Appeal from Circuit Court of Cook County No. 10L50018 Honorable Sanjay T. Tailor, Judge Presiding.
The opinion of the court was delivered by: Justice McCULLOUGH
Petition for Rehearing or the disposition of the same.
JUSTICE McCULLOUGH delivered the judgment of the court, with opinion. Justices Hoffman, Hudson, Holdridge and Stewart concurred in this judgment and opinion.
¶ 1 Robert Common, filed an application for adjustment of claim pursuant to the Workers' Compensation Act (Act) (820 ILCS 305/1 through 30 (West 2006)), seeking benefits from employer, Arcelor Mittal Steel, for injuries suffered to his right arm on November 29, 2007.
¶ 2 Following a hearing, an arbitrator found claimant proved he sustained injuries arising out of and in the course of his employment with employer. The arbitrator awarded claimant temporary total disability (TTD) benefits in the amount of $935.55 for a period of 21 6/7 weeks; and permanent partial disability (PPD) benefits in the amount of $636.15 for a period of 69.575 weeks, representing 27.55% loss of use of the right arm. In computing the TTD and PPD, the arbitrator included scheduled overtime earnings and production bonuses in the calculation of claimant's average weekly wage and fixed his average weekly wage at $1,403.32.
¶ 3 On review, the Workers' Compensation Commission (Commission) struck three sentences from the arbitrator's discussion of penalties. Further, the Commission corrected "the Order portion of the Arbitrator's Decision to reflect, consistently with the findings, the permanency award for loss of the use of the right arm to the extent of 27.5 percent thereof," and not 27.55 %. In all other respects, the Commission affirmed and adopted the arbitrator's decision. The circuit court confirmed the Commission's decision.
¶ 4 Employer appeals, arguing overtime wages and production bonuses should not have been included in the Commission's calculation of claimant's average weekly wage for purposes of determining the weekly benefits to which claimant is entitled for TTD and PPD. We disagree.
¶ 5 Employer does not dispute the fact that claimant suffered an injury arising out of and in the course of his employment on November 27, 2007, nor does employer contest the nature and extent of the claimant's injuries or his period of disability. Employer only asserts as error the Commission's inclusion of overtime earnings and production bonuses in calculating claimant's average weekly wage for purposes of determining the weekly benefits to which claimant is entitled for TTD and PPD. Consequently, we will present only those facts necessary to an analysis of the issues.
¶ 6 Claimant began working for employer in 2002 as a mechanical maintenance technician. On November 29, 2007, claimant sustained right arm injuries while carrying a piece of steel weighing approximately 300 pounds.
¶ 7 Claimant is a member of the United Steel Workers Union, Local 9481. During the 52 weeks preceding his injury, claimant earned $21.03 per hour and received a "shift differential" and "incentive pay." According to claimant, his regular eight-hour shift began at 7 a.m. and ended at 3 p.m., Monday through Friday. Claimant testified that his supervisor posts a work schedule on Thursday afternoon, for the next week. A "2" on the schedule indicates that individual is assigned to work a 12-hour shift on the designated day. In addition to the required 12-hour shift, claimant also works unscheduled overtime.
¶ 8 Claimant testified that the purpose of incentive pay is to produce as much high quality steel as safely as possible. Incentive pay varies weekly based on productivity and the specific crew. If the requirements that trigger a productivity or safety incentive are not met, no incentive is paid out.
¶ 9 Ken Knaga is the manager of human resources, labor relations, and payroll for employer. Knaga testified that the production bonus plan is an important part of an employee's payment package. On November 29, 2007, the production bonus plan was a part of the collective bargaining agreement. The plan has a production component and a safety component. If certain production levels are met, the corresponding bonus is paid. Additionally, if no time is lost due to a work-related accident, a safety bonus is paid. However, if a work accident occurs or a certain production level is not met, no bonus for that component is paid. The production bonus is based on the quality of saleable goods made. Knaga testified that a larger portion of the bonus is tied to production levels. If the benchmarks are hit, each employee on the team gets the bonus. If the benchmark is not met, no bonus is given to any member of the team.
¶ 10 The collective bargaining agreement refers to the production bonus plan as "the incentive plan" and by employer as "a production plan." Knaga testified that the bonus is not tied to the stock price, is not seasonal, and is not simply given due to the generosity of management. If an employee is sick or did not work, he does not get the bonus. The bonus is paid biweekly and is included as taxable income on the W-2 form.
¶ 11 Knaga testified that the production portion of the bonus is only available when the plant is producing steel. When the plant closes, no steel is produced, and no bonus is paid.
¶ 12 In a letter dated July 14, 2008, Gary Norgren, general manager for operations for employer, clarified for claimant (1) the production bonus and (2) scheduled overtime, stating:
"[Y]ou are eligible to receive a weekly production bonus that is based on 2 components -- quality tons per 12 hour shift and safety performance. Given that both these components can vary week to week, the percentages for the ...