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Solakis v. Roberts

Supreme Court of Michigan
Sep 8, 1975
395 Mich. 13 (Mich. 1975)


In Solakis v Roberts, 395 Mich. 13, 20; 233 N.W.2d 1 (1975), we said that when `an employee's injury is within the scope of the act, workmen's compensation benefits are the exclusive remedy against the employer.

Summary of this case from Sewell v. Clearing Machine Corp.


Docket Nos. 56374, 56375, 56388.

Argued May 7, 1975 (Calendar Nos. 8, 9).

Decided September 8, 1975.

Garvey, Kreis Silverman, P.C., for plaintiff Solakis.

James, Dark Craig (by Richard J. Craig), for defendants Charles D. Roberts and Michigan Mutual Liability Company.

Cholette, Perkins Buchanan (by Edward D. Wells and Kenneth L. Block), for defendants Miller Lumber Company and American Mutual Liability Company.

Early, Starbuck Lennon (by John T. Peters, Jr.), for defendants Miller Lumber Company and Employers Mutual of Wausau. Kelman, Loria, Downing, Schneider Simpson (by Robert W. Howes), for plaintiff White.

Conklin, Benham, McLeod, Ducey Ottaway, P.C. (by Thomas P. Chuhran), for defendant Estan Manufacturing Company.

These cases were consolidated to consider the common issue of whether the rate of interest on workmen's compensation awards is 5% or 6% per annum. The question has created a split in the Court of Appeals panels. We find that the Legislature has provided for 5% interest.

See, also, Gilbert v Reynolds Metals Co, 59 Mich. App. 62, 69-70; 228 N.W.2d 542 (1975) (5% interest); Morris v Baker Auto Parts, 57 Mich. App. 65; 225 N.W.2d 179 (1974) (6% interest); Miller v Midwest Foundry Corp, 57 Mich. App. 761; 226 N.W.2d 721 (1975) (6% interest); Gibbs v Keebler Co, 56 Mich. App. 690; 224 N.W.2d 698 (1974) (6% interest).

In the two most recent decisions, Johnson v Muskegon, 61 Mich. App. 121; 232 N.W.2d 325 (released May 27, 1975) and Holdren v Lease Management, Inc, 61 Mich. App. 508; 233 N.W.2d 59 (released May 30, 1975), the Court of Appeals allowed interest at the rate of 5%, holding 1% in abeyance pending decision in this Court.

Additionally, plaintiff White confronts the Court with the question of whether he is entitled to workmen's compensation based upon his $1.25 per hour wage received from Extra Labor Power of America (ELP) (a labor broker) or upon the $1.95 per hour received by ELP from Estan Manufacturing Company for plaintiff's wage plus ELP's services.


The Workmen's Compensation Appeal Board (WCAB) found 6% interest applicable to plaintiff's award. The Court of Appeals remanded and ordered modification of the award of benefits to provide for interest of 5% per annum from the due date. It further ordered payment of the additional 1% interest held in abeyance pending further decision.


WCAB provided for 5% interest per annum upon plaintiff's award. The Court of Appeals affirmed.

The White matter raises an additional meritorious question growing out of plaintiff's employment by a "temporary help" or "manpower" labor agency. Through the efforts of ELP, defendant worked for Estan Manufacturing Company. He would report each morning to ELP. From there he would be transported by the agency to work and then back to the agency after work. The hours worked would be noted by Estan each day on a time sheet and the sheet would be presented to ELP. Plaintiff was paid by the agency each day at the hourly rate of $1.25 for his day's work (time and a half for overtime). Estan paid ELP at the rate of $1.95 per hour, the difference being used by ELP for its operational costs, including workmen's compensation premiums to its carrier and for its profits. Estan could terminate plaintiff's services by notifying ELP and controlled the work performed during the day. ELP held the right to hire and fire plaintiff at any time.

While he was engaged in work at Estan, three fingers of plaintiff's left hand were amputated (December 21, 1965). Plaintiff sought workmen's compensation benefits and on June 7, 1971, the hearing referee found plaintiff disabled and awarded compensation on the basis of $1.25 per hour. Liability was assigned to ELP and its carrier, defendant Employers Mutual Casualty Company. WCAB affirmed. Plaintiff appealed, claiming that recovery should be based upon $1.95 per hour instead of $1.25. ELP also sought leave, claiming that Estan should be co-liable for payment of the benefits. The Court of Appeals affirmed the WCAB, but remanded for determination of plaintiff's wages paid by ELP.


Until Wilson v Doehler — Jarvis Division of National Lead Co, 358 Mich. 510; 100 N.W.2d 226 (1960), interest had not been allowed on workmen's compensation awards. Wilson overruled Fowler v Muskegon County, 340 Mich. 522; 65 N.W.2d 801 (1954), which had held that because interest in Michigan was purely statutory and there was no interest provision in the workmen's compensation law, interest could not be awarded.

In Wilson, the Court found that although interest is purely statutory, interest could be allowed in cases where no express statute could be invoked. The Court looked to other jurisdictions and found that the right to an award arose out of the contractual relationship between employers and employees. The Court stated in 358 Mich. 518-519; 100 N.W.2d 230:

"In discussing the principle involved in the leading case of Bourdeaux v Gilbert Motor Co, 220 Minn. 538, 541 ( 20 N.W.2d 393, 394) [1945], the court said:

"`The sole question raised in that case (Brown v City of Pipestone) [ 186 Minn. 540; 245 N.W. 145 (1932)] was * * * "whether or not unpaid installments of compensation bear interest at the legal rate from the date when under the provisions of the compensation act they should have been paid." We there held: "* * * Compensation in this State is a liability arising out of the contract of employment, and the compensation act becomes a part of every contract of employment." We there further stated: "Here was a contract debt due at the times when the compensation installments should have been paid under the provisions of the act, and we see no reason why it should not, like any other debt, bear interest at the legal rate when it is subsequently decided that the debt existed."'"

In Wilson, the Court also relied on Parker v Brinson Construction Co, 78 So.2d 873 (Fla, 1955), wherein the Florida Court also applied a contract theory to determine the rate of interest on workmen's compensation awards.

As was properly stated in Wilson, it has long been established that the question of interest in Michigan is purely statutory.

Kermott v Ayer, 11 Mich. 181, 184 (1863); Mitchell v Reolds Farms Co, 268 Mich. 301, 311; 265 N.W. 445 (1934).

Having determined that the right to an award in workmen's compensation was contractual, the Wilson Court found 1948 CL 438.7; MSA 19.4 applicable. Since interest was allowable, the rate was fixed at 5% by virtue of the provisions of 1948 CL 438.51; MSA 19.11, now MCLA 438.31; MSA 19.15(1), which provides in pertinent part:

"The interest of money shall be at the rate of $5.00 upon $100.00 for a year, and the same rate for a greater or less sum, and for a longer or shorter time, except that in all cases it shall be lawful for parties to stipulate in writing for the payment of any rate of interest, not exceeding 7% per annum."

The 5% interest rate was uniformly applied until the WCAB decision in Maxwell v General Motors Corp, Fleetwood Division, 1973 WCABO 1075. In Maxwell, decided April 30, 1973, the WCAB began to order that 6% interest be paid on such awards. In so ordering, the WCAB relied on MCLA 600.6013; MSA 27A.6013 as amended by 1972 PA 135, with an effective date of March 30, 1973, which provides in pertinent part:

"Interest shall be allowed on any money judgment recovered in a civil action, such interest to be calculated from the date of filing the complaint at the rate of 6% per year unless the judgment is rendered on a written instrument having a higher rate of interest * * *."

After Maxwell, the Court of Appeals split, with some panels following Wilson, supra, and applying a 5% rate of interest and some following Morris, supra, and allowing 6% interest.

We wish to restate our position in Wilson and, therefore, we affirm those Court of Appeals decisions applying the 5% rate of interest.

When an employee's injury is within the scope of the act, workmen's compensation benefits are the exclusive remedy against the employer. MCLA 418.131; MSA 17.237(131); Ladner v Vander Band, 376 Mich. 321, 325; 136 N.W.2d 916 (1965).

In Tews v CF Hanks Coal Co, 267 Mich. 466, 468-469; 255 NW 227, 228 (1934), this Court stated:

Also, see Wagner v LaSalle Foundry Co, 345 Mich. 185, 195; 75 N.W.2d 866, 871-872 (1956).

"The compensation act is in derogation of the common law and, therefore, its measure of relief may not be extended beyond its express terms; it is a legislative creation permitting no enlargement by principles of equity or common-law adaptations. It is arbitrary and where it speaks nothing can be added nor changed by judicial pronouncement. It imposes liability upon operatives under its provisions and measures exclusive relief in its own terms."

Thus, it was not by happenstance that this Court in Wilson grounded the interest recovery concept on a contract theory. Because interest in Michigan is statutory, plaintiffs' arguments sounding in equity are to no avail.

In Siebert v Northport Point Cottage Owners' Assn, 378 Mich. 661, 680; 148 N.W.2d 790, 799 (1967), Justice KELLY wrote in a well reasoned dissent:

"Appellee refers to the revised judicature act of 1961, and particularly to section 2921 of Chapter 29 and section 151 of chapter 1 thereof.

"The revised judicature act does not apply to workmen's compensation as is evidenced by the title of the act, which reads in part:

"`An act to revise and consolidate the statutes relating to the organization and jurisdiction of the courts; * * * the forms and attributes of civil claims and actions; the time within which civil actions and proceedings may be brought in said courts.'

"The words upon which appellee relies in regard to `judicial power,' which he claims include `any other agencies,' were eliminated by the 1963 legislature by the enactment of PA 1963 (2d Ex Sess), No 18."

Footnotes 4 and 5 at 378 Mich. 661, 680 state:
"`The judicial power is vested in a single court system consisting of the supreme court, circuit courts, probate courts, justices of the peace, superior court, municipal courts, common pleas courts, recorder's courts, circuit court commissioners, and any other agencies created by the legislature which exercise judicial power.' CLS 1961, § 600.151 (Stat Ann 1962 Rev § 27A.151)."
"`The judicial power of the state is vested exclusively in 1 court of justice which shall be divided into 1 supreme court, 1 court of appeals, 1 trial court of general jurisdiction known as the circuit court, 1 probate court and courts of limited jurisdiction created by the legislature.' CLS 1961, § 600.151, as amended by PA 1963 (2d Ex Sess), No 18 (Stat Ann 1965 Cum Supp § 27A.151)."

Additionally, this Court has often stated that WCAB is not a "court" and "is not possessed of judicial power". Modeen v Consumers Power Co, 384 Mich. 354, 360; 184 N.W.2d 197, 200 (1971).

In summary, the unilateral action of WCAB in Maxwell attempting to apply the interest rate of 6% found in MCLA 600.6013 was beyond the scope of the powers delegated to that body. This Court's decision in Wilson trod the fine line separating the legislative and judicial branches of government.

As this and other jurisdictions have noted, the contract theory is a sound basis upon which to ground the interest on workmen's compensation awards. The concept of a money judgment is totally alien to the policy and philosophy of the workmen's compensation law.

Until the legal interest rate is changed (MCLA 438.31) or the Legislature provides what they have heretofore failed to provide, the interest on workmen's compensation award must remain at 5%.

We affirm the Court of Appeals as to this issue.


At the hearings before the referee, the plaintiff testified that during the first six weeks of employment he worked ten hours per day and six days per week and that during the final five weeks, he worked eight hours per day and six days per week.

The referee found plaintiff's average weekly wage to be $60 computed at the rate of $1.25 per hour and fixed his compensation at $40 per week. WCAB affirmed the findings of the hearing referee.

MCLA 418.361; MSA 17.237(361).

The Court of Appeals maintained that the plaintiff's testimony was not borne out by the records of ELP. It must be noted that the records of ELP were never admitted into evidence. There was nothing to refute the plaintiff's testimony in the record.

We have not previously spoken to the question of whether the plaintiff's compensation should be determined by reference to the actual monies paid to him by the employment service, or by reference to the amount paid by the company to the employment firm.

The applicable statute, MCLA 418.371; MSA 17.237(371), provides:

"(1) The weekly loss in wages referred to in this act shall consist of such percentage of the average weekly earnings of the injured employee computed according to the provisions of this section as shall fairly represent the proportionate extent of the impairment of his earning capacity in the employment in which he was working at the time of the injury, the same to be fixed as of the time of the injury, but to be determined in view of the nature and extent of the injury. The compensation payable, when added to his wage earning capacity after the injury in the same or another employment, shall not exceed his average weekly earnings at the time of such injury.

"(2) Average weekly wage means the weekly wage earned by the employee at the time of his injury, inclusive of overtime, premium pay, and cost of living adjustment, and exclusive of any fringe or other benefits which continue during disability, but in no case less than 40 times his hourly rate of wage or earning. When it is found that the established normal work week for the employee's classification of employment in the establishment of the employer where the employee suffered a personal injury is less than 40 hours, then the average weekly wage shall be established by multiplying the employee's hourly rate or earning by the number of hours customarily worked in the employee's classification or employment in that place of employment or his actual earned wages, whichever is greater.

"(3) When a hearing referee finds that the employee was employed specifically and not temporarily on a part-time basis, the average weekly wage shall be determined by multiplying the hourly rate or earning by the average number of hours worked in the part-time employment. When it is found that the employee has worked an average of 25 hours or more per week in all of his current employments, he shall not be considered a part-time employee.

"(4) If the hourly earning of the employee cannot be ascertained, or if no pay has been designated for the work required, the wage, for the purpose of calculating compensation, shall be taken to be the usual wage for similar services where such services are rendered by paid employees.

"(5) Where there are special circumstances under which the weekly wage cannot justly be determined by applying the above provisions, an average weekly wage may be computed by dividing the aggregate earnings during the year prior to the injury by the number of days when work was performed and multiplying such daily wage by the number of working days customary in the employment, but not less than 5." (Emphasis added.)

The question becomes one of plaintiff's "earning capacity in the employment in which he was working".

The plaintiff argues that his "earning capacity" should be measured by what Estan was willing to pay to obtain his services ($1.95 per hour). The plaintiff maintains that this is what he would have received had he been hired directly by the company for that job as a regular employee. Plaintiff additionally argues that if the earnings cannot be clearly ascertained, the "usual wage for similar services", must be used.

MCLA 418.371(4).

Defendant Estan replies that plaintiff's "earning capacity" and "wages" are that which he was paid for the work he was doing ($1.25 per hour). The plaintiff's earning capacity must be ascertained from that which he was able to obtain for his services, and not that which someone else was willing to pay to obtain them. Defendant Estan submits that the difference between the $1.25 amount paid by ELP to plaintiff and the $1.95 paid by Estan to ELP was the result of a contract between the defendants. The difference reflected the costs and profit of ELP and was in no way a fringe benefit inuring to the plaintiff. The defendant maintains that the plaintiff's reliance on the "usual wage for similar services" standard is misplaced herein because this is not a situation where "the hourly earning of the employee cannot be ascertained".

ELP paid plaintiff's social security and workmen's compensation.

MCLA 418.371(4).

The plaintiff also maintains that ELP was engaged as his agent to find him employment. Thus, plaintiff asserts that the dollars received by ELP for acting as his agent should not be deducted from his average weekly wage.

The Court of Appeals was correct in applying the "economic reality" test to the instant case. Under the criteria espoused in the "economic reality" test, the plaintiff was an employee of both Estan and ELP and thus the principal-agent argument is inapplicable to the instant case.

See Goodchild v Erickson, 375 Mich. 289, 293; 134 N.W.2d 191 (1965). The factors to be employed are control of a worker's duties, payment of wages, the right to hire and fire, and the right to discipline.

Although there is a dual employment situation herein, we long have held that joint liability does not necessarily follow from a dual employer situation. Wing v Clark Equipment Co, 286 Mich. 343; 282 N.W. 170 (1938).

There it was held that because both employers paid wages to the injured employee, separate awards should issue. In the instant case, only ELP paid wages and therefore the ELP carrier is primarily liable.

As the Court of Appeals noted, the referee and the WCAB found that ELP should be exclusively liable for the payment of benefits.

In Allen v Kendall Hardware Mill Supply Co, 305 Mich. 163; 9 N.W.2d 45 (1943), a dual employer situation, the Court held that the determination of which employer should be liable to pay benefits was a question of fact. While Allen utilized the old "right to control test", this determination should also be a question of fact under the "economic reality" test. Because only ELP paid plaintiff's wages, there is support in the record for the factual finding, and that finding is conclusive and binding on this Court. Johnson v Vibradamp Corp, 381 Mich. 388; 162 N.W.2d 139 (1968); Hlady v Wolverine Bolt Co, 393 Mich. 368; 224 N.W.2d 856 (1975).

In plaintiff White, Estan obtained an employee whom it could and did supervise on its premises. Estan was relieved of almost all paperwork and costs incident to employment, including the payment of the employer's share of employment taxes. White was relieved of the obligations of a full-time employee. He also was relieved of expenditures (e.g., transportation) which may represent an economic gain to him.

ELP received $1.95 per hour on behalf of plaintiff White. From this sum, ELP paid White $1.25 per hour and its out-of-pocket expenses (for example, workmen's compensation insurance and employer's share of employment taxes) were deducted and the balance if any was its profit.

We find that ELP's profits should not be deducted from White's wage computation.

We remand to WCAB to determine that wage between $1.25 and $1.95 per hour which WCAB determines best to serve the objectives of the act, recognizing the wage paid part-time workers performing the same task, the economic gain to White of transportation provided by ELP, the economic gain accruing to White because of ELP's finding work for him and any other economic gains to him, the temporary nature of the employment, and ELP's out-of-pocket expenses.

Affirmed and remanded to WCAB for factual determination of plaintiff's average weekly earnings not inconsistent with this opinion.

T.G. KAVANAGH, C.J., and WILLIAMS, LEVIN, and J.W. FITZGERALD, JJ., concurred with M.S. COLEMAN, J.

SWAINSON and LINDEMER, JJ., took no part in the decision of this case.

Summaries of

Solakis v. Roberts

Supreme Court of Michigan
Sep 8, 1975
395 Mich. 13 (Mich. 1975)

In Solakis v Roberts, 395 Mich. 13, 20; 233 N.W.2d 1 (1975), we said that when `an employee's injury is within the scope of the act, workmen's compensation benefits are the exclusive remedy against the employer.

Summary of this case from Sewell v. Clearing Machine Corp.

In Solakis v Roberts, 395 Mich. 13, 20; 233 N.W.2d 1 (1975), we said that when "an employee's injury is within the scope of the act, workmen's compensation benefits are the exclusive remedy against the employer.

Summary of this case from Szydlowski v. General Motors

In Solakis, the Supreme Court stated that, because the right to an award of compensation is contractual, the board was not empowered to set a rate of interest which is different from that which was provided in MCL 438.51; MSA 19.11.

Summary of this case from Selk v. Detroit Plastic Products
Case details for

Solakis v. Roberts

Case Details


Court:Supreme Court of Michigan

Date published: Sep 8, 1975


395 Mich. 13 (Mich. 1975)
233 N.W.2d 1

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