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Washington State Court of Appeals Holds Payments to Class II Prison Workers Are “Wages” for Time-Loss Compensation Calculations
by Matt Clarke
On April 13, 2011, a Washington state Court of Appeals held that money paid to Class II prison workers counted as “wages” for purposes of calculating time-loss compensation.
James B. Hill, a former Washington state prisoner, was injured while performing a Class II prison job for which he was paid $0.85 per hour. After his release from prison, Hill applied for time-loss compensation from the Washington State Department of Labor and Industries (L&I). L&I allowed compensation, calculating that Hill worked 7.5 hours per day for six days a week at $0.85 per hour.
Hill appealed the order to the Board of Industrial Insurance Appeals, claiming that the money paid to Class II prison workers was a gratuity, not wages. The Department of Corrections (DOC) answered interrogatories stating that it did not pay wages to prisoners and did not report the gratuities to the Internal Revenue Service (IRS). Therefore, Hill moved for summary judgment. L&I filed a cross-motion for summary judgment and the DOC filed a brief supporting L&I.
The industrial appeals judge (IAJ) denied Hill’s motion and granted summary judgment to L&I. Hill unsuccessfully petitioned the Board for review of the IAJ’s decision. He then appealed the Board’s order in superior court. The superior court granted L&I’s motion for summary judgment, and Hill again appealed.
The Court of Appeals conducted a de novo review. It noted that statutory law required L&I to base time-loss compensation on the monthly wages the worker was receiving at the time of the injury, disallowing gratuities not reported to the IRS (former RCW 51.08.178). The appellate court also noted that the legislature classified money paid to prisoners for their Class II labor as a “gratuity” (RCW 72.09.100(2)(e)).
Further, if Hill’s wages could not be reasonably and fairly determined for any reason, L&I would be required to calculate a monthly wage based upon “the usual wage paid other employees engaged in like or similar occupations where the wages are fixed.”
The Court of Appeals looked to L&I regulations to determine whether Hill’s payments were a gratuity. It determined that the money the DOC paid to Hill was for his labor and therefore qualified as wages, not a gratuity. The Court rejected Hill’s argument that the payments could not be wages as they were lower than the minimum wage set by law. The appellate court noted the fact that the legislature had specifically exempted prisoners from the Washington state minimum wage act (RCW 49.46.010(5)(k)), which would create problems in calculating time-loss compensation, but assumed the legislature had to be aware of the problem and had failed to correct it because lawmakers decided that compensation based on prison wages was fair and reasonable.
Therefore, the Court of Appeals affirmed the trial court’s grant of summary judgment to L&I. The Washington Supreme Court declined to hear Hill’s appeal in September 2011. See: Hill v. Department of Labor and Industries, 161 Wash.App. 286, 253 P.3d 430 (Wash.App. Div.2 2011), review denied.
On April 13, 2011, a Washington state Court of Appeals held that money paid to Class II prison workers counted as “wages” for purposes of calculating time-loss compensation.
James B. Hill, a former Washington state prisoner, was injured while performing a Class II prison job for which he was paid $0.85 per hour. After his release from prison, Hill applied for time-loss compensation from the Washington State Department of Labor and Industries (L&I). L&I allowed compensation, calculating that Hill worked 7.5 hours per day for six days a week at $0.85 per hour.
Hill appealed the order to the Board of Industrial Insurance Appeals, claiming that the money paid to Class II prison workers was a gratuity, not wages. The Department of Corrections (DOC) answered interrogatories stating that it did not pay wages to prisoners and did not report the gratuities to the Internal Revenue Service (IRS). Therefore, Hill moved for summary judgment. L&I filed a cross-motion for summary judgment and the DOC filed a brief supporting L&I.
The industrial appeals judge (IAJ) denied Hill’s motion and granted summary judgment to L&I. Hill unsuccessfully petitioned the Board for review of the IAJ’s decision. He then appealed the Board’s order in superior court. The superior court granted L&I’s motion for summary judgment, and Hill again appealed.
The Court of Appeals conducted a de novo review. It noted that statutory law required L&I to base time-loss compensation on the monthly wages the worker was receiving at the time of the injury, disallowing gratuities not reported to the IRS (former RCW 51.08.178). The appellate court also noted that the legislature classified money paid to prisoners for their Class II labor as a “gratuity” (RCW 72.09.100(2)(e)).
Further, if Hill’s wages could not be reasonably and fairly determined for any reason, L&I would be required to calculate a monthly wage based upon “the usual wage paid other employees engaged in like or similar occupations where the wages are fixed.”
The Court of Appeals looked to L&I regulations to determine whether Hill’s payments were a gratuity. It determined that the money the DOC paid to Hill was for his labor and therefore qualified as wages, not a gratuity. The Court rejected Hill’s argument that the payments could not be wages as they were lower than the minimum wage set by law. The appellate court noted the fact that the legislature had specifically exempted prisoners from the Washington state minimum wage act (RCW 49.46.010(5)(k)), which would create problems in calculating time-loss compensation, but assumed the legislature had to be aware of the problem and had failed to correct it because lawmakers decided that compensation based on prison wages was fair and reasonable.
Therefore, the Court of Appeals affirmed the trial court’s grant of summary judgment to L&I. The Washington Supreme Court declined to hear Hill’s appeal in September 2011. See: Hill v. Department of Labor and Industries, 161 Wash.App. 286, 253 P.3d 430 (Wash.App. Div.2 2011), review denied.
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Related legal case
Hill v. Department of Labor and Industries
| Year | 2011 |
|---|---|
| Cite | 161 Wash.App. 286, 253 P.3d 430 (Wash.App. Div.2 2011) |
| Level | State Court of Appeals |
| Injunction Status | N/A |