Commonwealth Court Holds Expense Reimbursement Should Be Included in AWW

In T. Lennon, Dec', et al. v. WCAB (Epps Aviation, Inc.), the Claimant, an airplane pilot, received expense reimbursement for board and lodging from his employer. Claimant’s Counsel argued these amounts should be included in the average weekly wage calculation under Section 309(e) of the Act on the basis that they represent payments for board and lodging.

The WCJ denied the request to include reimbursed board and lodging expenses. The rule prior to this case was that board and lodging expenses are included in the average weekly wage only when a daily or weekly advance is paid to the claimant. These are reimbursements made under a nonaccountable plan and are therefore wages subject to withholding and employment taxes. Expense reimbursements paid to an employee under an accountable plan are exempt from withholding and employment taxes, and under the prior rule these were not included in the AWW.

The Board affirmed the WCJ’s decision, but the Commonwealth Court reversed. The Court stated according to the plain language of the statute, these amounts are includable in the average weekly wage. If there are policy considerations underlying the prior rule, the statute should except board and lodging reimbursement.