Opinion ID: 1253110
Heading Depth: 2
Heading Rank: 3

Heading: Offset of Back Pay and Front Pay for Disability Benefits

Text: ¶ 55. We next address whether the amount of back pay and front pay awarded to Salveson should have been offset by the disability payments she received. In its Amended Memorandum Decision, the circuit court ordered both Salveson's back pay and front pay offset as a matter of equity. On reconsideration, the circuit court amended its order, finding that Salveson's duty disability benefits had come from a source collateral to her employment. The court determined that under the collateral source rule, it would be inequitable to offset Salveson's back pay and front pay awards by her disability payments. [24-26] ¶ 56. Under the federal collateral source rule, it is within the circuit court's discretion to determine whether benefits received from a source collateral to employment should offset an award of back pay or front pay. Flowers v. Komatsu Mining Sys., Inc., 165 F.3d 554, 558 (7th Cir. 1999); EEOC v. O'Grady, 857 F.2d 383, 389 (7th Cir. 1988). In exercising their discretion, courts are guided by certain equitable principles. The collateral source rule operates not to prevent the plaintiff from being overcompensated but rather to prevent the tortfeasor from paying twice. Flowers, 165 F.3d at 558. If the employer is the source of the funds at issue, then the payments can be deducted from the award. Id. However, if employees earn the benefits as part of their compensation, the payments should not be subject to an offset. O'Grady, 857 F.2d at 391. ¶ 57. The circuit court found on reconsideration that Salveson, as a member of the Douglas County Paramedics Association Union (paramedics union), had negotiated to receive eligibility for duty disability benefits, giving up salary increases and other benefits. The court concluded that although the County paid the employee contribution to the Wisconsin retirement system (WRS), Salveson had earned the benefit by giving up other compensation. ¶ 58. The court based its decision on affidavits and supporting documents submitted by Salveson establishing that the paramedics union made concessions in its 1992 negotiations with Douglas County, in exchange for the paramedics being classified as protective services employees. Salveson submitted affidavits from Steve Mackiewicz, the president of the paramedics union in 1992, and Steve Morley and William Kalin, paramedics union negotiators in 1992. Mackiewicz, Morley, and Kalin all stated in their affidavits that the paramedics union gave up wage compensation and sick leave time in order that the paramedics be classified as protective services employees. They further stated that the paramedics union's primary purpose in becoming protective services employees was to become eligible for duty disability benefits through the WRS. Kalin also submitted a copy of the pertinent portion of the paramedics union's contract with Douglas County, documenting the concessions made by the union to become classified as protective services employees. ¶ 59. The County asserts that the circuit court erroneously exercised its discretion in not offsetting Salveson's award by the amount of her disability benefits. It acknowledges that under the collateral source rule, defendants should not receive a windfall for collateral benefits received by a plaintiff, and should not profit from benefits purchased by a plaintiff. However, the County asserts that it paid all premiums to the WRS for Salveson and that not offsetting her award would result in Douglas County taxpayers paying her twice. The County does not dispute that Salveson's disability benefits resulted from collective bargaining by the paramedics union, and therefore were essentially paid for by giving up potential compensation and benefits. It instead terms these facts irrelevant because Douglas County actually paid the premiums to the WRS. [27] ¶ 60. We accept Salveson's undisputed assertion that she received disability benefits based on the paramedics union's collective bargaining. We find that Salveson earned and essentially paid for the benefits, and conclude that these benefits came from a source collateral to her employment. O'Grady, 857 F.2d at 391. While the County may have contributed funds from which the benefits were paid, it does not dispute that Salveson paid for some of the benefits through collective bargaining. Funds supported in partbut not entirelyby contributions from the defendant are generally considered collateral. Id. at 390. ¶ 61. We conclude that Salveson's awards of back pay and front pay should not be offset by benefits she received for her disability; she and other paramedics paid for those benefits by foregoing pay increases and other benefits. Douglas County should not benefit simply because Salveson also received collateral disability benefits. The County will not pay twice. ¶ 62. The court of appeals correctly observed that the policy reasons for providing [disability] benefits for protective occupation participants are independent from the considerations involved in determining workplace discrimination. The County's contributions do not discharge any duty to maintain a suitable working environment. Salveson, 234 Wis. 2d 413, ¶ 21. They do not relieve the County from paying for illegal discrimination. [28] ¶ 63. The circuit court properly exercised its discretion in determining that Salveson contributed to the retirement fund from which her disability benefits are paid, and that pursuant to the collateral source rule, her benefits should not be offset.