11-20-2023; Wage Loss Differential Claims are A-Changing in IL WC; Injured Worker Can't Bring Civil Claim Against Borrowing Employer, Happy Thanksgiving to All!

Synopsis: Wage Differential Claims Are A-Changing in Illinois Workers’ Comp.

Editor’s comment: I consider this a “must-read” for IL WC risk managers, claims handlers and attorneys/hearing officers. The information I am doing my best to provide is going to change reserves, lump sums and all handling of one of Illinois’ biggest WC claims—wage loss differential under Section 8(d-1) of the IL WC Act. I am fairly sure we are going to need computers to accurately set reserves.

I don’t believe many of the troops, on both sides of this matrix, are aware of the new battlefield that may be wage loss differential claims, in light of the City of Chicago’s new ever-increasing minimum wage concept. I assure my readers this idea is new to this arena.

Section 8(d-1) of the IL WC Act

This section of the Act provides benefits from the date of loss to the day Claimant reaches age 67 or five years from the date the award becomes final, if the worker is unable to return to the same job at the same rate of pay and returns to work at a lower paying job.

The language is:

(d) 1. If, after the accidental injury has been sustained, the employee as a result thereof becomes partially incapacitated from pursuing his usual and customary line of employment, he shall, except in cases compensated under the specific schedule set forth in paragraph (e) of this Section, receive compensation for the duration of his disability, subject to the limitations as to maximum amounts fixed in paragraph (b) of this Section, equal to 66-2/3% of the difference between the average amount which he would be able to earn in the full performance of his duties in the occupation in which he was engaged at the time of the accident and the average amount which he is earning or is able to earn in some suitable employment or business after the accident. 

Please note most jobs in this State are within a range of 50 miles from the City of Chicago—that 50 mile range creates what has been called “the reasonably stable labor market” around such workers’ homes. Folks living in that area are “able to earn” spiraling minimum wage that is now available in Chicago.

So What Changed?

Initially, the City of Chicago’s minimum wage was raised to $15 per hour for workers with jobs with “large” employers. That change did make some difference in calculating wage loss differential.

What I and most IWCC observers may have missed is every July 1 from now on, Chicago’s minimum wage increases on an annual basis per the City of Chicago Minimum Wage Ordinance.

This is new and there has never been anything like it. In the past, once a worker was felt to be able to perform minimum wage work, the minimum wage stayed the same, sometimes for decades. In that environment, it was simple to calculate what a worker would get in an 8(d-1) wage loss award.

Now, with this new change to Illinois’ biggest city’s minimum wage, I feel an Arbitrator hearing the claim, creating an award or approving a settlement has to adjust to the changes that are mandated by Chicago’s new ordinance.

The Chicago minimum wage is tiered for large businesses with 21 or more employees, and small businesses with 4-20 employees. The minimum wage for larger employees increases annually, from now on, according to the Consumer Price Index or 2.5%, whichever is lower, since reaching $15 per hour in 2021. 

As of July 1, 2023, the minimum wage in Chicago rose to $15.80 per hour for employers with 21 or more workers, and $15.00 per hour for employers with 4 to 20 workers.

If you do compound interest calculations, at a minimum, in five years from now, Chicago’s minimum wage is going to be $17.88 an hour—this assumes the CPI or Consumer Price Index is more than 2.5%. In ten years assuming the CPI stays higher than 2.5%, the Chicago minimum wage will be $20.23 per hour. At 20 years from now, the Chicago minimum wage will be $25.89 an hour.

These annual increases are certain to change wage loss differential values in IL WC.

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Synopsis: Injured Illinois Worker Can't Maintain a Civil Suit against the Borrowing Employer.

Editor’s comment: We strongly support this ruling. In Leman v. Volmut, No. 2019 L 3711, 10/26/2023, published, the Illinois Appellate Court upheld the Circuit Court’s ruling that an injured worker could not pursue a civil claim against his borrowing employer.

Claimant Leman suffered injuries in January 2019 when he was struck by a vehicle while walking. Leman claimed a vehicle being driven by Defendant Volmut failed to stop at a stop sign and struck a vehicle being driven by another driver named Nucci. Her vehicle then struck Leman, a pedestrian.

Leman filed suit against Volmut, Nucci and Volmut’s alleged employers — CPU RX Inc. and Forum Coworking LLC. Nucci answered the complaint and filed a counterclaim against Volmut. He answered the complaint and counterclaim and filed a third-party complaint for contribution against INTREN LLC and Pinto Construction. Nucci and CPU also filed third-party complaints for contribution against INTREN and Pinto.

Leman then amended his complaint to add a negligence action against INTREN, which was engaged in construction activities in the area where the event occurred.

INTREN filed a motion to dismiss the claims against it. The company alleged it was the borrowing employer of Leman and, therefore, immune from common-law liability for his injuries.

A Circuit Court judge denied the motion, finding triable issues as to whether there was an employment relationship between Leman and INTREN. INTREN then filed a motion for summary judgment, again based on its workers’ compensation payments. The Circuit Court initially denied the motion but then granted reconsideration and granted the motion.

The Illinois Appellate Court explained when an employer loans an employee to another employer and the employee suffers injury, both employers have joint liability to the employee under IL workers’ compensation law, and both employers are therefore immune to common-law liability, under Section 5 of the IL WC Act.

Illinois has a two-part inquiry to determine whether a borrowing employer-employee relationship exists. It looks at whether the alleged borrowing employer had the right to direct and control how the employee performed his work and whether there was an express or implied contract of hire between the employee and the alleged borrowing employer.

Plaintiff Leman was a carpenter and a member of Carpenters Union Local 58. He had a years-long relationship with INTREN, but because it was not a signatory to his union’s contract, he could not work directly for it.

He testified that INTREN’s chief executive officer helped him secure employment with Pinto, a signatory to the union’s contract, before INTREN and Pinto entered into a contract to provide carpentry services to INTREN. The contract contained an acknowledgment by Pinto that its employees and agents were not employees of INTREN but were independent contractors.

In the seven years before his injury, Leman worked exclusively for INTREN, though Pinto paid him. He testified that INTREN assigned him work daily, supervised his work and provided safety training.

The court confirmed there was deposition testimony that Leman worked the same hours as INTREN employees, received instruction and direction from INTREN foremen and was assisted in his work by INTREN employees, and none of Pinto’s supervisors were on the INTREN job site on the date of the injury.

The Court’s ruling confirmed:

Based upon the evidentiary material in the record before us as set forth above, we conclude that there is no genuine question of fact on both the issue of whether INTREN had the right to control and direct the manner in which the plaintiff performed his work and the issue of whether, at minimum, there was an implied contract of hire between the plaintiff and INTREN…

To read the court’s decision, click here.

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