Court of Appeals Concludes that Inclusion of a Bonus in Rate Calculation is not Irrational, Illogical or Wholly Unjustified.
Over the years, the Pella Corporation (formerly Rolscreen) has paid yearly bonuses to its employees. Although the bonuses differed in amount each year and there was no absolute certainty that the bonuses would be paid each year, those bonuses have been paid every year, since at least the late 1980s. In Noel v. Rolscreen, 475 N.W.2d 666, 667 (Iowa App. 1991), the court affirmed the commissioner's conclusion that excluded the bonus from a claimant's gross earnings. Following that case, Pella repeatedly pointed to Noel as excluding their bonuses from consideration in determining gross weekly wages. The commissioner would sometimes include the bonus, sometimes not, and oftentimes, the cases would proceed to district court. This is precisely the situation in Pella Corp. v. Minar, No. 13-1616 (Iowa App. Aug. 13, 2014).
The court in Minar posited the issue as whether the agency's inclusion of the bonuses in gross earnings was "irrational, illogical, or wholly unjustified." The deputy had noted that the regularity of the payments demonstrated that the bonuses were not "irregular bonuses", which are excluded from consideration under section 85.61(3) of the Iowa Code. The commissioner affirmed, concluding that claimant's testimony that she had received these bonuses every year was unrebutted.
The district court concluded that the commissioner had listed logical reasons for concluding that the bonus was regular and that given this factual foundation, the commissioner's decision was governed by reason and was not devoid of logic. Citing Burton v. Hilltop Care Ctr., 813 N.W.2d 250, 266 (Iowa 2012). On review, the court of appeals indicated that the standard of review in Burton, which had also addressed issues of gross earnings, was that the agency had the task of finding the facts regarding gross earnings, and when applying the law to the facts, the agency's determination was only to be disturbed if it is irrational, illogical or wholly unjustifiable.
Pella contended the commissioner acted irrationally in including the bonus. The court of appeals held that Burton was the more recent decision on the gross earnings question and that the standard applied in Burton was the correct standard of review. The evidence in the record demonstrated that the bonuses were regular, and hence the commissioner's application of law to fact was not "irrational, illogical, or wholly unjustified." Pella also argued that because the bonus was not paid within the statutorily prescribed window for paying benefits, it could not be included. The court found that although the bonus was not paid until after the injury, it was not an anticipated bonus, but a vested bonus. Again, the court found the commissioner's decision was not irrational.
Because of the frequency with which this issue arises, it would not be surprising if an application for further review is filed with the Iowa Supreme Court. The case also raises the interesting issue of whether a bonus may be consider if it is not "vested" but is nonetheless regular. NOTE: An application for further review was filed and denied by the Supreme Court.
The court in Minar posited the issue as whether the agency's inclusion of the bonuses in gross earnings was "irrational, illogical, or wholly unjustified." The deputy had noted that the regularity of the payments demonstrated that the bonuses were not "irregular bonuses", which are excluded from consideration under section 85.61(3) of the Iowa Code. The commissioner affirmed, concluding that claimant's testimony that she had received these bonuses every year was unrebutted.
The district court concluded that the commissioner had listed logical reasons for concluding that the bonus was regular and that given this factual foundation, the commissioner's decision was governed by reason and was not devoid of logic. Citing Burton v. Hilltop Care Ctr., 813 N.W.2d 250, 266 (Iowa 2012). On review, the court of appeals indicated that the standard of review in Burton, which had also addressed issues of gross earnings, was that the agency had the task of finding the facts regarding gross earnings, and when applying the law to the facts, the agency's determination was only to be disturbed if it is irrational, illogical or wholly unjustifiable.
Pella contended the commissioner acted irrationally in including the bonus. The court of appeals held that Burton was the more recent decision on the gross earnings question and that the standard applied in Burton was the correct standard of review. The evidence in the record demonstrated that the bonuses were regular, and hence the commissioner's application of law to fact was not "irrational, illogical, or wholly unjustified." Pella also argued that because the bonus was not paid within the statutorily prescribed window for paying benefits, it could not be included. The court found that although the bonus was not paid until after the injury, it was not an anticipated bonus, but a vested bonus. Again, the court found the commissioner's decision was not irrational.
Because of the frequency with which this issue arises, it would not be surprising if an application for further review is filed with the Iowa Supreme Court. The case also raises the interesting issue of whether a bonus may be consider if it is not "vested" but is nonetheless regular. NOTE: An application for further review was filed and denied by the Supreme Court.
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