Failure to testify doesn't establish undocumented worker status

In Pennsylvania, a party cannot satisfy its burden of proof in a civil proceeding solely through reliance on the adverse party's failure to testify.

Case name: Cruz v. Kennett Square Specialties, 26 PAWCLR 60 (Pa. W.C.A.B. 2011).

Ruling: The Pennsylvania Workers' Compensation Appeals Board reversed the workers' compensation judge's finding that the claimant was an undocumented worker and the employer's suspension of indemnity benefits.

What it means: In Pennsylvania, a party cannot satisfy its burden of proof in a civil proceeding solely through reliance on the adverse party's failure to testify.

Summary: The board ruled that the WCJ's finding that the claimant was an undocumented worker was not supported by substantial competent evidence. The claimant filed a claim petition alleging a work-related injury to his lower back. The WCJ found that the claimant sustained a work-related lumbar strain, midline disk herniation, and right radiculopathy, and that he was not capable of returning to his preinjury job but could return to modified duty. The WCJ also drew an adverse inference from the claimant's refusal, on the advice of counsel, to answer questions regarding his citizenship or immigration status. The WCJ determined that the claimant was not a U.S. citizen and was not authorized to work in the U.S., and therefore, the employer was entitled to a suspension of indemnity benefits as of the date of the injury. The board reversed the WCJ's finding that the claimant was an undocumented worker and the suspension of indemnity benefits. The adverse inference alone was not sufficient evidence upon which to base the finding that the claimant was an undocumented worker.

The employer did not present any other evidence supporting this contention, and therefore, it had to show job availability or earning capacity to obtain a suspension of benefits.

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Failure to pay worker's benefits spells trouble for employer

An employer acts in bad faith when it knowingly or recklessly refuses to pay a claim without a reasonable basis, fraud, malice, oppression, or reckless disregard of the rights of a party.

Case name: Hernandez v. Dillards, Inc., No. 30,278 (N.M. Ct. App. 07/26/10, unpublished).

Ruling: In an unpublished opinion, the New Mexico Court of Appeals held that an employer acted in bad faith when it discontinued payments of a worker's benefits. The court increased the worker's benefits by 25 percent.

What it means: An employer acts in bad faith when it knowingly or recklessly refuses to pay a claim without a reasonable basis, fraud, malice, oppression, or reckless disregard of the rights of a party. When an employer knows a worker suffered from an aggravation of a preexisting injury due to a work-related incident and it refuses to pay benefits, the employer is acting in bad faith.

Summary: A dock worker fell while working and landed on his left side. He had a preexisting condition of severe osteoarthritis of his left hip. The fall aggravated this condition. The employer paid his medical bills and indemnity benefits for a period, but then ceased all payments. The worker filed an unfair claim practices and bad-faith claim against the employer. The New Mexico Court of Appeals held that the employer acted in bad faith, and it increased the worker's benefits by 25 percent.

Evidence showed that the employer was aware that the worker had been diagnosed with an aggravation of a preexisting condition as a result of his fall at work. The employer argued that the law requiring an employer to pay for the aggravation of a long-standing preexisting condition should be overturned. The court mentioned that it was bound by precedent. The court stated that the employer could have filed a claim to resolve the dispute while paying benefits under protest.

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Cosmetologist's failure to report tips for taxes slashes benefits

In Massachusetts, a worker's average weekly wage does not include tips that are not reported for tax purposes.
Case name: O'Connell's Case, No. 10-P-151 (Mass. App. Ct. 02/16/11).
Ruling: The Massachusetts Appeals Court held that a cosmetologist's average weekly wage did not include tips she received from customers that were not reported for tax purposes.
What it means: In Massachusetts, a worker's average weekly wage does not include tips that are not reported for tax purposes.
Summary: A cosmetologist injured her shoulder while working at a salon. She regularly received tips from customers averaging $45 per day. The cosmetologist did not report her tip income for tax purposes to either the IRS or the salon. However, the salon tallied up the tips each employee received each day and distributed the money accordingly. The salon discarded its informal tallies each day and kept no permanent record of each employee's tip income. The cosmetologist sought benefits. The salon's insurer acknowledged liability but contested the amount she was due. The Massachusetts Appeals Court held that the cosmetologist's average weekly wage should not include her tip wages.
The cosmetologist argued that the salon had actual knowledge of the amount she received in tips each day even though it chose to discard the information at the end of the day. The court said that to the extent the critical issue was the inability to set accurate insurance rates, the employer's access to the amount of tip income for each employee went part of the way to satisfy that concern. The court also said both the cosmetologist and the salon were trying "to have it both ways."
The court considered the legislative definition of wages in determining unemployment benefits since the workers' compensation laws do not directly address whether unreported tip income should be considered in setting benefits. For unemployment benefits, tip income is not considered unless the income was reported for taxes.
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