Third Quarter 2018
By: Caitlin R. Kilburg
Question: In an otherwise compensable workers’ compensation case, is an employer permitted to use salary continuation and can payments of it serve as a credit against TTD obligations?
Short Answer: Yes. In Iowa, if payments of regular salary are made in lieu of workers’ compensation indemnity benefits, credit for the wages is allowed.
Discussion: Agency rule 876 IAC 8.4 recognizes the employer’s right to pay salary in lieu of compensation. Although the employer cannot claim any payments above the weekly rate as a credit against further obligations, the rule permits an employer to pay ongoing salary to an injured worker in lieu of payment of worker’s compensation weekly benefits.
In 1998, the commissioner ruled that salary payments made by an employer that were designed as workers’ compensation payments with the full knowledge of the work-related nature of the injury and the employee was the payment of weekly workers’ compensation benefits. Moffit v. Super Value, File No. 1059425 (App. June 19, 1998). In another appeal decision, the commissioner noted that salary paid in lieu of compensation is a payment of weekly benefits even if designated as salary by the employer. Boyd v. Ankeny Comm. Schools, File No. 1225693 (App. June 2003).
The Agency recently commented on this topic in Christiansen v. Pottawattamie County, File No. 5051440 (Aug. 24, 2018). In this case, Claimant was attempting to argue that the statute of limitations had not run because the employer paid regular wages in lieu of weekly benefits. However, the Commissioner found that what was actually paid was accrued vacation, holiday, and sick time and therefore did not qualify as regular wages and did not toll the statute of limitations.
For instance, in Copeland v. Boones Book and Bible Store, File No. 1059319 (June 17, 2002), Claimant was alleging salary continuation in order to establish that his statute of limitation had not run. Claimant’s wife was the bookkeeper for the employer and testified that the two payments Claimant received while off work after surgery were intended to be salary in lieu of weekly benefits. The deputy found that from the testimony it was unclear whether the two sporadic checks were for past or continuing work services and, as a result, he was unable to find that the payments constituted salary in lieu of workers’ compensation benefits.
Practice Tip: As always, documentation and establishment of a record is paramount. In order to receive a credit for salary continuation, it must be established that monies paid to Claimant while off work and otherwise entitled to weekly benefits actually constituted regular salary continuation. Periodic payments out of the goodness of an employer’s heart or paying out otherwise accrued benefits does not meet the necessary threshold.