CASE NO. 2237 CRB-4-94-12
COMPENSATION REVIEW BOARD
WORKERS’ COMPENSATION COMMISSION
JUNE 25, 1996
BARTLETT NUCLEAR, INC.
COMMERCIAL UNION INS. CO.
The claimant was represented by Richard Shapiro, Esq., Weinskin, Weiner, Ignal, Vogel & Shapiro, P.C., 350 Fairfield Ave., Bridgeport, CT 06604.
The respondents were represented by Steven A. Levy, Esq., Freidman, Mellitz & Newman, One Eliot Place, Fairfield, CT 06430.
This Petition for Review from the December 6, 1994 Finding and Award of the Commissioner acting for the Fourth District was heard October 27, 1995 before a Compensation Review Board panel consisting of the Commission Chairman Jesse M. Frankl and Commissioners Roberta Smith Tracy and Amado J. Vargas.
JESSE M. FRANKL, CHAIRMAN. The respondents have petitioned for review from the December 6, 1994 Finding and Award of the Commissioner acting for the Fourth District. They argue on appeal that the trial commissioner improperly concluded that a living allowance paid to the claimant was part of his total wages under § 31-310 C.G.S. We reverse the trial commissioner’s decision.
The parties stipulated that the claimant, a resident of the state of Washington, and the respondent employer, a Massachusetts corporation, entered into a contract sometime prior to May 1992 wherein the claimant would furnish inspection services for the Millstone Nuclear Plant in Waterford. The contract entitled the claimant to $14.50 per hour as regular pay, with $21.75 per hour for overtime. The agreement also provided the claimant with $350 per week as living expenses while he was in Connecticut, which would be increased to $400 per week as of June 1, 1992. The claimant suffered a compensable injury on May 31, 1992. The only dispute between the parties concerns the proper amount of his compensation rate under § 31-310.
The claimant received gross wages of $3103.00 during his period of employment, from which FICA, Medicare, and withholding tax deductions were made. No such deductions were made from the five $350 living expense payments the claimant received, and they were not reported as income by the claimant or listed as such on the claimant’s W-2 form. The respondent only pays living expenses to employees who report that they are living outside their normal commuting distance pursuant to the Internal Revenue Code, which permits an employer to pay a per diem allowance to such an employee rather than requiring reimbursement for the actual expenditures after they are incurred. The stipulation provided that the employer, as required by the federal tax regulations, reasonably calculated the $350 payments to cover the claimant’s lodging, restaurant, motor vehicle and other incidental expenses while in Connecticut.
The trial commissioner found that neither party presented any evidence as to what the claimant’s actual living expenses were, which failed to satisfy the federal regulation (stipulated to by the parties) stating that the employee must be required to return to the employer any portion of the allowance relating to days of travel not substantiated. He noted, “for all that appears on the record, claimant could have found some friends with whom he roomed for five weeks and therefore pocketed the entire $350.00 allowance.” Thus, the commissioner ruled that the claimant’s average weekly wage included the whole amount of the living expense payments, and that his compensation should be calculated accordingly. The respondents appealed from that decision.
The respondents argue that the commissioner’s conclusion regarding the lack of evidence as to the claimant’s actual living expenses unfairly penalized them for failing to offer proof in support of a fact on which the parties agreed. A stipulation of facts is a useful tool in the administration of a workers’ compensation case. It prevents a trial commissioner from needlessly considering issues that the parties have been able to negotiate an agreement on, and allows the limited resources of this agency to be marshaled toward resolving disputed matters. See Albert Mendel & Son, Inc., v. Krogh, 4 Conn. App. 117, 121-22 (1985). When a commissioner adopts a stipulation of facts, we presume that he has found that agreement to satisfy the Workers’ Compensation Act’s requirements. Section 31-296 C.G.S. As such, the parties are entitled to deem settled the matters addressed in the stipulation. Krogh, supra, 122.
In this case, the parties stipulated to certain facts surrounding the nature of the living expense payments the claimant received from his employer. They then sought an opinion by the commissioner on the legal status of those payments with respect to § 31-310. Because no evidence was presented by either party at the formal hearing, fairness and due process restricted the trial commissioner to the stipulated facts in making his decision. See Krogh, supra, 122-23; Davis v. New London Board of Education, 11 Conn. Workers’ Comp. Rev. Op. 245, 247, 1346 CRD-2-91-11 (Nov. 10, 1993), appeal dismissed, A.C. 13053 (Feb. 16, 1994). If the commissioner thought that evidence of the claimant’s actual living expenses was important, he should have given the parties the opportunity to address that issue at another hearing. Id.
The key to this appeal, however, is actually the set of tax regulations stipulated to by the parties. The Internal Revenue Code allows an employee to deduct from his adjusted gross income business expenses for which he is reimbursed or receives an expense allowance, provided that the employee is required to substantiate his expenses and to return excess sums to the person providing the expense account. 26 U.S.C. §§ 62(a)(2)(A), (c), 274(d)1; see also 26 U.S.C. § 162(a)(2) (business-related traveling expenses generally deductible from income). The employee substantiation requirement may be waived in certain cases pursuant to § 274(d) and its accompanying regulations, including cases where a per diem allowance is given to an employee to cover ordinary and necessary expenses of traveling away from home. 26 CFR § 1.274(d)-1(a)(2)(ii).
The parties stipulated that Bartlett Nuclear, Inc. “pays living expenses only to employees who report that they are working outside their normal commuting distance pursuant to Internal Revenue Code Section 62c and Section 274d and related regulations.” The parties then outlined the requirements for substantiating a deductible per diem allowance. They stipulated that the employer reasonably calculated the amounts it paid in living expenses to cover the expenses that the claimant would incur for lodging, food, transportation, etc. while in Connecticut, and that this amount did not exceed the applicable federal per diem rate of $88.00 per day for the New London/Groton area in 1992. See Rev. Proc. 94-77, 1994-2 C.B. 825, 826, § 3.01; 41 CFR § 301, App. A (1992). The parties also agreed that the employee must be required to substantiate the time, place and business purpose of the travel, and that any portion of the allowance relating to “days of travel not substantiated” must be returned to the employer. See 26 CFR § 1.62-2(f)(2). The federal rules specifically state that “the arrangement does not require the employee to return the portion of such an allowance that relates to days of travel substantiated and that exceeds the amount of the employee’s expenses deemed substantiated pursuant to rules prescribed under § 274(d), provided . . . the employee is required to return any portion of such an allowance that relates to days of travel not substantiated.” Rev. Proc. 94-77, supra.
Rather than focusing on the substantiated “days of travel,” however, the trial commissioner noted that there was no evidence of the claimant’s “actual living expenses,” and speculated that he might have pocketed the $350 per week rather than spending it on food and lodging. That was not the relevant test under the federal tax regulations. The stipulation clearly reflects that both parties contemplated that the tax rules discussed above would be applicable, as evidenced by the claimant’s failure to report the living expense payments as income, and the employer’s failure to take deductions out of those payments. The relevant issue here would have been whether the claimant could substantiate all of his travel days, and there is no evidence to suggest that the claimant left this area during the month he was working at the Millstone plant.
In our efforts to define “wages” under the Workers’ Compensation Act, we have held that profit sharing checks based on the number of hours worked by a claimant were properly considered to be wages, Yale v. Allegheny Ludlum, 13 Conn. Workers’ Comp. Rev. Op. 275, 1894 CRB-3-93-10 (April 19, 1995), while employer health plan contributions and payments to annuity and pension funds were not. Pascarelli v. Moliterno Stone Sales, 14 Conn. Workers’ Comp. Rev. Op. 328, 2115 CRB-4-94-8 (Sept. 15, 1995). Clearly, however, the term “wages” presupposes some benefit that inures to the claimant as compensation for his services. Even though a commissioner has a good deal of discretion to determine the character of a fixed sum given to a traveling employee, see Thibeault v. General Outdoor Advertising Co., Inc., 114 Conn. 410, 413 (1932), the stipulated facts of this case do not support the inclusion of the claimant’s living expense payments in his total wages. The facts instead indicate an undisputed effort by both parties to comply with federal tax laws that exclude such payments from an employee’s income. Including those payments in wages under § 31-310 would be patently inconsistent with that effort.
The trial commissioner’s decision is reversed. The claimant’s average weekly wage is to be fixed at $620.60, in accordance with Paragraph V of the Finding and Award.
Commissioners Roberta Smith Tracy and Amado J. Vargas concur.
1 26 U.S.C. § 274(d) provides, in relevant part, that “[n]o deduction or credit shall be allowed— (1) under section 162 or 212 for any traveling expense (including meals and lodging while away from home) . . . unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement (A) the amount of such expense or other item, (B) the time and place of the travel, entertainment, amusement, recreation, or use of the facility or property, or the date and description of the gift, (C) the business purpose of the expense or other item, and (D) the business relationship to the taxpayer of persons entertained, using the facility or property, or receiving the gift. The Secretary may by regulations provide that some or all of the requirements of the preceding sentence shall not apply in the case of an expense which does not exceed an amount prescribed pursuant to such regulations. . . .” BACK TO TEXT