Free living quarters offered as employment perk are wages

In South Carolina, a worker's AWW includes the actual pay he receives as well as "allowances of any character when they are a specified part of his employment contract."

Case name: Bazen v. Badger R. Bazen Co., Inc., et al., No. 4681 (S.C. Ct. App. 05/03/10).

Ruling: The South Carolina Court of Appeals upheld an award of temporary total benefits, finding that the fair rental value of housing provided by the employer was properly included in calculating the worker's average weekly wage.

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What it means: In South Carolina, a worker's AWW includes the actual pay he receives as well as "allowances of any character when they are a specified part of his employment contract."

Summary: The claimant's father induced the claimant to work for him by offering him wages of $2,500 per month, a tank of gas per week, and free use of a home and storage building that the parents owned. The claimant suffered injuries while at work. A workers' compensation commissioner determined that the use of the home and storage building were integral parts of his compensation, not fringe benefits, and should therefore be included in calculating his AWW. The Court of Appeals agreed, explaining that an "average weekly wage can include allowances of any character when they are a specified part of his employment contract."

The employer argued that the commissioner should not have factored the rent-free use of the house and storage into the worker's AWW because the use of the house was a gift from his mother and because the company did not own the house. The Court of Appeals rejected this argument. To qualify as a component of wages, an allowance or benefit must be offered in lieu of wages and must be a specific part of the employment contract.

Noting that the parties' employment contract consisted solely of an oral agreement, the court pointed out that the worker and his father agreed that the terms of employment involved a $30,000 annual salary, a free tank of gas weekly, and rent-free living accommodations.

The father testified that his son would have rejected the offer of employment without the free living arrangement component.

The court refused to address the issue regarding ownership of the house because the employer failed to raise that matter before either the commissioner or the panel.

Read more at the WorkersComp Forum homepage.

July 29, 2010

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