Wages: Harder to define then you might think!

In a case with a truly bizarre set of facts, the Judge of compensation had to decide on an issue of what exactly should count as wages, in a claim where the ’employee’ was obviously trying to ‘game the system.’

Some facts: the claimant, Richard Holle was a funeral director who was injured at work in 1985, getting an award of 60% partial total (remember: 75% of partial total is deemed ‘totally disabled’ in New Jersey). Over the next 13 years he succeeded in having this finding of disability increased from 60% to 65% and then ‘totally disabled.’

The issue before the court: was the claimant working for the respondent at the time he was deemed ‘totally disabled’, and if so, how would his wages be computed? This was a huge question because the claimant “sold the business’ to family members under an “installment contract” that paid the claimant fixed sums for twenty years – and that in return, the claimant continued to act as a funeral director at the funeral home, meeting clients, residing on the premises, holding a state funeral license, and assisting in making funeral arrangements.

If the claimant was indeed working (as the comp Judge found he was) then the claimant would only be due $5 per week for ‘permanent, total disability.’ This is due to a ‘quirk’ in the New jersey law which states that if a claimant can earn wages that exceed the wages he earned at the time he was injured, then the employer must pay only $5 per week to the claimant until such time as the claimant’s wages fall below his pre-injury earnings.

In this case, the claimant’s pre-injury earnings (in 1985) were MUCH LESS than his income under his ‘installment contract.’ This means that the Comp Judge’s ruling – that the ‘installment contract’ is really the equivalent of wages given what the claimant is actually doing for the funeral home – would entitle the petitioner to only $5 a week in compensation.

The Appellate Division screwed this one up – finding that the Comp Judge needed to make “further findings . . . as to whether petitioner’s receipt of payments under the installment contract can qualify as wages or earnings.”

Case: Richard J. Holle v. Jacob A. Holle Funeral Home, A-3632-08T2 (App. Div., decided November 5, 2009).

Greg Lois is the managing partner of LOIS LLC and dedicates his practice to defending employers and carriers in New York and New Jersey workers' compensation claims. Greg is the author of a popular series of "Handbooks" on workers' compensation, and is the co-author of the 2016 & 2017 Lexis-Nexis New Jersey Workers' Compensation Practice Guide. Greg can be reached at 201-880-7213 or glois@loisllc.com