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Felix v. Industrial Commission4/28/1998
DEPARTMENT C
Filed 4-28-98
Amended per Order
AWARD SET ASIDE
Because workers' compensation payments for loss of earnings are calculated as a percentage of the injured worker's average monthly wage, employers have an incentive to minimize their liability for such benefits by categorizing a portion of their workers' earnings as reimbursement for expenses and not wages. A device used sometimes for this purpose is to pay workers a sum, separate and distinct from designated wages, for "tool rental," purportedly to compensate for wear and tear on personal tools the workers bring to the job. Such payments may be legitimate expense reimbursements, but may be ruses. To separate the former from the latter, such payments "are not to be excluded from a calculation of the average monthly wage unless they bear a reasonable relationship to the actual work-related expense incurred." Pinetop Truck & Equip. Supply v. Industrial Comm'n, 161 Ariz. 105, 108, 776 P.2d 356, 359 (App. 1989).
In this case, a worker's paycheck was supplemented by an equipment allowance from a "tool procurement" fund that was divided among workers who brought their own tools to the job. Finding no material difference between the tool procurement payment in this case and the tool rental payment considered in Pinetop, we conclude that this case is governed by the Pinetop standard. In the absence of any evidence that the equipment allowance paid to Claimant bore a reasonable relationship to the actual work-related expense that he incurred, we hold that the administrative law Judge ("ALJ") erred in excluding that payment from the calculation of Claimant's average monthly wage.
I.
Claimant Octavio Felix, the petitioner, fractured his wrist while working as a plasterer and initiated workers' compensation claims against the two respondent employers, Team Personnel ("Team") and Swiss Plastering & Interiors, Inc. ("Swiss"). Claimant asserts that they jointly employed him on the date of injury.
Team is insured by respondent Fireman's Fund, which acknowledges that Claimant was a Team employee and has accepted the claim. Swiss was uninsured on the date of injury, and the No Insurance Section of the Commission's Special Fund Division ("Special Fund") has processed the Swiss claim. See generally A.R.S. Section 23-907(B). The Special Fund denies that Swiss was Claimant's employer and has accordingly denied the claim.
At consolidated hearings before the Industrial Commission, the parties disputed (1) whether Claimant was Swiss's employee or only Team's, and (2) the amount of Claimant's average monthly wage. The material evidence was this:
Swiss, a plastering subcontractor, administers fifty to one hundred subcontracts at a time. For each subcontract, a Swiss supervisor chooses a crew leader, who in turn recruits a plastering crew and supervises the crew's performance of the job. Instead of placing its crew leaders and crews on the Swiss payroll, however, Swiss contracts with temporary services employers to hire them and provide them workers' compensation coverage. One such temporary services employer is Team, which employed Claimant and the crew that he served on.
From the funds that Swiss receives from a contractor to perform each subcontract, Swiss pays one portion to the temporary services employer for labor costs and dispenses another portion directly to the crew leader and members of his crew as an "equipment procurement" fund. Swiss provides plastering materials for its projects, but the crew leader and crew provide equipment and tools. At the Conclusion of a project, based upon information from
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