South Carolina Court Approves Workers’ Compensation Payments Based on an Oral Agreement

A recent decision by the Court of Appeals of South Carolina addressed the Workers’ Compensation payments granted on the basis of an oral employment contract between a father and his son. The son, who had been living in Minnesota, agreed to move back to South Carolina and work for his father’s company in exchange for $30,000 a year, a tank of gas per week, and an arrangement that allowed him to live rent-free in an house owned by his family members. While in the course of his employment, and within the scope of that employment, the son was injured. One question in the case concerned the calculation of the average weekly wage of the employee/son, since the workers’ compensation benefits granted to the son would be calculated on the basis of the amount of that average weekly wage.

In its decision, the Court of Appeals agreed with the Workers’ Compensation Commissioner and the Appellate Panel of South Carolina’s Workers’ Compensation Commission, both of whom had held that the fair rental value of the house specified in the oral contract should be included as part of the average weekly wage payable to the employee/son. According to the Court, the testimony presented at the Workers’ Compensation hearing showed that the rent-free living arrangement had been one of the terms of the oral contract.

The South Carolina Code includes in the definition of “average weekly wage” any “allowances” (or benefits) that are specified as part of an employment contract and are provided “in lieu of wages.” In other words, if an employee agrees to take a particular wage only if supplemented by a particular benefit, the value of that benefit would be considered part of the employee’s average weekly wage for the purposes of determining the amount of workers’ compensation payments.

In this case, the company and its insurance carrier argued that the rent-free living arrangement was merely a gift from the parents to the son; however, the employee was able to prove that the benefit had been a specified part of the oral contract.

The attorneys at Lee & Smith have handled Workers’ Compensation cases in both South and North Carolina. For a free consultation regarding your workers’ compensation case, please contact us by phone or email.

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