Last week, the Tennessee Workers' Compensation Appeals Board answered an issue of first impression about statutory construction and in particular whether an employer is entitled to the Social Security offset in Section 50-6-207(4)(A)(i) when applying it lowers an employee’s compensation rate below the “minimum weekly benefit” as defined by statute.

Jane Salem

The board concluded that the offset doesn’t apply in that circumstance.

In Williams v. Tennessee Farmers Cooperative Risk Management, Judy Williams, 63, was already receiving Social Security retirement benefits when she was injured at work. She alleged permanent total disability from the injury. Farmers Cooperative accepted the claim, and the authorized physician assigned a 5% impairment.

Afterward, the parties agreed that:

• Due to Williams’ age, the most she could receive in permanent disability is 260 weeks under the statute.
• Her average weekly wage was $150.79 and her compensation rate was $100.53, while the minimum weekly benefit for her date of injury was $144.
• If the Social Security offset applies, Farmers would be entitled to a weekly offset of 50% of her retirement benefits, or $115.73 per week. If applied, this offset would lower her weekly benefit to $28.27.

Given these calculations, the parties disagreed about whether Farmers was entitled to the offset. The company filed for partial summary judgment, asking the trial court to set the appropriate compensation rate — and, acknowledging that, if applied, her weekly benefit would be less than the statutory minimum compensation rate.

The trial court held that even though the statute gave an offset, the employer must pay the minimum weekly benefit. Farmers appealed.

In affirming the central holding of the case, the board harmonized several statutes.

Section 50-6-207(4)(A)(i) states that for disabilities "resulting from injuries that occur less than five (5) years before the date when the employee is eligible for full benefits in the Old Age Insurance Benefit Program … permanent total disability benefits are payable for a period of two hundred sixty (260) weeks. The compensation payments shall be reduced by the amount of any old-age insurance benefit payments attributable to employer contributions that the employee may receive” under the Social Security Act.

Farmers argued that the intent of the statute is to prevent a “windfall” to an employee by prohibiting her from contemporaneously receiving permanent disability benefits at her weekly compensation rate and the benefit of an employer’s contributions to her Social Security. Williams countered that the statutory definition of the minimum compensation rate, as well as the other provisions of the statute, meant Farmers had to pay the minimum weekly benefit, despite the offset.

The board pointed out that subdivisions of Section 50-6-207, which discuss temporary total disability, temporary partial disability and permanent total disability benefits, all mention the minimum weekly benefit.

For temporary total disability, an employee "shall receive not less than the minimum weekly benefit” and, "in no event "shall the compensation paid be less than the minimum weekly benefit.” For temporary partial disability, the statute says, “In no event shall the compensation be less than the minimum weekly benefit.” And for permanent total disability, the employee "shall receive not less than the minimum weekly benefit,” and in no event "shall the compensation paid be less than the minimum weekly benefit.”

The board concluded that when considering the statute overall, “[T]he legislature repeatedly stated that ‘in no event’ should the compensation paid for disability, whether temporary or permanent, be less than the minimum weekly benefit. Yet, we must also consider that most cases in which appellate courts have discussed the calculation of compensation rates are pre-reform, and the courts often emphasized the remedial nature of the statutes at issue.”

With all that in mind, the board reasoned that when drafting the Reform Act, lawmakers didn’t change the language regarding either the Social Security offset or the minimum weekly benefit. The board also found no legislative intent to subject employers to the requirements of the minimum weekly benefit in every case, except for cases where the offset applies.

The board wrote, “[W]e conclude that the language ‘in no event shall the compensation paid be less than the minimum weekly benefit’ is inclusive of those circumstances in which an employer can claim the benefit of a Social Security offset. To accept employer’s interpretation of the statutes would result in certain employees being deprived of some or all permanent disability benefits despite the Workers’ Compensation Law’s admonition that in no event shall an employer pay less than the minimum weekly benefit.

“In sum, we find no support in the statute or binding precedent for employer’s argument that permanent disability benefits can be decreased by the Social Security offset to the extent that the payments would be less than the minimum weekly benefit.”

In a footnote, the board pointed out that Farmers would’ve received a “significant windfall,” since Williams was already receiving Social Security at the time she began working for it, and she worked for only 24 weeks before her injury.

“Thus, this employer made little to no contribution to employee’s Social Security retirement,” it wrote. Moreover, “As noted by the trial court, employer’s interpretation would also lead to scenarios in which an employee could be permanently totally disabled from an injury yet receive no workers’ compensation disability benefits if that benefit were erased by the Social Security offset.”

The opinion answered an important legal question for the first time.

Looking at the bigger picture, the opinion is good news for older workers, as more people are working into their senior years. For example, a December 2023 article from the nonpartisan Pew Research Center found that in the United States, “Numbering roughly 11 million today, the older workforce has nearly quadrupled in size since the mid-1980s.” Further, “Some 19% of adults ages 65 and older are employed today.”

Jane Salem is a staff attorney in the Tennessee Court of Workers' Compensation Claims, Nashville. This entry is republished with permission from the court's blog.