March 01, 2013

Pension Payments Do Not Merit Section 8j Credit

March 01, 2013

Wood Dale Electric v.ll. Illinois Workers’ Compensation Commission No. 2013 Il. App. (1st) 113394WC

Richard Bilson was a journeyman electrician whose work-related injuries prevented him from returning to work in his trade.  Eventually, he took a part-time bus driver position ($12.50 per hour for 20 per week), which was substantially less than the $37.80 per hour he would have earned as an electrician.  When he testified, he stated that he had applied for pension retirement benefits which he was entitled to receive at age 62.

Wood Dale claimed a credit for Bilson’s pension benefits.  The Arbitrator awarded a weekly wage differential benefit based on lost earnings and denied Wood Dale’s claim for credit.  The Commission affirmed the Arbitrator with two exceptions.  First, Bilson’s wage loss benefits were modified to reflect the maximum rate that could be awarded.  Second, the Commission found that Wood Dale was entitled to a credit for any pension benefits that accrued during Bilson’s time working for Wood Dale.  Upon remand, the Arbitrator issued a Decision calculating Wood Dale’s pension credit at $432.00 per week.  The Commission affirmed this finding.

When the matter was heard in the Circuit Court, the court set aside that portion of the award granting Wood Dale credit and remanded the case to the Commission to determine as a factual matter the extent to which Bilson would be entitled to pension benefits.  Wood Dale appealed.

When the Appellate Court took up the case, it first ruled that the Circuit Court had no jurisdiction over Bilson’s pension benefits and vacated that portion of the Circuit Court’s order.  It then addressed the question of what credits Wood Dale was entitled tounder the Act, stating that “The right to credits, which operates as an exception to liability created under the Act, is narrowly construed.”  Wood Dale argued that Section 8(j)2 of the Act set forth a clear exception.

The Court noted that Section 8(j) contains three subparts, two of which did not apply to the case.  The portion of the Section which did apply provides as follows:

Nothing contained in this Act shall be construed to give the employer or the insurance carrier the right to credit for any benefits or payments received by the employee other than compensation payments provided by this Act, and where the employee receives payments other than compensation payments, whether it’s full or partial salary, group insurance benefits, bonuses, annuities, or any other payments, the employer or insurance carrier shall receive credit for such payments only to the extent of the compensation that would have been payable during the period covered by such payment. 

Bilson argued that the above language excluded pension payments, emphasizing the words “[n]othing contained in the Act shall be construed to give” a credit.  Wood Dale argued that this interpretation of the Section limited credits which an employer “shall receive” for payments made.

The Court resolved the issue by referring to prior case law which had disallowed credit in instances where employees receiving full salary while off work due to accident or illness were entitled to such benefits irrespective of whether a workers’ compensation accident had occurred. Where an employer intends that its employees can collect both salary and workers’ compensation payments, no credit will be allowed for payment of salary.  Here, there was no dispute that the pension payments due Bilson were the result of his pension retirement benefits which were unrelated to the work injury.  Thus Bilson could collect his pension and wage loss benefits.

In addition to the credit issue, Wood Dale argued that Bilson should not be entitled to a wage differential under Section 8(d)1 because he voluntarily removed himself from the workforce by electing to retire.  The Court disagreed with this proposition, stating that in order to qualify for a wage differential, a claimant must prove (1) a partial incapacity that prevents him from pursuing his usual and customary line of employment, and (2) an impairment of earnings.  There was no dispute Bilson had suffered a diminution in earnings following the accident due to his inability to return to work as an electrician.  The evidence produced before the Commission was sufficient to show his efforts to find suitable post-accident employment.  Therefore, he was entitled to a wage differential award.  His voluntary decision to remove himself from the workforce did not preclude a wage differential award.


All claims for credit under the Act are narrowly construed.  This includes claims for credit for wages paid when an employee is off due to a work-related injury.  Although a retirement pension is clearly a benefit that would have been paid “irrespective” of the occurrence of a workers’ compensation accident, in the case of other benefits the result is not so clear.  Most observers would read the plain language of Section 8(j)2 and conclude that an employer should receive credit for payment of wages or other benefits, but this is not the case.  For this reason, all salary continuation programs should state explicitly that in cases of work-related accidents such benefits are being paid in lieu of temporary total disability benefits under the Act.  And employers should stand ready to provide assistance in proving the credit.

We also note the court’s summary holding that an injured worker can retire and still qualify for wage loss.  Again, pension benefits are paid irrespective of a work-related injury:  A worker who retires from his principle employment and finds other work has not effectively removed himself from the work force.