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MORRISON-KNUDSEN CONSTRUCTION CO. ET AL. v. DIRECTOR

decided: May 24, 1983.

MORRISON-KNUDSEN CONSTRUCTION CO. ET AL
v.
DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, UNITED STATES DEPARTMENT OF LABOR, ET AL.



CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT.

Burger, C. J., delivered the opinion of the Court, in which Brennan, White, Blackmun, Powell, Rehnquist, Stevens, and O'connor, JJ., joined. Marshall, J., filed a dissenting opinion, post, p. 638.

Author: Burger

[ 461 U.S. Page 626]

 CHIEF JUSTICE BURGER delivered the opinion of the Court.

The question presented is whether employer contributions to union trust funds for health and welfare, pensions, and training are "wages" for the purpose of computing compensation benefits under § 2(13) of the Longshoremen's and Harbor Workers' Compensation Act, 44 Stat. (part 2) 1425, 33 U. S. C. § 902(13) (Compensation Act).

I

James Hilyer, an employee of petitioner Morrison-Knudsen Construction Co., was fatally injured while working on the construction of the District of Columbia Metrorail System. At the time of his death, Hilyer was covered by the District of Columbia Workmen's Compensation Act, D.C. Code § 36-501 (1973), which incorporates the provisions of the Compensation Act. He was also a beneficiary of a collective-bargaining agreement between Morrison-Knudsen and his union, Local 456 of the Laborers' District Council of Washington, D.C., and Vicinity (AFL-CIO).

Immediately upon Hilyer's death, petitioner*fn1 began to pay 66 2/3% of Hilyer's "average weekly wage" in death benefits to his wife and two minor children pursuant to 33 U. S. C. § 909(b).*fn2 Respondent Hilyer disputed the amount of benefits paid, claiming, among other things, that her husband's average weekly wage included not only his take-home pay, as

[ 461 U.S. Page 627]

     petitioner contended, but also the 68cent per hour in contributions the employer was required to make to union trust funds under the terms of the collective-bargaining agreement.*fn3 The Administrative Law Judge rejected Mrs. Hilyer's contention and the Benefits Review Board affirmed. The Board reasoned that only values that are readily identifiable and calculable may be included in the determination of wages. Hilyer's rights in his union trust funds were speculative. It was not clear from the record whether his pension rights had vested, and even if they had, the value of his interest in the

[ 461 U.S. Page 628]

     Pension and Disability Fund depended on his continued employment with petitioner, while the value of his interest in the health, welfare, and training funds was contingent on his need for these benefits. The Board also rejected the notion that the values could be computed from the amounts contributed by the employer, noting that the family in all likelihood would not have been able to purchase similar protection at the same cost.

Mrs. Hilyer*fn4 sought review of the Benefits Review Board's decision in the Court of Appeals for the District of Columbia Circuit, reiterating her contention that her husband's wages included the contributions that his employer made to the union trust funds.*fn5 The Court of Appeals reversed.

[ 461 U.S. Page 629]

     It agreed with the Board that the term "wages" includes only values that are readily identifiable and calculable, but held that the benefits at issue here met that definition. The court reasoned that since the contributions were intended for the benefit of the workers, the trustees could be viewed as "no more than a channel; . . . a means by which the company provides life insurance, health insurance, retirement benefits, and career training for its employees." Hilyer v. Morrison-Knudsen Construction Co., 216 U. S. App. D.C. 50, 53, 670 F.2d 208, 211 (1981). Although the court conceded that the family would not be able to use the employer's contribution to purchase benefits of equivalent value, it relied on United States ex rel. Sherman v. Carter, 353 U.S. 210 (1957), for the proposition that the employer's contributions were a reasonable measurement of the value of the benefits to the employees.

We granted certiorari, 459 U.S. 820 (1982), and we reverse.

II

This case involves the meaning of 33 U. S. C. § 902(13), a definitional section that was part of the Compensation Act in 1927, when it became law, and that has remained unchanged through 10 revisions of the Act.*fn6 The section provides:

"'Wages' means the money rate at which the service rendered is recompensed under the contract of hiring in force at the time of the injury, including the reasonable value of board, rent, housing, lodging, or similar advantage received from the employer, and gratuities received in the course of employment from others than the employer."

[ 461 U.S. Page 630]

     A

We begin with the plain language of the Compensation Act. Since it is undisputed that the employers' contributions are not "money . . . recompensed" or "gratuities received . . . from others," the narrow question is whether these contributions are a "similar advantage" to "board, rent, housing, [or] lodging." We hold that they are not. Board, rent, housing, or lodging are benefits with a present value that can be readily converted into a cash equivalent on the basis of their market values.

The present value of these trust funds is not, however, so easily converted into a cash equivalent. Respondent Hilyer urges us to calculate the value by reference to the employer's cost of maintaining these funds or to the value of the employee's expectation interests in them, but we do not believe that either approach is workable. The employer's cost is irrelevant in this context; it measures neither the employee's benefit nor his compensation. It does not measure the benefit to the employee because his family could not take the 68cent per hour earned by Mr. Hilyer to the open market to purchase private policies offering similar benefits to the group policies administered by the union's trustees. It does not measure compensation because the collective-bargaining agreement does not tie petitioner's costs to its workers' labors. To the contrary, the employee enjoys full advantage of the Training and Health and Welfare Funds as soon as he becomes a beneficiary of the collective-bargaining agreement. App. 37-38 and 40. He derives benefit from the Pension and Disability Fund according to the "pension credits" he earns. These pension credits are not correlated to the amount of the employer's contribution; the employer pays benefits for every hour the employee works, while the employee earns credits only for the first 1,600 hours of work in a given year. Furthermore, although the employer is never refunded money that has been contributed, the employee can lose credit if he works less than 200 hours in a year or fails to earn credit for

[ 461 U.S. Page 631]

     four years. Significantly, the employee loses all advantage if he leaves his employment before he attains age 40 and accumulates 10 credits.*fn7 Id., at 49-68.

Nor can the value of the funds be measured by the employee's expectation interest in them, for that interest is at best speculative. Employees have no voice in the administration of these plans and thus have no control over the level of funding or the benefits provided. Furthermore, the value of each fund depends on factors that are unpredictable. The value to the Hilyer family of the Health and Welfare Fund depends on its need for the services the Fund provides; the value of the Pension and Disability Fund depends on whether Hilyer's interest vested, see n. 7, supra. And the value of the Training Fund, which was established to insure "adequate trained manpower," see n. 3, supra, and not for the benefit of the individual workers, is even more amorphous.

United States ex rel. Sherman v. Carter, supra, is not to the contrary. That case concerned a claim under the Miller Act, 40 U. S. C. § 270a et seq., which requires a contractor working for the United States to furnish a surety bond to insure the payment of "sums justly due" employees. When the employer failed to contribute to the union trust funds as required by the employees' collective-bargaining agreement, the union trustees sued the surety on the bond. The Court allowed the trustees to maintain their action, reasoning that "contributions were a part of the compensation for the work to be done by [the] employees." 353 U.S., at 217-218. The Court did not, however, base its conclusion on the notion these contributions were included in wages. Indeed the Court specifically noted that the Miller ...


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