Employees such as truck drivers and flight attendants often receive per diem. Per diem is defined as:
…a specific amount of money that an organization gives an individual, typically an employee, per day to cover living expenses when travelling on the employer’s business. A per diem payment can cover part or all of the expenses incurred.
In the case of Swearingen v. Industrial Commission, the Appellate Court addressed for the first time whether travel expense reimbursement should be considered when calculating the average weekly wage.179 The court looked to numerous other jurisdictions, including Colorado, Nebraska, Montana, Kansas, New Mexico, Arizona, and Florida. The court found that the general rule that most jurisdictions have adopted is that payments designated as a reimbursement for travel expenses should be included when calculating an employee’s average weekly wage to the extent that such payments represent real economic gain rather than the actual reimbursement for actual travel expenses.
In the subsequent case of United Airlines, Inc. V. Illinois Workers’ Compensation Commission180, the court stated clearly that in general, amounts paid as reimbursement for travel expenses are not part of a claimant’s earnings the purpose of calculating her average weekly wage. The rationale behind this rule is that such payments merely reimburse the claimant for employment-related expenses that she would not otherwise incur, and , therefore, the claimant will not suffer any economic loss if she fails to receive such reimbursements once the employment ceases. In other words, the claimant’s entire per diem should be included only if she had no expenses.
In the Commission case of Kerri Russell v. United Airlines, Inc.,181 the Arbitrator was called upon to determine what aspects of the Petitioner’s pay were to be included in her earnings. The Arbitrator wrote:
It is clear that her regular salary, vacation pay, and sick time would be included in her regular earnings. In addition, there is no dispute between the parties that the taxable per diem and duty-free earnings should be included. The remaining pay components to be addressed include the non-taxable per diem, incentive pay and profit sharing.
Pursuant to the case of Swearingen v. Industrial Commission, the Court must look at whether the per diem constitutes a real economic gain in order to determine whether it is to be included in the Petitioner’s average weekly wage.
The Arbitrator found, and the Commission affirmed that Kerri Russel failed to provide enough information to have any portion of her per diem included in her average weekly wage in that she provided no evidence of her actual expenses. Therefore, it was impossible to determine what portion of the per diem constituted real economic gain.
How do you ensure that per diem is included in your average weekly wage?
Here is the best way I’ve found to get per diem included in average weekly wage. Every month, you must have a record of the amount of money you receive in per diem. This is best done by keeping a copy of your check stub that shows the per diem payment or keeping a copy of the separate per diem check. Next, you must keep detailed record of any expenses you pay using that per diem money, including receipts.
If you can demonstrate this type of record-keeping for a year, then any unspent per diem should be accepted as economic gain by the Commission and the courts. And if you don’t have any expenses at all, then the full per diem should be included in your average weekly wage as real economic gain.
If you have questions about calculating your average weekly wage, feel free to contact me for a free consultation.