Morrison-Knudsen Construction Co. v. Director, Office of Workers' Compensation Programs

*638Justice Marshall,

dissenting.

On April 19, 1974, James H. Hilyer was run over by a cement truck while working for petitioner Morrison-Knudsen Construction Co. The dispute in this case concerns the calculation of the level of death benefits that should be paid to his widow and their two children. The appropriate level of benefits depends on the meaning of the term “wages” under §2(13) of the Longshoremen’s and Harbor Workers’ Compensation Act, 33 U. S. C. §902(13). The Court of Appeals held that “wages” include employer contributions to union trust funds for health and welfare, pensions, and training.1 Because I agree with the lower court, I respectfully dissent.

I

Legislative enactments framed in general terms and designed for prospective operation should be construed to apply to subjects falling within their general purview even though coming into existence after their passage. As this Court has recognized:

“Old laws apply to changed situations. The reach of [an] act is not sustained or opposed by the fact that it is sought to bring new situations under its terms. While a statute speaks from its enactment, even a criminal statute embraces everything which subsequently falls within its scope.” Browder v. United States, 312 U. S. 335, 339-340 (1941).

In interpreting old enactments, we should focus on the purpose of the statute. “Legislative words are not inert, and derive vitality from the obvious purposes at which they are aimed . . . .” Griffiths v. Commissioner, 308 U. S. 355, 358 (1939). As Justice Holmes explained:

*639“The Legislature has the power to decide what the policy of the law shall be, and if it has intimated its will, however indirectly, that will should be recognized and obeyed. The major premise of the conclusion expressed in a statute, the change of policy that induces the enactment, may not be set out in terms, but it is not an adequate discharge of duty for the courts to say: We see what you are driving at, but you have not said it, and therefore we shall go on as before.” Johnson v. United States, 163 F. 30, 32 (1908) (Circuit Justice), quoted in United States v. Hutcheson, 312 U. S. 219, 235 (1941).2

In this case, Congress enacted the pertinent statutory language in 1927. “Wages” were defined as “the money rate at which the service ... is recompensed under the contract of hiring in force at the time of the injury, including the reasonable value of board, rent, housing, lodging, or similar advantage received from the employer.” Act of Mar. 4, 1927, §2(13), 44 Stat. (part 2) 1425. The question presented is whether payments made by an employer to union trust funds for the benefit of employees, pursuant to a collective-bargaining agreement, should be deemed “wages” under the Act. As the majority notes, when the Act became law in 1927, employer-funded fringe benefits were “virtually unknown.” Ante, at 632. Since Congress therefore did not address the matter directly, we must interpret the words of the statute *640so as to carry out the congressional purpose underlying the Act.

The 1927 Longshoremen’s Act was a direct response to decisions of this Court which limited the authority of the States to apply their workers’ compensation laws to injured maritime workers. See Southern Pacific Co. v. Jensen, 244 U. S. 205 (1917); Knickerbocker Ice Co. v. Stewart, 253 U. S. 149 (1920); Washington v. W. C. Dawson & Co., 264 U. S. 219 (1924). In order to fill the void created by those decisions, Congress adopted a federal compensation scheme patterned after existing state workers’ compensation laws. S. Rep. No. 973, 69th Cong., 1st Sess., 16 (1926); H. R. Rep. No. 1767, 69th Cong., 2d Sess., 20 (1927). In particular, the 1927 Act was derived from the New York State workers’ compensation law, which was deemed one of the most progressive in the country. See ibid.; H. R. Rep. No. 1190, 69th Cong., 1st Sess., 2 (1926). The definition of “wages” incorporated in the 1927 Act was lifted almost verbatim from the New York statute. Compare 33 U. S. C. § 902(13) with N. Y. Work. Comp. Law § 201.12 (McKinney 1965).

When Congress acted, the recognized aim of the New York workers’ compensation scheme was to compensate for “the loss of earning power incurred in the common enterprise, irrespective of the question of negligence.” New York Central R. Co. v. White, 243 U. S. 188, 204 (1917) (emphasis added). In describing the New York law on which the federal scheme was modeled, the New York Court of Appeals had stated: “[Compensation awarded the employee is not such as is recoverable under the rules of damages applicable in actions founded upon negligence. It is based on loss of earning power . . . .” Winfield v. New York C. & H. R. R. Co., 216 N. Y. 284, 289, 110 N. E. 614, 616 (1915) (emphasis added). Accord, Marhoffer v. Marhoffer, 220 N. Y. 543, 547, 116 N. E. 379, 380 (1917) (“The award is to compensate for loss of earning power”). The Longshoremen’s Act, like the New York law, thus focused on an employee’s loss of earning ca*641pacity as a result of an occupational injury. See Act of Mar. 4, 1927, §§8(c)(21), (e), §§ 10(c), (d), 44 Stat. (part 2) 1428, 1429, 1431; Vogler v. Ontario Knife Co., 223 App. Div. 550, 229 N. Y. S. 5 (1928); Berenowski v. Anchor Window Cleaning Co., 221 App. Div. 155, 223 N. Y. S. 73 (1927).

Viewed against this background, the term “wages” as used in the 1927 Act should encompass employer-funded benefits because those benefits indisputably represent a portion of the employee’s earning power. Union members with various benefits that they have collectively bargained for clearly have a greater earning capacity than employees with equal take-home pay but without such benefits. For the purposes of determining a worker’s earning power, there is no principled distinction between direct cash payments and payments into a plan that provides benefits to the employee. If the employer had agreed to pay some fixed amount of money to its employees who, in turn, paid the amount into benefit funds, that amount would satisfy the majority’s definition of wages since the benefit has “a present value that can be readily converted into a cash equivalent on the basis of [its] market valu[e].” Ante, at 630. In my view, the result should not change simply because the company agrees to eliminate an unnecessary transaction by paying the contributions directly to the trust funds. Employees may bargain to receive their compensation strictly, in cash payments or may arrange to forgo a portion of those payments in exchange for certain fringe benefits. There is no reasoned basis for concluding that the employee’s earning power should differ depending on which arrangement is chosen.

Fringe benefits now constitute over 15% of employers’ compensation costs, and they could easily constitute more than one-third of labor costs by the middle of the next century. See ante, at 636. Such benefits are provided in exchange for labor and as a result of bargained agreements. In 1927, Congress explicitly included within the meaning of “wages” the reasonable value of “board, rent, housing, [and] *642lodging.” At the time, these items were the known noncash components of an employee’s earning power. In terms of a modern employee’s earning power, fringe benefits are functionally equivalent and should be treated in the same manner.3

II

The majority’s initial objection to including employee benefits within the meaning of “wages” involves the problem of valuation. In this case, the employer’s contributions to the funds under the terms of the collective-bargaining agreement are readily identifiable: they amount to 68$ per hour per employee. Yet the majority rejects such a measure, asserting that the employer’s cost is “irrelevant in this context.” Ante, at 630. I disagree. In my view, it is better to be roughly right than totally wrong. The trust funds obviously have some value for employees and simply to exclude them from consideration is hardly an appropriate response to uncertainty about their precise value. In addition, the statute itself calls only for inclusion of “the reasonable value” of non-cash items, 33 U. S. C. § 902(13) (emphasis added). While *643an employer’s contribution may understate the true value of the benefits received under the collective-bargaining agreement,4 it nonetheless provides a readily identifiable and therefore reasonable surrogate for the “advantage” received. An employer’s contribution to a trust fund has long been accepted as a reasonable measure of the value of fringe benefits when such benefits are expressly included in a statutory definition of wages. See, e. g., the Davis-Bacon Act, 40 U. S. C. § 276a et seq.

The majority also relies heavily on Congress’ “failure to amend” the Longshoremen’s Act to provide specifically that fringe benefits constitute wages. Ante, at 633. Inferring Congress’ intent from legislative silence is never an easy task. Such inferences are reasonable only under special circumstances, such as where a well-established agency or judicial statutory construction has been brought to the attention of the Congress, and the Legislature has not sought to alter that interpretation although it has amended the statute in other respects. United States v. Rutherford, 442 U. S. 544, 554, n. 10 (1979). In this case, there is no evidence that the administrative construction of the term “wages” has been brought to Congress’ attention. Similarly, until the decision below, the term “wages” in the Longshoremen’s Act had never been judicially defined to include or exclude fringe benefits. And the majority apparently concedes that Congress did not even consider the fringe benefit issue during its consideration of the 1972 Amendments to the Longshoremen’s Act. See ante, at 632.

*644The majority emphasizes that “Congress has acted on several occasions to include fringe benefits in other statutory schemes.” Ibid, (emphasis added). The Court points to the Davis-Bacon Act, which historically contained no definition of the terms “wages,”5 but which was amended in 1964 to provide a definition of the term that included fringe benefits. See ante, at 632-633. The majority then states that in light of Congress’ willingness to amend some legislation but not the Longshoremen’s Act, “we can only conclude that Congress did not intend this expanded definition of ‘wages.’” Ante, at 633. However, the term “wage” or “wages” is used in over 1,200 separate subsections of the United States Code. That Congress has revised the meaning of the term in a few of these provisions hardly controls the meaning of the term in the vast number of other subsections. The notion that Congress has systematically examined existing legislation and amended definitional sections wherever appropriate is sheer fiction.

The majority also points to the “consistent” practices of the agencies charged with interpreting the Act. Ante, at 635. The force of this argument is diminished in this case by at least two considerations. First, fringe benefits have only recently begun to represent an appreciable portion of wages. It is for this reason that the meaning of the term “wages” has become a serious administrative issue only in the past few years. For example, the first decision of the Benefits Review Board that addressed the issue of fringe benefits was rendered only six years ago. See Collins v. Todd Shipyards Corp., 5 BRBS 334 (1977). This case therefore does not present a situation where an agency’s longstanding interpretation of a statute deserves “great weight,” cf. NLRB v. Bell Aerospace Co., 416 U. S. 267, 275 (1974), and it certainly does not involve a contemporaneous construction of a statute, cf. E. I. du Pont de Nemours & Co. v. Collins, 432 U. S. 46, *64555 (1977). Second, in this very case, the Director of the Office of Workers’ Compensation submitted a lengthy brief in the Court of Appeals contending that the Benefits Review Board had “clearly erred” when it excluded the employer’s contributions to the union trust funds in computing the decedent’s wages. Brief for Petitioner in No. 80-1504 (CADC), p. 9. The Director has now switched sides. Of course, agencies often make mistakes and disavow prior positions, but a call for deference to administrative expertise under these circumstances has a rather hollow ring.

Finally, the majority contends that a change in the manner of calculating wages could “drastically” undermine the goal of prompt compensation of injured workers and their survivors. Ante, at 637.6 This concern is unfounded. As we have previously noted, the Longshoremen’s Act “requires the employer to begin making the payments called for by the Act within 14 days after receiving notice of injury without awaiting resolution of the compensation claim and permits withholding of payments only to the extent of any dispute.” Intercounty Construction Corp. v. Walter, 422 U. S. 1, 4, n. 4 (1975), citing § 14 of the Act, 33 U. S. C. §914. Nor would compensation for employer-funded benefits lead to increased litigation under the Act. As long as fringe benefits are valued at some reasonable amount, the marginal increase in compensation to be gained by challenging the calculation of “wages” will almost certainly be small enough not to warrant resort to the administrative process. In any event, as the *646majority recognizes, such employer contributions are already included within a whole host of statutes, ante, at 632-633, and n. 9, yet there is no evidence to suggest that those provisions are administratively cumbersome.7

Notably, the Davis-Bacon Act, which covers virtually all construction projects to which the United States or the District of Columbia is a party, applied to the very project on which Mr. Hilyer was working at the time of his death. That Act requires, inter alia, that all contractors and subcontractors make payments in accordance with prevailing wage determinations made by the Secretary of Labor, and requires contractors to post a scale of wages at the site of work. 40 U. S. C. §276a(a). All wage determinations must include fringe benefits, §276a(b), and the statute has been administered smoothly in this fashion for nearly 20 years. Thus, in this case, an accepted measure of the deceased’s wages— including employer contributions — was readily available.

hH KH

Shortly after the Longshoremen’s Act became law, this Court stressed that it “should be construed liberally in furtherance of [its] purpose . . . and, if possible, so as to avoid incongruous or harsh results.” Baltimore & Philadelphia Steamboat Co. v. Norton, 284 U. S. 408, 414 (1932). In my *647view, it would be incongruous to allow an employee’s fringe benefits to rise without any corresponding protection in the event of injury or death, and harsh simply to ignore part of an employee’s earning power when calculating benefits for his survivors. Because the majority’s narrow construction of the term “wages” is fundamentally at odds with Congress’ purpose in enacting the compensation scheme, I dissent.

Hilyer v. Morrison-Knudsen Construction Co., 216 U. S. App. D. C. 50, 670 F. 2d 208 (1981). The only other Court of Appeals to address this question has reached the same conclusion. Duncanson-Harrelson Co. v. Director, OWCP, 686 F. 2d 1336 (CA9 1982).

For example, a statute enacted in 1880 before the invention of the automobile might well have applied to “carriages.” Suppose that the statute requires all “carriages” to come to a stop before entering a crosswalk near a schoolyard. If the statutory purpose is to assure safety, a court should apply the statute to automobiles. On the other hand, suppose the statute provides that no “carriage” above a certain weight shall be used on a public road unless it is being drawn by at least two horses. If the statutory purpose is to assure that horses are not subject to too great a strain, it obviously follows that the law should not be applied to automobiles. The language of the enactment must be interpreted in light of its purposes. See 2 H. Hart & A. Sacks, The Legal Process: Basic Problems in the Making and Application of Law 1214-1215 (Tent. ed. 1958).

The majority suggests that the standard of living of an injured worker’s family might not decline in the event that the worker is fatally injured. “[U]pon the death of the worker, disability, pension, and training benefits have no relevance.” Ante, at 637, n. 14. Of course, deceased workers also have no need for employer-provided room nr board, but the reasonable value of such benefits is nonetheless included in the calculation of the employee’s wages under the Longshoremen’s Act. Indeed, none of the normal living expenses that must be provided from the worker’s take-home pay continue to be required after a worker dies. This is obviously no reason for ignoring such pay in the calculation of wages. The point here is that all of these elements constitute the basis for the employee’s earning power at the time of injury, and for that reason all of these elements should be included in the calculation of “wages.” (It should also be remembered that survivors of a deceased employee may receive no more than two-thirds of the employee’s “wages,” 33 U. S. C. § 909(b), so there is little danger that their standard of living will improve significantly.)

See ante, at 629, 630-631. Of course, this problem already arises with respect to benefits explicitly included under the Act such as “board.” For example, an employer may contribute to a fund that provides free meals to its employees. If only because of economies of scale associated with feeding large numbers of employees, the employer’s contribution would undoubtedly be less than the price required for employees individually to purchase similar meals on the open market.

See Act of Mar. 3, 1931, ch. 411, § 1, 46 Stat. 1494; Act of Aug. 30, 1935, 49 Stat. 1011; Act of June 15, 1940, ch. 373, § 1, 54 Stat. 399; Act of July 12, 1960, §26, 74 Stat. 418.

The majority hints at problems that would be caused by including in the calculation of wages “the costs of Christmas parties, company outings, or gold watches.” Ante, at 634, n. 11. The simple answer is that the statute’s express reference to recompense “under the contract of hiring” in force at the time of the injury, 33 U. S. C. § 902(13), suggests that the collective-bargaining agreement would provide a simple guide as to which fringe benefits to include in the calculation of wages. In any event, the Secretary of Labor has expressed no problems in calculating wages under those statutes which do require inclusion of fringe benefits.

Inclusion of fringe benefits in the compensation calculations has proved quite feasible in such diverse contexts as the Federal Employees Compensation Act, see 5 U. S. C. § 8101(12); United States v. Crystal, 39 F. Supp. 220 (ND Ohio 1941), the Miller Act, see United States ex rel. Sherman v. Carter, 353 U. S. 210 (1957), and state workers’ compensation schemes, e. g., Hite v. Evart Products Co., 34 Mich. App. 247, 191 N. W. 2d 136 (1971). Even the existing calculation of wages under the Longshoremen’s Act requires valuation of overtime, Gray v. General Dynamics Corp., 5 BRBS 279 (1976), vacation pay, Baldwin v. General Dynamics Corp., 5 BRBS 579 (1977), meals furnished employees, see Harris v. Lambros, 61 App. D. C. 16, 56 F. 2d 488 (1932), and such exotic items as automobile parts, Carter v. General Elevator Co., 14 BRBS 90 (1981).