Opinion ID: 2070301
Heading Depth: 2
Heading Rank: 2

Heading: Bonus

Text: [¶ 18] The next issue is whether the hearing officer should have treated McAdam's $1000 bonus as a fringe or other benefit for purposes of paragraph 102(4)(H). 39-A M.R.S.A. § 102(4)(H) (Pamph.2000). The bonus was awarded to UPS employees as a result of a new labor agreement contract. UPS contends that the one-time $1000 bonus was not a part of McAdam's wages but rather falls within the category of fringe or other benefit, 39-A M.R.S.A. § 102(4)(H). Therefore, according to UPS's argument, the hearing officer erred in failing to determine whether inclusion of that bonus would result in a weekly benefit greater than two-thirds of the state average weekly wage at the time of the injury. [6] [¶ 19] The Act contains no explicit references to the treatment of a bonus. Therefore, in determining whether such a payment should be included in the average weekly wage as wages or treated separately, we look again to the definition of average weekly wages, which is defined as the amount that the employee was receiving at the time of the injury for the hours and days constituting a regular full working week. 39-A M.R.S.A. § 102(4)(A). Fringe or other benefits are not includable in that amount unless (1) they are not continued during the disability and (2) the inclusion of the fringe or other benefit will not result in a weekly benefit amount that is greater than two-thirds of the state average weekly wage at the time of the injury. 39-A M.R.S.A. § 102(4)(H). [¶ 20] Because the language of paragraph 102(4)(H) contains no guidance for interpreting the phrase, fringe or other benefits, we look to legislative history and Board rules to determine whether a one-time signing bonus should be treated as wage, fringe benefit, or other benefit. [¶ 21] We have no difficulty in concluding that a bonus is not a fringe benefit. Fringe benefits have traditionally referred to goods or services purchased by the employer for the employee. [7] Most often, fringe benefits take the form of some benefit other than an immediate payment of cash, for example, employer contributions specifically earmarked for the purchase of health, disability, or retirement insurance. [8] The payment of a cash bonus does not fall within the description of fringe benefits. [¶ 22] Because a bonus is clearly not a fringe benefit, we must determine whether the Legislature intended to encompass bonuses within the description of other benefits, contained in section 102(4)(H). The Legislature has not defined other benefits and, although the Board has promulgated an interpretive rule for paragraph 102(4)(H), the rule contains no definition of other benefits and is silent with regard to the treatment of bonuses. Me. W.C.B. Rule ch. 1, § 5(1). [¶ 23] Our only occasion to address bonuses arose long before the enactment of section 102(4)(H). In Freeman v. Co-Hen Egg Co., 430 A.2d 1107 (Me.1981), a case that preceded both former section 2(2)(G) and current section 102(4)(H), we held that it was error to exclude the employee's annual bonus from his average weekly wage when the bonus was a part of the employee's regular annual compensation for the hours and days of service. Id. at 1108. We relied, in part, on a rule of the former Workers' Compensation Commission expressly providing that [i]n computing the average weekly wage, vacation pay, bonuses, tips, etc. should be included in the total amount of earnings for the period employed. Id. (citing former Me. W.C.C. Rule 7(a) (1981)). We again relied, in part, on the former Commission rule in Nielsen v. Burnham & Morrill, Inc., 600 A.2d 1111 (Me.1991), in which we affirmed a decision of the Commission to include vacation pay in the employee's average weekly wage. Id. at 1112 (citing former Me. W.C.C. Rule 16.8 (1991), replaced by Me. W.C.B. Rule ch. 1, § 5(1)). [¶ 24] Examination of decisions from other jurisdictions suggests that, although most states exclude fringe benefits from the average weekly wage, bonuses are often included in the average weekly wage. See 5 ARTHUR LARSON, LARSON'S WORKERS' COMPENSATION LAW, § 93.01(2)(a) (2000). The cases turn on a variety of rationales. [9] Generally, cash bonuses are included as wages when they represent value received as consideration for work. Id. [¶ 25] We conclude that the determination as to whether a bonus received by an employee is part of wages or is an other benefit, pursuant to section 102(4)(H), relates to the nature of the bonus received. [10] If the bonus is regularly received by the employee as a part of an ongoing compensation scheme, such as annual bonuses, or is a bonus related to productivity or other employee and employer accomplishments, or is based on other measurable employee goals, it should be included in the employee's wages. Cf. Clukey v. Piscataquis County Sheriff's Dep't, 1997 ME 124, ¶¶ 9-11, 696 A.2d 428, 431 (holding that unrestricted cash payments to military personnel ostensibly for meals and housing were wages not fringe or other benefit(s)). If, in contrast, the bonus is a one-time event, not related to the employee's work, efforts, or employment goals, it must be considered an other benefit, pursuant to 39-A M.R.S.A. § 102(4)(H). See 5 LARSON, § 93.01(2)(a). [¶ 26] Here, McAdam received his bonus as a result of the negotiations between the union and the employer. The new contract provided that [a]ll seniority employees on the payroll as of 7/31/90 shall be paid a one-time signing cash bonus within one month following ratification. (Emphasis added). This one-time bonus did not represent compensation for work performed, it was not part of an ongoing compensation scheme, it was not expected to recur, and it was not related in any way to McAdam's performance. It was, therefore, not representative of the amount that McAdam was receiving at the time of the injury for hours and days worked. See 39-A M.R.S.A. § 102(4)(A). Accordingly, it falls not within the definition of wages, but within the catch-all of other benefits subject to the restrictions of section 102(4)(H).