Third Quarter 2018
By: Joshua Stegeman
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: No. In Missouri, there is no formal or recognized salary continuation program and the Division of Workers’ Compensation does not recognize salary continuation for credits toward TTD benefits paid. The courts have insinuated that if an employer makes continued salary payments, and those payments are specifically identified as payment toward TTD benefits or lost time for work injury, then the Employer may be entitled to a credit. But there is no case law specifically holding that a credit shall apply.
Discussion: In Missouri TTD benefits are paid pursuant to Sections 287.160 RSMo and 287.170 RSMo. Below are citations to the specific language because it is critical to understanding that the courts have adhered to the language and made no exceptions. The courts have only alluded to the fact that if the employer specifically designates the salary continuation as applying to the work injury TTD benefits owed under the statutes, then it may be possible to claim a credit, but it is not guaranteed.
Section 287.160.4 states that “the employer shall not be entitled to credit for wages or such pay benefits paid to the employee or his dependents on account of the injury or death except as provided in Section 287.270.”
Section 287.270, provides an exception, for professional athletes only, to the rule prohibiting a credit for salary continuation. Otherwise, Section 287.270 specifically reinforces the bar against a credit for salary continuation when it states:
No savings or insurance of the injured employee, nor any benefits derived from any other source than the employer or the employer’s insurer for liability under this chapter, shall be considered in determining the compensation due hereunder; except as provided in subsection 3 of Section 287.170, and employers of professional athletes under contract shall be entitled to full credit for wages or benefits paid to the employee . . . . Section 287.270 RSMo.
The Missouri courts have reaffirmed the statutory language in several cases. In Cook, the employer did not pay any TTD benefits during the period the employee was off work due to the workers’ compensation injury, but instead paid the employee’s full salary because he was a salaried employee and their employment policies provided for that benefit. Cook v. Sunnen Products Corp., 937 S.W.2d 221 (Mo. App. E.D. 1996). The employer presumed payment of the full salary was sufficient to satisfy the TTD benefits under workers’ compensation discussed above. However, the Court held the employer was not entitled to a credit because the full salary payment did not satisfy the statutes. It specifically stated, “The payments made to claimant were done without reference to compensable injury . . . . Based upon the evidence, the employer paid claimant a salary and not a disability compensation as provided by the statute. Therefore, the employer in this matter is not entitled to receive a credit. Cook. 937 S.W.2d at 226-227 (1996).
Similarly in Campbell, the court held that the employer was not entitled to credit for sick leave payments it made to an employee against its workers’ compensation liability. Campbell v. Citicorp Mortgage, 924 S.W.2d 323, 325 (Mo. App. E.D. 1996). The sick leave payments were a benefit paid to the employer regardless of a work injury, and the employer did not specify the sick leave payments were meant to satisfy the TTD benefits pursuant to the workers’ compensation statutes.
The Court extended this interpretation of the statutes in Schuster. In Schuster, the court held that sick leave pay, even when required pursuant to a government administrative rule and procedure, is still only a benefit accumulated through employment and is designed to compensate employees for short-term absences from work due to illness. The court stated that workers’ compensation benefits are designed to compensate employees for longer absences from work due to work-related injuries. Schuster v. State of Missouri Div. Employment Security, 972 S.W.2d 377, 382 (Mo. App. E.D. 1996).
In addition, the court in Shaffer, held that an employer’s payment of vacation pay and sick pay to an employee for a work-related injury were not payments “pursuant to the Workers’ Compensation Act” and therefore did not preclude an award of temporary total disability benefits. Shaffer v. St. John’s Regional Health Center, 943 S.W.2d 803, 808 (Mo. App. S.D. 1997).
Since that time, despite the amendments to the workers’ compensation statutes in 2005, the Commission has relied on these appellate court rulings to find that salary continuation does not entitle the employer to a credit for TTD benefits. In fact, since 2005, the courts have been required to apply strict scrutiny to the statutory language cited above. Therefore, it is even more likely that the current court would not find that an employer may receive a credit for TTD benefits based on salary continuation, even if the employer designated it under the statutes. This is because the statutes do not specifically state that an employer may designate salary continuation to obtain a credit for TTD benefits, even though the prior decision suggests that may be a possibility.
Practice Tip: We do not recommend salary continuation in Missouri because of the statutory language and case law discussed above. However, if an employer wishes to use salary continuation in Missouri, we recommend the employer specifically designate that the salary continuation is being paid to satisfy TTD benefits under the statutory language discussed above. At least then the employer can argue the salary continuation was paid to satisfy a workers’ compensation injury and not due solely to policies and procedures unrelated to a work injury.