Alabama Workers' Comp Blawg

Alabama Court of Appeals Rules that Employer is not Entitled to Credit for Wages Paid to Injured Employee

On September 20, 2013, the Alabama Court of Civil Appeals released its opinion in the case of Malone v. Steelcase, Inc., dealing with the applicability of § 25-5-57(c)(3) of The Alabama Workers’ Compensation Act. § 25-5-57(c)(3), known as the set-off statute, provides that an employer is allowed a set-off against compensation benefits owed to an injured employee when the employer continues the salary of the employee during the period in which benefits are owed. Malone suffered an injury to her lower back occurring in and arising out of her employment with Steelcase, but she was able to return to her job earning wages equal to those she was earning prior to the injury. The trial court awarded permanent partial disability benefits for a 25% disability to Malone’s body as a whole, in the amount of $81.54 per week. However, the trial court also awarded Steelcase an offset in the amount of $67.30 per week for wages Steelcase paid to Malone after she was placed at maximum medical improvement, pursuant to § 25-5-57(c)(3). Malone appealed, and the Court of Appeals reversed the trial court’s decision.

Malone argued that § 25-5-57(a)(3)i, which is often referred to as the "return to work statute" was controlling, and that under that statute, her compensation for her injury was to be based on her physical disability rating, without consideration for loss of earnings capacity. Malone argued that under that statute, Steelcase was not entitled to a set-off, because § 25-5-57(c)(3) did not apply to her situation. In reaching its decision, the Court of Appeals stated that it agreed with Malone, because when two statutes conflict, the "more specific" statute is controlling, and § 25-5-57(a)(3)i is the more specific statute. The Court further stated that § 25-5-57(a)(3)i would be rendered meaningless under the interpretation of the set-off statute advocated by Steelcase. The Court of Appeals noted that benefits awarded in cases where the return to work statute applies, like scheduled benefits, should be awarded regardless of whether an employee is receiving full wages. 

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MY TWO CENTS:

The Court of Appeals’ analysis begs the question: So exactly when does the set-off statute apply? The Court of Appeals’ ruling is interesting in that it found that § 25-5-57(a)(3)i would be rendered meaningless if the employer was allowed an offset against an award for wages paid in situations where the employee is earning wages equal to her pre-injury wage. The decision further implies that the set-off statute does not apply in scheduled member injury cases either, for the same reason. The only other statute that applies to permanent partial disability awards is § 25-5-57(a)(3)g, which provides that an employee’s compensation for injury is equal to 66 2/3% of the difference between her average weekly earnings at the time of the injury and the average weekly earnings she is able to earn in her partially disabled condition. It certainly seems that if the legislature intended that the set-off statute only apply to awards made under § 25-5-57(a)(3)g that the statute would clearly and unambiguously state as much. However, the answer is contained in the statutory language concerning the employer continuing the salary of the employee. It appears that the Court of Appeals’ interpreted it to mean when the employer continues the full salary of the employee. In other words, when the employer is paying the employee her full wages for either performing less work, or for performing a less demanding job, the employer is entitled to a set-off, but when the employee is performing her regular job for her regular wages, the employer is not entitled to a set-off.  

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ABOUT THE AUTHOR

This article was written by Charley M. Drummond, Esq. of Fish Nelson, LLC. Fish Nelson is a law firm located in Birmingham, Alabama dedicated to representing employers, self-insured employers, and insurance carriers in workers’ compensation cases and related liability matters. Drummond and his firm are members of The National Workers’ Compensation Defense Network (NWCDN). The NWCDN is a national and Canadian network of reputable law firms organized to provide employers and insurers access to the highest quality representation in workers’ compensation and related employer liability fields. If you have questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author at cdrummond@fishnelson.com or (205) 332-3414.