This post was contributed by Paul D. Clouser, an Attorney in McNees Wallace & Nurick LLC’s Labor & Employment Practice Group in Lancaster, Pennsylvania.

One tool available to employers to limit workers’ compensation benefit payments is the so called “fellow employee” limitation. In general, absent a full recovery from a work-related injury, an employer is obligated to pay partial disability benefits equal to 2/3 the difference between the pre-injury average weekly wage and the current earnings of the employee, who is often working with restrictions. In situations where that employee has an elevated average weekly wage due to significant past overtime, the partial disability rate can seem “artificially” high. Section 306(b)(1) of the Act contains a seldom used provision limiting the payment of partial disability benefits in these circumstance. It states:

[I]n no instance shall an employee receiving compensation under this section receive more in compensation and wages combined, than the current wages of a fellow employee in employment similar to that in which the employee was engaged at the time of injury.

Pennsylvania WC Act, Section 306(b)(1).

Likewise if an employer can prove that an employee’s shortfall in wages is the result of economic circumstances affecting all employees and unrelated to that employee’s work related physical impairment, a defense to the payment of partial disability benefits is also available.

On February 4, 2015, the Commonwealth Court addressed and affirmed these principles in the case ofJanice Donahay v. WCAB. Ms. Donahay was a team leader and residential services assistant for Skills of Central PA, which operates group homes for mentally challenged adults. In February 2011, Donahay sustained a ruptured biceps tendon while assisting a large resident. The resident had difficulty walking due to a leg problem and had been leaning heavily on Donahay while ambulating.

Donahay had surgery and was off work and received workers’ compensation total disability benefits for 5 months. She returned to her job with restrictions in August 2011, earning significantly less than her average weekly wage. Prior to the injury, she had been working 80-85 hours per week, as the group home was short-staffed. As such, her “average weekly wage” was unusually high.

Upon her return and with the resumption of normal staffing levels, Donahay was working only 45 hours per week. Additionally, due to funding cuts, the employer was limiting the amount of available overtime to all employees to help control costs.

The employer successfully argued that despite her restrictions and reduced hours, benefits should be suspended, with no ongoing payment of partial disability. After all, there was no medical limitation on the number of hours Donahay could work and her other restrictions did not prevent her from carrying out all aspects of her regular job. Donahay was not required to perform patient transfers, as clients in the group home were independent and required little direct care. Additionally, team leaders do more paperwork than direct care and Donahay had the flexibility to direct other employees to perform the tasks she could not perform.

Accordingly, the WC Judge found that despite some residual physical impairment, Donahay was able to perform all aspects of her pre-injury job. Furthermore, the extraordinary overtime she had worked prior to her injury was only temporary, pending the hiring of additional staff. As such, Donahay’s alleged loss of earnings was not due to her residual impairment, but rather to the employer’s new limitation on overtime which was applicable to all employees. Accordingly, any loss of earnings was due entirely to “economic circumstances” and unrelated to her physical limitations. To allow Donahay to continue collecting ongoing partial disability benefits, in addition to her regular wages, would place her in a better position than her fellow employees, who were performing similar duties. The Commonwealth Court found it unnecessary however, to formally address the “fellow employee” argument, as the WC Judge had adequate grounds under the “economic circumstances” argument, to suspend compensation benefits.

The legal analysis involving payment of partial disability benefits is somewhat technical and fact specific, so the best option is to consult legal counsel, if you feel an employee is being unfairly overcompensated for his or her work injury, Denise Elliott and Paul Clouser, in McNees Wallace & Nurick’s Lancaster office, specialize in the handling of workers’ compensation matters.