Jewell v. Ford Motor Company, No. 2013-CA-00850-WC (Ky.App. 2014):  Unemployment benefits are not to be included in calculating average weekly wage.  Supplemental Unemployment Benefit (SUB) plans are included in calculating average weekly wage when made pursuant to a collective bargaining agreement.

The issue in Jewell was whether unemployment benefits and SUB benefits are to be included in calculating the average weekly wage.  Ford’s practice was to periodically temporarily layoff workers when retooling or when demand was reduced.  During those periods, Ford applied for state unemployment benefits on behalf of its workers and also paid supplemental unemployment benefits (SUB) to them per a collective bargaining agreement. The Court determined that unemployment benefits were not to be included in calculating average weekly wage but the SUB benefits could be.The court reasoned that state unemployment benefits cannot qualify as wages because they are not “money payments for services rendered.” They deemed such benefits the antithesis of wages because they are paid when services are not rendered to the employer.  The benefits are a wage substitute rather than compensation for work.  As for the SUB pay, the claimant argued it was bargained for pay which Ford pays directly to him i included on his W-2 with taxes withheld and is part of the overall payment scheme to retain employees. The Court agreed, noting the SUB pay was in the nature of wages and did not constitute fringe benefits (not considered wages under the statute).  They deemed including “them in calculating Jewell’s wage would aid in advancing the remedial goals of the workers’ compensation statute and excluding them would artificially deflate the calculation of his AWW.” Relaying on other jurisdictions, the court held that SUB payments made pursuant to a collective bargaining agreement “are in the nature of wages…if such payments are an entitlement accrued as a result of the claimant’s services for the employer.”  SUB pay is not a fringe benefit because it is direct pay, according to the court.

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