id. ¶ 11 (explaining that "because the Legislature has not amended the definition [of wages] to include employer-paid health insurance after it developed into a customary benefit, it is prudent to conclude that such a benefit was not intended to be part of an employee's average weekly wage").

         ¶ 15. Finally, the Court's analysis in Lydy relied in part on a U.S. Supreme Court decision that an employer's contributions to a union trust fund that supported life insurance, health insurance, retirement benefits, and career training for employees, were not wages under the Longshore and Harbor Workers' Compensation Act-a statute with a similar, but not identical, definition of wages to Vermont's workers' compensation statute. See id. ¶¶ 13-16 (discussing Morrison-Knudsen Constr. Co. v. Dir., Office of Workers' Comp. Programs, 461 U.S. 624 (1983)). In Lydy, this Court explained that one reason the Supreme Court concluded that employer's payments into the union trust fund did not constitute a "similar advantage" under the federal workers' compensation law was that was that there was no way to value the benefit actually received by the employee deriving from the employer's contributions to that trust fund. Lydy, 2013 VT 44, ¶ 13 (citing Morrison-Knudsen, 461 U.S. at 631). This Court analogized the health insurance benefit to the employer's contribution to the union trust fund in Morrison-Knudsen, and concluded that the value of the health insurance coverage actually received by the employee was likewise speculative. Id. ¶ 14.

         ¶ 16. The same cannot be said for the value of free tuition benefits. The undisputed record reflects that claimant herself received the free tuition benefit, and that the value to the employee of the benefit is readily ascertainable. Employer's policies specifically note that employer is responsible for tracking the benefit to the employee and reporting the imputed income on the employee's W-2 to the extent that it exceeds $5250 per calendar year.[4] Wholly independent of any workers' compensation claim, the record reflects that there is an established methodology for determining not the employer's costs-which were all that was known in Morrison-Knudsen- but the benefit to the employees. Moreover, the courses available to claimant are offered to Champlain College students more broadly at a set price. The "market value" of the courses, and the associated credits, ...

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