PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNIVERSAL MARITIME SERVICE
CORPORATION,
Petitioner,

v.
                                                                        No. 97-2129
BERNARD N. WRIGHT; DIRECTOR,
OFFICE OF WORKERS' COMPENSATION
PROGRAMS, UNITED STATES
DEPARTMENT OF LABOR,
Respondents.

On Petition for Review of an Order
of the Benefits Review Board.
(97-346, 97-346S)

Argued: January 28, 1998

Decided: August 19, 1998

Before LUTTIG and MICHAEL, Circuit Judges, and
GOODWIN, United States District Judge for the
Southern District of West Virginia, sitting by designation.

_________________________________________________________________

Affirmed in part, vacated in part, and remanded by published opinion.
Judge Michael wrote the opinion, in which Judge Luttig and Judge
Goodwin joined.

_________________________________________________________________

COUNSEL

ARGUED: Lawrence Philip Postol, SEYFARTH, SHAW, FAIR-
WEATHER & GERALDSON, Washington, D.C., for Petitioner.
Malcolm McLaurin Crosland, Jr., THE STEINBERG LAW FIRM,
L.L.P., Mount Pleasant, South Carolina, for Respondents.

_________________________________________________________________

OPINION

MICHAEL, Circuit Judge:

This workers' compensation case involves a dispute over the mean-
ing of "wages" as defined in § 2(13) of the Longshore and Harbor
Workers' Compensation Act, 33 U.S.C. §§ 901-950 (LHWCA or
Act). Universal Maritime Service Corporation (Universal Maritime)
petitions this court to review a decision of the Benefits Review Board
in which the Board interpreted "wages" to include vacation, holiday,
and container royalty payments received by employees under a col-
lective bargaining agreement. Universal Maritime contends that these
payments are "fringe benefits" that the Act specifically excludes from
the definition of "wages." Alternatively, the company argues that if
these payments are wages, then Bernard Wright's receipt of these
payments while he was disabled resulted in a (post-injury) wage-
earning capacity that reduces his compensation under the Act.
Because we conclude that (1) these payments are"wages" if they are
earned through actual work and (2) Wright's receipt of this pay did
not reflect his wage-earning capacity after his injury, we affirm the
Board in part. However, we vacate in part and remand because the
record is unclear as to whether vacation, holiday, and container roy-
alty payments should be included in Wright's (pre-injury) "average
weekly wages."

I.

A.

On April 17, 1995, Bernard Wright seriously injured a finger in the
course of his employment with Universal Maritime at the Port of
Charleston, South Carolina. Because his injury rendered him tempo-
rarily and totally disabled from April 17, 1995, through December 31,
1995, Universal Maritime paid him temporary, total disability com-
pensation. These payments, however, were based on an average

                    2
weekly wage that did not include Wright's historical earnings from
vacation, holiday, and container royalty payments. 1 Instead, they were
calculated from an average weekly wage of $591.34 that compensated
Wright only for the loss of his hourly wage rate.

Wright received the vacation, holiday, and container royalty pay-
ments pursuant to a collective bargaining agreement between the
South Carolina Stevedores Association (SCSA) and his local chapter
of the International Longshoremen's Association (ILA). This agree-
ment set the wage rates for covered employees and required that the
employers make monetary contributions into employee benefit funds
that provide for (1) vacation and holiday payments, (2) container roy-
alties, (3) pension and welfare benefits, and (4) Guaranteed Annual
Income payments. To explain these contract provisions in their proper
context, we begin with a discussion of pertinent aspects of the ship-
ping industry.

B.

In the shipping industry a stevedore is an entity that loads and
unloads cargo from merchant vessels at port.2 Stevedores usually are
_________________________________________________________________
1 In 1994, the year prior to his injury, Wright received $4,368.00 in
vacation and holiday payments and $14,259.11 in container royalty pay-
ments. In 1995 Wright's vacation and holiday pay remained the same,
while his earnings from container royalties increased to $16,240.14.
2 Our discussion of the shipping industry draws from a variety of
sources. See, e.g., Howlett v. Birkdale Shipping Co., 512 U.S. 92, 96
(1994); Jones & Laughlin Steel Corp. v. Pfeifer , 462 U.S. 523, 528
(1983); Federal Maritime Comm'n v. Pacific Maritime Ass'n, 435 U.S.
40, 46 n.9 (1978); Northeast Marine Terminal Co. v. Caputo, 432 U.S.
249, 254 n.4 (1977); Bay Ridge Operating Co. v. Aaron, 334 U.S. 446,
455 & n.9 (1948); Steamship Trade Ass'n v. Commissioner, 757 F.2d
1494, 1495-96 (4th Cir. 1985); Local 1814, Int'l Longshoremen's Ass'n
v. Waterfront Comm'n, 667 F.2d 267, 269-70 (2d Cir. 1981); United
States v. International Longshoremen's Ass'n, 460 F.2d 497, 499, 502-03
(4th Cir. 1972); id. at 504-06 (Boreman, J., concurring); Notice of
Request by ILWU-PMA Pension Plan, 63 Fed. Reg. 5573, 5575 (1998);
Longshoring and Marine Terminals, 59 Fed. Reg. 28,594, 28,630 (1994)
(proposed rules); Air Contaminants, 57 Fed. Reg. 26,002, 26,492 (1992)
(proposed rules); Notice of Request by STA-ILA Pension Plan, 53 Fed.
Reg. 40,805, 40,807 (1988); American Bar Association, The Developing
Labor Law 509, 1533 (Patrick Hardin ed., 3d ed. 1992).

                    3
independent companies that contract with shipowners to handle the
cargo, although shipowners occasionally act as their own stevedores.
Longshoremen, in turn, are persons hired by stevedoring concerns to
perform the actual loading and unloading of goods. Most longshore-
men are not permanent employees of any one stevedore or maritime
carrier. Instead, their employment is casual in nature and is usually
limited to the task of loading or unloading a specific ship that has
arrived at port. Once the ship's cargo has been loaded or unloaded,
the employment ends. Consequently, the work schedule of a long-
shoreman can be "highly variable and unpredictable, from day to day,
week to week, and season to season" since "[t]he amount of work
available depends on the number of ships in port and their length of
stay." Aaron, 344 U.S. at 455.

Longshoremen typically perform their duties in groups of twelve to
twenty workers known as longshoring "gangs." The gang operates as
a unit with longshoremen distributed between the ship and the pier to
allow for the uninterrupted transfer of cargo. Moreover, membership
in gangs often is fixed, which allows "permanent" gangs to become
more efficient from teamwork developed over time. 3

Because longshoremen do not have permanent employers, they tra-
ditionally have received job assignments though a union-organized
"hiring hall" system in which workers are referred to stevedores as
work becomes available. Under this system, longshoremen usually do
not receive piecemeal paychecks from each individual employer.
Instead, their wages are often (if not always) paid through an entity
that centralizes payroll accounts, collects wages from employers, and
issues a single, aggregate check to each employee.

This fluid employment relationship between longshoremen and
their employers also affects the process of labor negotiations.4 Union
_________________________________________________________________
3 Some ports, however, use a daily shapeup system in which stevedores
pick individual longshoremen from the "shape" to form gangs.
4 The Senate report accompanying the Maritime Labor Agreements Act
of 1980 describes the collective bargaining process in the longshoring
industry. See S. Rep. No. 96-854, at 3-4 (1980), reprinted in 1980
U.S.C.C.A.N. 2447, 2449-50. Compare also Hampton Roads Shipping
Ass'n v. International Longshoremen's Ass'n, 746 F.2d 1015, 1016-17
(4th Cir. 1984) (describing local and master collective bargaining agree-
ments); The Developing Labor Law, supra , at 509.

                    4
contracts in the industry are negotiated between the union and multi-
employer bargaining units which represent groups of stevedores, mar-
itime carriers, and marine terminal operators. Historically, contract
negotiation has involved a two-step process in which the ILA (repre-
senting longshoremen on the Atlantic and Gulf coasts) first negotiates
a master contract with a committee of regional stevedore and shipping
associations. Although the employers that are parties to the master
contract do not represent all stevedoring companies, carriers, and ter-
minals on the Atlantic and Gulf coasts, the agreement nevertheless
forms the basis for contract negotiations at each port between the
local association of employers and the local chapter of the ILA.

Since the late 1950s the most contentious disputes in these union-
employer negotiations on the Atlantic and Gulf coasts have centered
on the technological innovation of containerized cargo and its impact
on the longshoring industry.5 Prior to containerization,

          [c]argo arriving at the pier by truck was"transferred piece
          by piece from the truck's tailgate to the ship by longshore-
          men. . . . The longshoremen checked the cargo, sorted it,
          placed it on pallets and moved it by forklift to the side of
          the ship, and lifted it by means of a sling or hook into the
          ship's hold. The process was reversed for cargo taken off
          incoming ships."

ILA II, 473 U.S. at 64. Containerization, however, "profoundly trans-
formed this traditional pattern." Id.

            Containers are large metal boxes [ranging from 20 to 40 feet
            in length that are] designed to fit without adjustment into the
            holds of special ships and onto the chassis of special trucks
_________________________________________________________________
5 A series of Supreme Court and lower court decisions chronicles the
history of labor disputes spawned by containerization. See NLRB v. Inter-
national Longshoremen's Ass'n, 473 U.S. 61, 64-66 (1985) (ILA II);
NLRB v. International Longshoremen's Ass'n, 447 U.S. 490, 493-99
(1980) (ILA I); International Longshoremen's Ass'n, 266 N.L.R.B. 230,
243-47 (1983) (ILA) (providing history of containerization and labor
strife), enforcement denied sub nom. American Trucking Ass'ns v. NLRB,
734 F.2d 966 (4th Cir. 1984), aff'd sub nom. ILA II.

                    5
          and railroad cars. "Because cargo does not have to be han-
          dled and repacked as it moves from the warehouse by truck
          to the dock, into the vessel, then from the vessel to the dock
          and by truck or rail to its destination, the costs of handling
          are greatly reduced. . . . [Moreover], a container ship can be
          loaded or unloaded in a fraction of the time required for a
          conventional ship."

Id. at 64 n.1. Because containers can be stuffed (packed) and stripped
(unpacked) at locations away from the pier, cargo transported in con-
tainers can travel without intermediate handling. In addition, contain-
ers eliminate the need to load and unload cargo piece by piece. As a
result, containerization has "drastically reduced. . . [t]he amount of
work available for longshoremen." ILA I, 447 U.S. at 495. It is easy
to see why the 1957 arrival in the Port of New York of the first ocean-
going container ship set the stage for bitter labor disputes between the
ILA and maritime employers.

In 1959, when containerization was still in its infancy, the ILA
agreed to a master contract that recognized the right of stevedoring
concerns to handle any type of container in exchange for royalty pay-
ments that employers would make for all containers stuffed or
stripped by non-ILA labor away from the pier. This was but the first
container royalty negotiated by the union. The second royalty was
negotiated in the 1971 master contract following a strike along the
entire Atlantic and Gulf coasts that was triggered by issues relating
to containerization. The royalties, which apply only to containers that
pass intact over the piers, were a part of the larger collective bargain-
ing agreement that included the Rules on Containers. The Rules,
which were upheld in ILA II as a lawful work preservation agreement,
essentially provide that only ILA longshoremen (and the employees
of the cargo's beneficial owner) can stuff or strip containers within 50
miles of the port. Together, the Rules and the container royalties have
the effect of partially preserving the traditional role that longshore-
men have played in the loading and unloading of oceangoing mer-
chant vessels. In 1977 the ILA's master contract added a third
container royalty and reaffirmed the Rules on Containers.

C.

The local collective bargaining agreement between the ILA and
SCSA in this case is a product of this history. It specifies that a steve-

                     6
dore must give preference in employment to those permanent gangs
that regularly work for it and that a union-run hiring hall must provide
a system for employers to call in orders for gangs. Of course, the con-
tract also sets hourly wage rates for the various types of longshoring
work.

In addition to an hourly rate of pay, longshoremen are entitled to
vacation, holiday, and container royalty payments. The local contract
provides certain workers with sixteen days of holiday pay and up to
six weeks vacation pay. These "holidays" and"vacations," however,
do not guarantee time off work but, instead, promise a predetermined
amount of pay based on a fixed hourly rate and the worker's holiday
and vacation days. Longshoremen who have worked 700 or more
hours in a contract year (October 1 to September 30) are eligible for
these payments, which are made in December (vacation pay) and June
(holiday pay) after the contract year. These payments are made by an
employer-funded trust governed by employer- and union-appointed
trustees who must "establish such procedures as necessary to provide
for" the vacation and holiday payments described above. The trustees
are empowered to "establish such assessments[on employers] as nec-
essary to supplement the fund as needed to meet its anticipated finan-
cial responsibilities."

The local agreement also incorporates the container royalty provi-
sions of the 1990 master contract. Among other things, this master
agreement provides that "[t]he two Container Royalty payments,
effective in 1960 and 1977, respectively, shall be continued and shall
be used exclusively for supplemental cash payments to employees
covered by [the agreement], and for no other purpose." The local con-
tract adopts this provision and adds that employers must "pay into a
fund for supplemental cash benefits [specified] amounts . . . as a roy-
alty when loading or discharging containers" stuffed or stripped by
non-ILA personnel. These contributions for the first and third con-
tainer royalties "must be used only and exclusively for cash disburse-
ments to the men." Like the vacation and holiday payments, the
royalties are paid to employees by a trust whose trustees are jointly
appointed by the union and the employers. Unlike the situation with
the vacation and holiday fund, however, the trustees are charged with
establishing the terms and conditions governing the disbursement of
the royalty money. Historically, employees who have worked 700 or

                    7
more hours in a contract year have been paid (in December after the
contract year) an equal share of the royalty money deposited into the
fund.

Although the contract does not address whether disabled long-
shoremen are eligible for these payments, the vacation/holiday and
container royalty funds have both historically given disabled workers
a set amount of credit towards the 700-hour eligibility thresholds for
each day that the worker receives workers' compensation benefits.
This practice enabled Wright, the claimant in this case, to receive
credit towards eligibility for both the vacation/holiday and container
royalty funds while he was disabled. During the 1994-1995 contract
year he received credit for his disability from April 17, 1995, to the
end of the contract year on September 30, 1995. Because his disabil-
ity lasted through December 31, 1995, he also received credit from
the beginning of the 1995-1996 contract year (October 1, 1995) until
his disability ended. The parties have stipulated that Wright received
a holiday/vacation payment as well as a container royalty payment in
1996 even though he did not work during his disability in 1995.

D.

The parties now dispute whether compensation under the Act
should be calculated to include earnings from vacation, holiday, and
container royalty payments. Although Universal Maritime made dis-
ability payments to Wright for his injuries, Wright brought a claim
under the Act alleging that the compensation should have been calcu-
lated to include not only his hourly wage rate but also his earnings
from vacation, holiday, and container royalty payments. The adminis-
trative law judge (ALJ) agreed and ruled that these payments were
"wages" under § 2(13) of the Act that must be included in the calcula-
tion of his average weekly wage. The ALJ also ruled that Wright's
receipt of these payments while he was disabled in 1995 neither
reflected a residual wage-earning capacity nor resulted in a "double
recovery." After the Benefit Review Board affirmed these rulings, see
Bernard N. Wright, 31 B.R.B.S. 195, 195-96 (1997) (per curiam),
Universal Maritime petitioned this court for review. 6 We now affirm
the Board in part, vacate in part, and remand for further proceedings.
_________________________________________________________________
6 We cite the Board's decisions as"B.R.B.S." instead of the more cum-
bersome citation of "Ben. Rev. Bd. Serv. (MB)."

                    8
II.

Section 2(13)'s definition of "wages" lies at the heart of the
LHWCA's compensation scheme. The Act mitigates the economic
effects of job-related injuries by basing the claimant's statutory com-
pensation on the wage-earning capacity that is lost due to the dis-
abling injury. See Metropolitan Stevedore Co. v. Rambo, 117 S. Ct.
1953, 1957-58 (1997) (Rambo II). More specifically, compensation
for most partial disabilities is defined to equal two thirds of the claim-
ant's (pre-injury) "average weekly wages" minus two-thirds of his
(post-injury) "wage-earning capacity." See 33 U.S.C. § 908(c)(21), (e).7
When a claimant is totally disabled, he has no post-injury wage-
earning capacity and is therefore compensated with two-thirds of his
pre-injury average weekly wages. See id. § 908(a), (b); cf. id. at
§ 908(h). Consequently, the Act's definition of "wages" drives the
compensation calculation by specifying what income will be used to
determine the claimant's pre-injury average weekly wages and post-
injury wage-earning capacity.

Universal Maritime relies on this point to make two related argu-
ments. First, it argues that vacation, holiday, and container royalty
payments are not "wages." As a result, they cannot be included in
Wright's pre-injury average weekly wage that must be compensated
by the company. Second, if these payments are "wages," Universal
Maritime asserts that Wright received them (and thus had "wages")
while he was disabled. This would give Wright a post-injury wage-
earning capacity that reduces the compensation owed to him under the
_________________________________________________________________
7 Not all compensation is calculated from the actual loss in wage-
earning capacity. Claimants with permanent partial disabilities resulting
from certain types of injuries, known as "scheduled" injuries, are com-
pensated for the permanent aspect of their disability by a lump-sum pay-
ment equal to two-thirds of their pre-injury wage for a specified period
of time. See 33 U.S.C. § 908(c), (c)(1)-(20). Instead of basing this com-
pensation on the actual, permanent wage loss due to the injury, the Act
"conclusively presume[s]" the monetary effect of the injury. See Rambo
II, 117 S. Ct. at 1957-58; Potomac Elec. Power Co. v. Director, OWCP,
449 U.S. 268, 269-71 (1980); Gilchrist v. Newport News Shipbuilding &
Dry Dock Co., 135 F.3d 915, 918-19 (4th Cir. 1998). Because Wright did
not have a permanent, scheduled disability, however, his statutory com-
pensation is based on his actual loss of earning capacity.

                    9
Act. Either way, the company argues that it is not obligated to com-
pensate Wright for vacation, holiday, and container royalty payments.
We disagree and address each argument in turn.

III.

Universal Maritime's main argument on appeal is that vacation,
holiday, and container royalty payments are not"wages" because they
are "fringe benefits" that the Act explicitly excludes from the defini-
tion of wages. While this argument has a superficial appeal, a close
reading of the definition and an examination of the statutory history
lead us to a different conclusion.

To interpret § 2(13)'s definition of "wages" we must first deter-
mine whether "the language at issue has a plain and unambiguous
meaning with regard to the particular dispute in the case." Robinson
v. Shell Oil Co., 117 S. Ct. 843, 846 (1997). Because we conclude that
the language of § 2(13) is ambiguous, we must turn to the legislative
history to guide our interpretation of the Act. See Concrete Pipe &
Prods., Inc. v. Construction Laborers Pension Trust , 508 U.S. 602,
627 (1993); Patterson v. Shumate, 504 U.S. 753, 761 (1992). From
this history we conclude that § 2(13)'s use of the term "fringe bene-
fits" refers only to certain benefits given to employees in addition to
a regular monetary wage or salary. Because vacation, holiday, and
container royalty payments are not "fringe benefits" covered by
§ 2(13) and because they otherwise meet the section's definition of
wages when they are earned from actual work, we ultimately hold that
they are "wages" which must be included in the calculation of disabil-
ity compensation under the Act. We now explain our reasoning in
greater detail.

A.

We begin the analysis by looking to the language of § 2(13). That
provision defines "wages" to be:

          the money rate at which the service rendered by an
          employee is compensated by an employer under the contract
          of hiring in force at the time of the injury, including the rea-

                    10
         sonable value of any advantage which is received from the
         employer and included for purposes of any withholding of
         tax under subtitle C of the Internal Revenue Code of 1954
         (relating to employment taxes).8

33 U.S.C. § 902(13) (1994). The section continues by adding that:

         The term wages does not include fringe benefits, including
         (but not limited to) employer payments for or contributions
         to a retirement, pension, health and welfare, life insurance,
         training, social security or other employee or dependent
         benefit plan for the employee's or dependent's benefit, or
         any other employee's dependent entitlement.

Id. Therefore, the opening passage of § 2(13) defines "wages" to be
the "money rate" of compensation that is provided (1) for the employ-
ee's services (2) by an employer (3) under the employment contract
in force at the time of the injury.9 At a minimum, this encompasses
_________________________________________________________________
8 Under subtitle C of the Internal Revenue Code, 26 U.S.C. §§ 3101-
3510, Federal Insurance Contributions Act (FICA) taxes, see id.
§ 3102(a), railroad retirement taxes (if applicable), see id. at § 3202(a),
and income taxes, see id. § 3402(a)(1), are withheld from an employee's
paycheck. Cf. 26 U.S.C. §§ 3101, 3201 (defining FICA and railroad
retirement taxes). Withholding is calculated from the employee's
"wages" and "compensation" which are defined by 26 U.S.C. §§ 3121(a),
3231(e), and 3401(a), respectively.
9 Because the Act defines "wages" as the "money rate at which the ser-
vice rendered by an employee is compensated," 33 U.S.C. § 902(13)
(emphasis added), "wages" measure the amount of a worker's compensa-
tion for his services in terms of an amount of money. See Webster's
Third New International Dictionary of the English Language,
Unabridged 1884 (Philip Babcock Gove ed., 1981) (defining "rate" as a
"quantity, amount, or degree of something measured per unit of some-
thing else" (def. 4a)); see also Oxford Encyclopedic English Dictionary
1197 (Judy Pearsall & Bill Trumble eds., 3d ed. 1996) (def. 1: "a stated
numerical proportion between two sets of things," especially "as the basis
of calculating an amount or value"); Random House College Dictionary
1095 (rev. ed. 1980) (def. 2: "a certain quantity or amount of something
considered in relation to a unit of something else"). As we will discuss,
"wages" include not only monetary pay for services but also the value of

                   11
cash compensation meeting these conditions. However, the language
of § 2(13) does not end there. It specifies that the compensation
described in the opening passage of the section"includ[es]" the "rea-
sonable value" of "any advantage" that (a) is received from the
employer and (b) triggers tax withholding.10 Finally, § 2(13) states
that "fringe benefits" are not "wages." In short, wages are defined to
_________________________________________________________________
a worker's nonmonetary compensation. Accordingly,§ 2(13) converts
the value of nonmonetary compensation into a monetary equivalent and
adds it to a worker's monetary pay in order to measure his overall com-
pensation ("wages") in units of money.

Although the word "rate" standing alone often means a temporal rate
(e.g., compensation per hour of work), § 2(13) does not use this meaning
of the term. By defining "wages" as the "money rate" of an employee's
compensation, the Act simply specifies that this compensation is to be
measured in terms of a dollar amount whether or not the employee's
compensation is paid in the form of currency.
10 The structure of the first sentence of § 2(13) demonstrates that the
"advantage[s]" described in the latter part of the sentence illustrate one
class of the compensation defined generally in the sentence's opening
passage. The word "including" in § 2(13) indicates that the reasonable
value of advantages that are received from employers and trigger tax
withholding will necessarily be "part of the larger [category] of" com-
pensation for employees' services provided by employers under the pre-
vailing employment contract. See 33 U.S.C. § 902(13); P.C. Pfeiffer Co.
v. Ford, 444 U.S. 69, 77 n.7 (1979) (interpreting § 2(3) of the Act, a defi-
nitional provision with sentence structure similar to § 2(13), by holding
that use of "including" indicates an element that "necessarily" is "part of
the larger group" and by rejecting argument that"`including' means
`and' or `as well as'"); Federal Land Bank v. Bismarck Lumber Co., 314
U.S. 95, 100 (1941) ("the term `including' is not one of all-embracing
definition, but connotes simply an illustrative application of the general
principle"); Jose Quinones, 32 B.R.B.S. 6, 8-10 (1998) (per curiam)
(construing § 2(13) in this manner). But see Wausau Ins. Co. v. Director,
OWCP, 114 F.3d 120, 121, 122 n.2 (9th Cir. 1997) (per curiam) (failing
to analyze § 2(13)'s use of "including" but effectively ruling that "includ-
ing" means "and" or "as well as" in holding that nonmonetary advantages
are included in wages only when they are subject to tax withholding);
McNutt v. Benefits Rev. Bd., 140 F.3d 1247, 1248 (9th Cir. 1998) (per
curiam) (following Wausau to conclude that monetary "advantage" not
subject to tax withholding is not "wage" under § 2(13)).

                    12
be the monetary rate of an employee's compensation, including the
value of certain "advantage[s]," but excluding "fringe benefits."

Unfortunately, neither "advantage" nor "fringe benefit" is sepa-
rately defined by the Act. When a statute uses terms that Congress has
left undefined, we normally give such terms their"ordinary or natural
meaning." Smith v. United States, 508 U.S. 223, 228 (1993). How-
ever, because the "`meaning of statutory language, plain or not,
depends on context,'" we must consider "not only the bare meaning
of the word but also its placement and purpose in the statutory
scheme." Bailey v. United States, 516 U.S. 137, 145 (1995). Thus,
"[t]he plainness or ambiguity of statutory language is determined by
reference to the language itself, the specific context in which that lan-
guage is used, and the broader context of the statute as a whole."
Robinson, 117 S. Ct. at 846.

If we were to interpret the meaning of "fringe benefits" according
to its dictionary definition without reference to the rest of § 2(13), its
meaning would be clear. Dictionaries converge on a common inter-
pretation of the term: a "fringe benefit" is a benefit provided to an
employee in addition to a regular monetary wage or salary. See, e.g.,
Oxford Encyclopedic English Dictionary 555 ("an employee's benefit
supplementing a money wage or salary"); Random House College
Dictionary 530 ("a benefit, as free insurance, received by an
employee in addition to his regular pay"); Webster's Third New Inter-
national Dictionary 912 ("an employment benefit (as a pension, a
paid holiday, or health insurance) granted by an employer that
involves a money cost without affecting basic wage rates"). While
this meaning is consistent with the examples of fringe benefits given
in § 2(13), it conflicts with the use of the term in the context of that
section as a whole.

Section 2(13) explicitly includes in wages the reasonable value of
"any advantage" that meets two conditions. Webster's defines "advan-
tage" as a "benefit, profit, or gain of any kind." Webster's Third New
International Dictionary 30 (def. 2a); see also Oxford Encyclopedic
English Dictionary 19 (def. 2: "benefit, profit"); Random House Col-
lege Dictionary 20 (def. 1: "anything that is of benefit or gain to
someone or something"). This expansive meaning is reinforced by the
use of the word "any" to modify "advantage." See United States v.

                     13
Wildes, 120 F.3d 468, 470 (4th Cir. 1997) ("`the word `any' has an
expansive meaning, that is, `one or some indiscriminately of whatever
kind."" (quoting United States v. Gonzales , 117 S. Ct. 1032, 1035
(1997))). The bare language itself therefore suggests that "any advan-
tage" includes benefits of any kind, including nonmonetary benefits.
This reading is consistent with the term's immediate context in
§ 2(13). The section uses the phrase "reasonable value of any advan-
tage" to describe one class of compensation that falls within its gen-
eral definition of wages. "Reasonable value," when read in
conjunction with the word "any" and the term"money rate" in the
preceding passage, indicates that "any advantage" was meant to
include nonmonetary advantages. Cf. Wausau, 114 F.3d at 121 (non-
monetary compensation is "advantage" under§ 2(13)).

Obviously this interpretation of "any advantage" (which encom-
passes nonmonetary benefits) is in tension with a definition of "fringe
benefits" as benefits given in addition to a regular monetary salary.
If we were to read "fringe benefits" to mean all benefits given to an
employee in addition to regular monetary pay, "wages" would neces-
sarily be defined to exclude all nonmonetary compensation. This
would make Congress's use of the phrase "reasonable value of any
advantage" meaningless. Moreover, this conflict in the specific con-
text of § 2(13) is not diminished by looking to the broader context of
the statute as a whole.11 Because it is an "elementary canon of con-
struction that a statute should be interpreted so as not to render one
part inoperative," Colautti v. Franklin, 439 U.S. 379, 392 (1979), we
conclude that "any advantage" and "fringe benefit" cannot both be
given their ordinary meanings. This creates an ambiguity that cannot
be resolved by reference to the statute alone. Accordingly, we turn to
the statute's history to aid our interpretation of these terms.

B.

This history leads us to conclude that Congress meant to give "any
advantage" the plain meaning described above, while the term "fringe
benefits" was only intended to cover a certain class of those benefits
commonly referred to as fringe benefits. More specifically, the term
_________________________________________________________________
11 Neither "advantage" nor"fringe benefit" is used in the Act outside of
§ 2(13).

                    14
"fringe benefits" means those advantages given to an employee in
addition to his regular, monetary pay whose value to the employee is
too speculative to be readily converted into a cash equivalent. This
conclusion is guided not only by the legislative history surrounding
the 1984 amendment of § 2(13) but also by the judicial interpretation
of the pre-amendment definition that was prevalent when Congress
amended the section in 1984.

Section 2(13) dates back to the enactment of the LHWCA in 1927
and originally defined "wages" to mean:

         the money rate at which the service rendered is recom-
         pensed 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, and gratuities received in the course of employ-
         ment from others than the employer.

See Longshoremen's and Harbor Workers' Compensation Act of
1927, ch. 509, § 2(13), 44 Stat. 1424, 1425 (1927). This language
remained unchanged through ten revisions of the Act, see Morrison-
Knudsen Constr. Co. v. Director, OWCP, 461 U.S. 624, 629 & n.6
(1983), until Congress amended the section in 1984 to give it its cur-
rent form. Compare LHWCA Amendments of 1984, Pub. L. No. 98-
426, § 2(c), 98 Stat. 1639, 1639-40 (1984), with 33 U.S.C. § 902(13).

By 1981, however, the interpretation of the original section was
well settled. The section's plain language included in wages the rea-
sonable value of "advantages" given to employees by an employer if
the advantages were "similar advantages" to"board, rent, housing,
[or] lodging." The Benefits Review Board found that this language
"clearly implie[d] that values received by an employee that are readily
identifiable and calculable should be included" as wages. See Sonya
Hilyer, 6 B.R.B.S. 754, 758 (1977), rev'd , Hilyer v. Morrison-
Knudsen Constr. Co., 670 F.2d 208, 211-13 (D.C. Cir. 1981), rev'd
sub nom. Morrison-Knudsen Constr. Co. v. Director, OWCP, 461
U.S. 624 (1983) (affirming Board's position). Accordingly, the Board
invariably construed "wages" under § 2(13) to include vacation pay,
overtime, and container royalties.12 Similarly, the D.C. Circuit had
_________________________________________________________________
12 See, e.g., Carolyn Sie Waters, 14 B.R.B.S. 102, 106 (1981) (vacation
pay); Jesse P. Parks, 9 B.R.B.S. 462, 465-66 (1979) (container royalty

                    15
ruled that the value of employer-provided meals was included as
"wages." See Harris v. Lambros, 56 F.2d 488, 489 (D.C. Cir. 1932).
Of course, the value of some benefits were excluded from the calcula-
tion of wages. Most importantly for our purposes the Board consis-
tently ruled that an employer's contributions to health and welfare,
pension, and training benefit funds were not wages. 13 Indeed, the
Board recognized in 1981 that the "law with regard to [such] fringe
benefits . . . is clear." Waters, 14 B.R.B.S. at 106. When compared
to "board, rent, housing, and lodging," the benefits that these funds
provide to employees were found not to be "similar advantage[s]"
because an employee's realization of any tangible benefits was "con-
tingent upon the occurrence of an event which may or may not hap-
pen," making the benefits' potential value to the employee "too
speculative" to include in wages. See id. at 105-06. Therefore, by
1981 the settled interpretation of "wages" included the value of an
"advantage" received from an employer only when the advantage's
value to the employee was readily identifiable and calculable.

Against this background, bills were introduced in the House and
the Senate in 1981 that included identical provisions to amend the
Act's definition of wages. Both bills proposed amending § 2(13) to
read:
_________________________________________________________________
and vacation), rev'd on other grounds sub nom. John T. Clark & Son,
Inc. v. Benefits Rev. Bd., 621 F.2d 93 (4th Cir. 1980); Richard J.
Cipollone, 7 B.R.B.S. 94, 97-98 (1977) (vacation and overtime); Norris
Lawson, 6 B.R.B.S. 770, 776-77 (1977) (vacation); Elizabeth N.
Baldwin, 5 B.R.B.S. 579, 583 (vacation), aff'd on reh'g, 6 B.R.B.S. 396,
398 (1977); Sammie L. Gray, 5 B.R.B.S. 279, 283-84 (1976) (overtime),
aff'd on other grounds sub nom. General Dynamics Corp. v. Benefits
Rev. Bd., 565 F.2d 208 (2d Cir. 1977).
13 See, e.g., Waters, 14 B.R.B.S. at 105-06 (health); Nancy A. Freer, 9
B.R.B.S. 888, 891 (1979) (pension and health), rev'd sub nom.
Duncanson-Harrelson Co. v. Director, OWCP, 686 F.2d 1336, 1343-46
(9th Cir. 1982), vacated, 713 F.2d 462 (9th Cir. 1983) (affirming Board);
Lawson, 6 B.R.B.S. at 776-77 (health, accident insurance, and pension);
Hilyer, 6 B.R.B.S. at 758-60 (health and welfare, pension, and training
funds); Melvin E. Collins, 5 B.R.B.S. 334, 339 (1977) (pension, health
and welfare).

                   16
          "Wages" means the money rate at which the service ren-
          dered by an employee is recompensed by the employer
          under the contract of hiring in force at the time of the injury,
          including the reasonable value of any advantage which is
          received from the employer and included for purposes of
          any withholding of tax under subtitle C of the Internal Reve-
          nue Code of 1954 (relating to employment taxes).

See H.R. 25, 97th Cong. § 2(c) (1981) (as introduced Jan. 5, 1981);
S. 1182, 97th Cong. § 2(c) (1981) (as introduced May 14, 1981). This
proposed revision did three things. First, it eliminated any reference
to "gratuities received . . . from others than the employer." Second,
it modified the general definition of wages in the opening passage of
§ 2(13) by requiring that compensation be recompensed "by the
employer." Third, the revision broadened the illustration of the "ad-
vantage[s]" that are included in the general definition by indicating
that "any advantage" received from an employer that requires employ-
ment tax withholding is covered by the definition. In doing this it
abandoned § 2(13)'s requirement that an "advantage" must be "simi-
lar" to board, rent, housing, or lodging in order for it to be explicitly
included as wages. The courts, however, would soon prompt Con-
gress to add a second sentence to this proposed amendment.

In December 1981 the D.C. Circuit's decision in Hilyer v.
Morrison-Knudsen Construction Co., 670 F.2d 208, 211-13 (D.C. Cir.
1981), overruled the Board's prior treatment of employer contribu-
tions to benefit funds for health and welfare, pensions, and training
by treating the employer's contribution to these funds as "wages."
Although the court agreed with the Board that § 2(13) "`clearly
implie[d] that values received by an employee[must be] readily iden-
tifiable and calculable [to] be included'" as wages, it held that
employer contributions to benefit funds for health and welfare, pen-
sions, and training met this criterion even though the actual value that
employees get from being eligible for fund benefits was "impossible
to determine . . . because whether and to what extent the employee
might use them is highly speculative." Id. at 211.

Congress promptly moved to undo this holding. By July 1982 the
Senate amended its pending bill on the LHWCA, S. 1182, to add a
second sentence to its revision of § 2(13). This sentence explicitly

                     17
excluded from wages "fringe benefits, including but not limited to
employer payments for or contributions to . . .[employee] benefit
fund[s]" of the kind addressed in Hilyer . See S. Rep. No. 97-498, at
3 (1982) (S. 1182, § 2(c)). The Senate report accompanying the bill
explained that the amendment to § 2(13) "expressly rejects the hold-
ing in [Hilyer], 670 F.2d 208 (D.C. Cir. 1981)," id. at 31, and was
intended "to confirm past practice and congressional intent and to
reaffirm the previously settled rule that fringe benefits are excluded
from the definition of `wages,'" id. at 41 (emphasis added). Because
it was "previously settled" that the original§ 2(13) included in wages
the value of board, rent, housing, lodging, and similar advantages, the
amendment's use of "fringe benefits," in contrast to the dictionary
definition of the term, could not have meant all benefits given in addi-
tion to an employee's regular, monetary pay. It could only have meant
a particular class of such benefits.

Although the bill passed the Senate, it failed to pass the House
before the 97th Congress came to an end. See S. Rep. No. 98-81, at
22 (1983). The Senate bill was reintroduced as S. 38 in the 98th Con-
gress and again was favorably reported out of committee. See id. at
1, 22. The committee report reiterated that the amendment to § 2(13)
"expressly reject[ed] the holding in Hilyer," id. at 30, "confirm[ed]
past practice and congressional intent," and"reaffirm[ed] the previ-
ously settled rule that fringe benefits are excluded from the definition
of `wages,'" id. at 41.

Just fourteen days after this report was issued, the Supreme Court
reversed the D.C. Circuit's Hilyer decision in Morrison-Knudsen
Construction Co. v. Director, OWCP, 461 U.S. 624 (1983). The
Court's analysis focused on the "plain language" of (the original)
§ 2(13) to interpret the meaning of the phrase the "`value of board,
rent, housing, lodging, or similar advantage received from the
employer.'" See id. at 629-30 (emphasis added). In holding that the
benefits received from employer-funded trust funds for health and
welfare, pensions, and training are not "similar advantage[s]" to
board, rent, housing, and lodging, the Court said that board, rent,
housing, and lodging are "benefits with a present value that can be
readily converted into a cash equivalent on the basis of their market
values." Id. at 630. Because the value of the benefits that an employee
received from the trust funds were not "so easily converted," they

                    18
were found not to be similar advantages whose value is included in
wages. See id.

The Court declined to base the calculation of the benefits' value on
either (1) the employer's monetary contributions to the funds or (2)
the value of the employee's expectation interest in fund benefits. See
id. First, the Court found an employer's contributions to be "irrele-
vant" to this calculation because they failed to measure the value of
the benefit actually received by the employees. See id. The employ-
er's contribution also failed to measure the compensation paid for an
employee's services and, therefore, the cost of these services could
not be used to calculate the present value of the benefit. See id. at
630-31. Although the Court implied that the benefit's value might be
measured by the cost of the services that an employee renders to earn
the benefit, the fact that an employee's receipt of benefits was not
directly exchanged for a specific quantity of services made calculat-
ing the benefit's value on this basis "[un]workable." See id.

Second, the Court ruled that the "value of the funds [could not] be
measured by the employee's expectation interest in them." Id. at 631.
The value of the tangible benefits actually received by an employee
from these funds was contingent on "unpredictable" factors such as
the employee's need for health and welfare services and his long-term
employment with the company. See id. Consequently, the employee's
future expectation interest was an insufficient measure of the benefit's
value since it was "at best speculative." See id.

By rejecting these alternative bases for calculating the value of
benefits under § 2(13), the Court reaffirmed the settled rule that bene-
fits whose value is too speculative to be readily converted into a cash
equivalent are excluded from the Act's definition of wages. In doing
so it implied that this value normally should be calculated from the
value of the tangible benefit actually received by employees. The
Court's interpretation of the statute therefore closely paralleled the
earlier holdings of the Board. Indeed, the Court cited the Board's
decisions as being consistent with its holding, see id. at 635, and
quoted S. 1182 and its accompanying report as "suggesti[ng]" that the
Court's ruling was consistent with congressional intent and "previ-
ously settled" law. See id. at 633 n.10. Significantly, the Court's quo-

                    19
tation of S. 1182 included the amendment excluding"fringe benefits"
from the definition of "wages." See id.

After Morrison-Knudsen was decided, the House passed S. 38 with
only minor changes to the definition of wages. See S. 38, 98th Cong.
§ 2(b) (1983) (as reported to the House on Nov. 18, 1983). The perti-
nent House committee explained that the bill "amended [§ 2(13)'s]
definition of `wages' to exclude certain fringe benefits." See H.R.
Rep. No. 98-570, pt. 1, at 26 (1983), reprinted in 1984 U.S.C.C.A.N.
2734, 2759 (emphasis added). This version of the bill was adopted by
the Senate and was signed into law in 1984.

This history points to three conclusions. First, the continued use of
the term "advantage" in the 1984 amendment to§ 2(13) parallels its
earlier usage to include the value of many forms of nonmonetary
compensation in the definition of wages. Second, although the
amendment's use of the phrase "any advantage" expanded the cate-
gory of advantages that are used to illustrate the general definition of
wages, Congress limited this expansion by requiring that these advan-
tages must be obtained from an employer and must be subject to tax
withholding. Third, after the D.C. Circuit's Hilyer decision, Congress
again sought to limit this expansion and to reaffirm the previously set-
tled view that wages do not include benefits whose value to employ-
ees is too speculative to be readily converted into a cash equivalent.
This was done by amending § 2(13) to explicitly exclude "fringe ben-
efits" from wages and by providing examples of those types of bene-
fits that are to be excluded. Like Morrison-Knudsen, these examples
directly overruled Hilyer's treatment of employer contributions to
employee benefit funds.

We therefore believe that Congress intended to use the term "fringe
benefits" in the 1984 amendment to § 2(13) to refer to the class of
fringe benefits whose value to the employee is too speculative to be
readily converted into a cash equivalent. This definition of the term
is not only consistent with the history behind the passage of the 1984
amendment but it also fits harmoniously with the rest of § 2(13). First,
the section's examples of fringe benefits (e.g. , employer contributions
to a retirement or other benefit plan) clearly fall within the definition
just mentioned. The value that an employee derives from employer
contributions to retirement, pension, life insurance, and similar bene-

                    20
fit plans is too speculative to be readily converted into a cash equiva-
lent because the employee's right to obtain tangible benefits is
contingent on fulfilling conditions that might never be satisfied. See
Morrison-Knudsen, 461 U.S. at 630-31.14 Second, unlike the dictio-
_________________________________________________________________
14 Of course, it is possible to attribute a dollar value to such benefits.
The D.C. Circuit's decision in Hilyer did exactly that, see 670 F.2d at
211-13, and experts regularly testify to the monetary value of these and
similar items. However, a benefit's value to the employee must be read-
ily converted into a cash equivalent within the framework established by
the LHWCA in order to be "wages." Under the Act, "readily converted
into a cash equivalent" had a specific meaning before Hilyer was decided
by the D.C. Circuit, and this meaning was reaffirmed by Congress in the
1984 amendment to § 2(13).

When a claimant's entitlement to a tangible benefit is contingent on
certain conditions that may or may not be fulfilled, the benefit's value to
the employee is deemed too speculative to be included in wages. For
example, participation in a health insurance plan will provide an
employee with an entitlement to medical services contingent on the need
of the employee and his dependents for medical care. Since this need
may never arise and the employee may derive no tangible value from
participation in the employer-funded plan, the potential value of the ben-
efit is too speculative to be calculated under the Act. See Waters, 14
B.R.B.S. at 106; Freer, 9 B.R.B.S. at 891; Lawson, 6 B.R.B.S. at 776-77;
Hilyer, 6 B.R.B.S. at 758-59. The same is true for life insurance and pen-
sion plans. Life insurance proceeds are paid only when certain contrac-
tual conditions are satisfied (e.g., employment by the plan sponsor at the
time of death). Likewise, an employee's right to benefit from employer
contributions to a pension or other retirement plan is contingent on fac-
tors such as his continued employment with a particular employer and
his future achievement of retirement status. An employee who changes
employers before his benefits vest or who dies before attaining retire-
ment status will never acquire an unconditional right to payment from
the plan. Consequently, his contingent right to benefit from an employ-
er's contributions to the plan makes the potential value of these benefits
too speculative to be calculated under the Act. See Freer, 9 B.R.B.S. at
891-92; Lawson, 6 B.R.B.S. at 776-77; Hilyer, 6 B.R.B.S. at 758-59.
Although an employee's right to pension payments will no longer be
contingent once he enters retirement, the Act's compensation for work-
related injuries does not apply to post-retirement injuries incurred outside
the course of employment. See 33 U.S.C.§§ 902(2), 903(a). Thus,
because these benefits provide employees with a contingent right to tan-

                    21
nary definition of the term, the above definition does not undermine
the section's statement that "the reasonable value of any advantage"
(subject to two limitations) be included in wages. Because this read-
ing of "fringe benefits" is consistent with the section and because it
fits logically within the legislative history, we believe this is the
intended meaning of the term.15 Accordingly, we hold that the term
"fringe benefits" as used in § 2(13) refers to those advantages, given
to an employee in addition to a regular monetary salary, whose value
to the employee is too speculative to be readily converted into a cash
equivalent.
_________________________________________________________________

gible benefits that depends on conditions that may never be fulfilled, the
benefits' value to an employee is deemed too speculative to be converted
into a cash equivalent.

When an employee's right to a tangible benefit does not depend on
contingent factors like those above, however, the value of the benefit is
not too speculative to be readily converted into a cash equivalent under
the Act. As long as the employee earns an unconditional entitlement to
a tangible benefit (even though the benefit may not be received until
sometime in the future), the value of the benefit can be identified and cal-
culated as a part of the employee's wages. See, e.g., Parks, 9 B.R.B.S.
at 465-66 (ruling that wages include container royalty payment earned
before but received after injury, and noting that employees normally are
entitled to payments as they are earned but that union contract permitted
several month delay in receipt of royalty).

15 We reject Universal Maritime's argument (1) that Morrison-Knudsen
defined fringe benefits to be all forms of benefits created after 1927 and
(2) that this decision was codified by the 1984 amendment to § 2(13).
First, the Court's reasoning in Morrison-Knudsen did not freeze the
forms of compensation compensable under the Act at the year 1927. See
461 U.S. at 632-33. Instead the Court simply concluded that (before
1984) Congress had not intended to expand the pre-amendment defini-
tion of wages beyond the plain meaning of the 1927 Act. See id. at 633.
Second, the 1984 amendment did not codify the reasoning of Morrison-
Knudsen. As our discussion above reveals, Congress independently
developed the language of the amended definition before the Court
decided Morrison-Knudsen.

                    22
C.

In summary, § 2(13) defines "wages" as a dollar measure of the
compensation provided (1) for an employee's services (2) by an
employer (3) under the contract of hiring in force at the time of the
injury. Although all compensation that meets these general require-
ments will fall within the affirmative definition of wages, the section
expressly "includ[es]" as an illustration of such compensation the rea-
sonable value of any advantage that is received from the employer
and triggers tax withholding. See supra note 10. Finally, "wages" do
not include "fringe benefits," that is, those advantages (1) given in
addition to an employee's regular monetary pay (2) whose value to
the employee is too speculative to be readily converted into a cash
equivalent.

D.

With this general interpretation of the statute, we now turn to
decide whether the holiday, vacation, and container royalty payments
in this case are "wages." We conclude that these payments meet the
criteria above and are wages if they are earned with actual work.

Vacation, holiday, and container royalty payments meet the first
requirement of § 2(13) and are earned as compensation for "service[s]
rendered by an employee," 33 U.S.C. § 902(13), when they are earned
with (700 or more hours of) actual work. The vacation and holiday
payments clearly are paid for services. The collective bargaining
agreement states that employees "who have worked 700 hours or
more in the current contract year" will receive a pre-calculated
amount of vacation and holiday pay. We reject Universal Maritime's
assertion that these payments must reflect a fixed, hourly rate of pay
to render them compensation for services. The fact that Wright would
receive the same amount of vacation/holiday pay for working 700 or
2700 hours is immaterial. If these payments are paid for services,
regardless of the quantity of services, they meet the first requirement
of § 2(13).16
_________________________________________________________________
16 Morrison-Knudsen is not to the contrary. As we discussed above, the
Supreme Court suggested that the benefits in that case had to be linked

                    23
The same is true for container royalties. The local contract speci-
fies that the royalty fund must be used "only and exclusively for cash
disbursements for the men," and the fund trustees have traditionally
paid royalties to all longshoremen who have worked 700 or more
hours in the contract year. These royalties are, in effect, a wage pre-
mium paid for the handling of containers that are not stuffed or
stripped by longshoremen. Since longshoring work is irregular and
depends only on the amount of work to be done, the practical effect
of the container royalty is to provide employees with a higher wage
proportional to the amount of work lost as a result of the stuffing and
stripping of containers away from the pier. Indeed, the history of
labor discontent and collective bargaining over containerization
reveals that these royalties were negotiated to mitigate the loss of
work due to the use of containers. As more containers are stripped
and stuffed by non-ILA labor, longshoremen work less (and hence
lose pay) but receive more pay for the work that is done. When
viewed in this context, we conclude that the container royalty is paid
for the longshoring services that are actually rendered by employees
(when the employees earn this payment from actual work).

Of course, the vacation/holiday and container royalty payments are
compensation for "services" only when they are earned with 700 or
_________________________________________________________________
to an exact amount of employee services in order to calculate the value
of the benefit by reference to the employer's payments for these services.
See 461 U.S. at 630-31; supra at 18-19. This exact correlation between
the amount of services and the amount of the benefit was necessary to
value the benefits in Morrison-Knudsen and make them "similar advant-
age[s]" to board, rent, housing, and lodging. In this case we do not ask
whether vacation, holiday, and container royalty payments are "advan-
tages" under § 2(13). Moreover, if we did ask this question, we would
not have to value these benefits in reference to the labor exchanged for
them since the monetary value of these cash benefits is clear. The ques-
tion that we must answer is a different question than that addressed by
the Supreme Court in Morrison-Knudsen: whether the benefits were
received by the claimant for "service[s] rendered by an employee," 33
U.S.C. § 902(13). As we said above, a payment is made for an employ-
ee's services when it is given as compensation for the employee's work,
regardless of whether it is exchanged for a specific amount of work or
for the employee's services more generally.

                    24
more hours of actual work. If an employee works 699 hours, he nor-
mally is ineligible for these payments. Disabled employees who work
less than 700 hours, however, can still become eligible if they receive
enough disability credit to bring them to the 700-hour eligibility
threshold. These credits are awarded not because the worker has pro-
vided "services" but because his disability prevents him from doing
so. See SEACO v. Richardson, 136 F.3d 1290, 1293 (11th Cir. 1998)
(per curiam) (identical credits "were not based on any services ren-
dered by" employee to his employer). Consequently, vacation/holiday
and royalty moneys earned only because of disability credit are not
paid for "services" and therefore are not "wages." When an employee
has worked 700 hours or more, however, such credit is unnecessary
and the payments are compensation for the employee's"services."

We also conclude that the second requirement of § 2(13) is met
because vacation/holiday and container royalty payments are paid "by
an employer." Even though these payments are indirectly made to
employees through trust funds, the true source of the payment is the
employer. Stevedores and maritime carriers have agreed to a labor
contract that requires them to fund the trusts and defines the payments
that will be made to employees. Moreover, the unusual nature of the
longshoring industry all but necessitates that all employers at a partic-
ular port act, in effect, as a single, aggregate employer of longshore-
men. Because longshoremen are only "employed" by any one
company for short periods of time, employer associations often cen-
tralize functions such as payroll, hiring, and collective bargaining.
The reliance of these employers on centralized benefit funds to man-
age their vacation, holiday, and container royalty payments merely
serves to channel these payments to employees through a convenient
third-party entity. The payments, however, are still made "by an
employer."

From our discussion of the first two factors, it is clear that Wright's
vacation, holiday, and container royalty payments were made "under
the contract of hiring in force at the time of the injury," 33 U.S.C.
§ 902(13), and thus satisfy the third requirement of § 2(13). Normally
this would end our inquiry, but Universal Maritime argues that these
payments were "fringe benefits." We disagree.

"Fringe benefits" are benefits (given in addition to regular pay)
whose value to the employee is too speculative to be readily con-

                     25
verted into a cash equivalent. See supra at 22. Because vacation, holi-
day, and container royalty payments are a part of Wright's regular
monetary pay as a longshoreman, they are not fringe benefits. Cf.
Morrison-Knudsen, 461 U.S. at 636 (contrasting fringe benefits with
"take-home pay"); Bay Ridge Operating Co. v. Aaron, 334 U.S. 446,
460 (1948) ("Contracts for pay take many forms. The rate of pay may
be by the hour, by piecework, by the week, month or year, and with
or without a guarantee that earnings for a period of time shall be at
least a stated sum."). Even if these payments were not a part of
Wright's regular pay, they would still constitute wages (and not fringe
benefits) because their value can be readily converted into a cash
equivalent. Wright received $18,627.11 in vacation/holiday pay and
container royalties in 1994. In 1995 he received $20,608.14. The
value that Wright receives from these monetary payments is crystal
clear. Unlike a right to future payments from a pension or retirement
plan, Wright's entitlement to vacation, holiday, and container royalty
payments is not contingent upon the occurrence of events that may or
may not occur. Once Wright accumulates 700 hours of work, he is
entitled to receive the payments from the funds. Because his right to
payment is not contingent on any factors other than his ability to earn
it through work, the value that Wright will receive from the payments
is not sufficiently speculative to make it difficult to calculate under
the Act. See supra at 20-21 & n.14. Therefore, even if we were to
conclude that vacation, holiday, and container royalty payments are
not part of Wright's regular pay, we would conclude that they are
wages because their value to Wright can be readily converted into a
cash equivalent.

Nevertheless, Universal Maritime appears to argue that the value
of these payments is too speculative to be included in "wages"
because the exact amount of these payments might not be known until
a year after they are earned. This is partially true. The vacation, holi-
day, and container royalty payments are earned in a contract year
(October 1 to September 30) but are not paid until the next December
and June. The company concludes that this wait to determine the
exact amount of these payments would delay the calculation of a
claimant's average weekly wage and, therefore, would"undermine
the goal of providing prompt compensation to injured workers and
their survivors," Morrison-Knudsen, 461 U.S. at 636-37. Conse-
quently, the company would have us exclude such payments from

                     26
"wages." While we agree that this delay does complicate the calcula-
tion of an average weekly wage, the timing of the receipt of such pay-
ments cannot alter their character as wages.

Moreover, the delay does not prevent the prompt payment of com-
pensation to disabled workers. Universal Maritime assumes that
Wright's average weekly wage can only be calculated under § 10(a)
by using the actual amount of wages earned in the year prior to his
injury. Because the amount of the container royalty will not be known
until sometime after the contract year ends, the company concludes
that this will unreasonably delay Wright's compensation.17 The com-
pany errs, however, in assuming § 10(a) is the only option under the
Act. If § 10(a) "cannot reasonably and fairly be applied" to determine
the average weekly wage, § 10(c) requires that the claimant's "aver-
age . . . earnings shall be . . . [calculated to] reasonably represent the
. . . earning capacity of the injured employee." See 33 U.S.C. § 910(c)
(emphasis added). "[T]he prime objective of[this subsection is] to
insure that compensation awards [are] based on accurate assessments
of the claimants' earning capacity." Tri-State Terminals, Inc. v. Jesse,
596 F.2d 752, 756 (7th Cir. 1979); see also Meehan Seaway Serv. Co.
v. Director, OWCP, 125 F.3d 1163, 1169 (8th Cir. 1997); Empire
United Stevedores v. Gatlin, 936 F.2d 819, 823 (5th Cir. 1991) (per
curiam); Hawthorne v. Director, OWCP, 844 F.2d 318, 320 (6th Cir.
1988); Palacios v. Campbell Indus., 633 F.2d 840, 843 (9th Cir.
1980). Therefore, § 10(c) "explicitly recognizes that the mechanical
formula for benefit computation [in § 10(a)] must be disregarded
where the formula would distort a claimant's actual earning capacity."
Hastings v. Earth Satellite Corp., 628 F.2d 85, 95 (D.C. Cir. 1980);
_________________________________________________________________

17 Normally, a claimant's average weekly wage is calculated under
§ 10(a) from his actual wages earned in the year prior to the injury. See
33 U.S.C. § 910(a), (d)(1); Universal Maritime Corp. v. Moore, 126 F.3d
256, 265 (4th Cir. 1997) (explaining calculation). While the exact
amount of Wright's vacation and holiday pay earned as "wages" during
this year (April 17, 1994, to April 16, 1995) can be determined from the
local labor contract, the amount of the container royalty cannot be known
until the size of the royalty fund and the number of royalty recipients is
known. We agree with Universal Maritime that because the amount of
Wright's actual wages cannot be determined at the time of his injury, the
calculation of his average weekly wage under § 10(a) is not feasible.

                    27
see also Hall v. Consolidated Employment Sys., Inc. , 139 F.3d 1025,
1030-31 (5th Cir. 1998). The timing of the payments in this case war-
rants the application of § 10(c) in order to accurately and promptly
calculate Wright's pre-injury average weekly wage. To do this, his
pre-injury ability to earn vacation, holiday, and container royalty pay-
ments in a contract year must first be assessed. If Wright worked 700
or more hours in the 365 days immediately preceding his injury, it is
reasonable to find that he possessed the capacity to earn payments
from the funds. The amount of these payments must then be deter-
mined. The amount of vacation and holiday pay earned by Wright is
specified by the local contract and thus can be exactly calculated.
Similarly, the most recent container royalty payment can serve to rea-
sonably approximate Wright's capacity to earn wages from the royalty.18
In this way Wright's average weekly wages can be calculated to rea-
sonably represent his pre-injury earning capacity so as not to delay his
compensation. Therefore, while we agree with the company that the
unusual timing of the container royalty payment complicates the cal-
culation of the average weekly wage under § 10, we conclude that
§ 10(c) provides the solution to this difficulty.

Accordingly, we hold that vacation, holiday, and container royalty
payments are "wages" under § 2(13) if they are earned through work
but not if they are earned with disability credit. Because the record
does not indicate whether Wright demonstrated the ability to earn
these payments through hours actually worked in the year prior to his
injury, this issue must be addressed on remand. 19
_________________________________________________________________
18 Of course, if the actual amount of the appropriate container royalty
is known, it should be used in calculating a claimant's average weekly
wage. See Sproull v. Director, OWCP, 86 F.3d 895, 899 (9th Cir. 1996).
19 We note that our holding is consistent with the position of the Direc-
tor of Workers' Compensation Programs and the rulings of the Benefits
Review Board that have interpreted § 2(13) after the 1984 amendment.
See, e.g., Thomas Ring, 31 B.R.B.S. 212, 213 (1998) (per curiam) (not-
ing that Department of Labor advised employer that container royalty
and vacation/holiday pay is included in calculation of average weekly
wages); Estate of George Trice, 30 B.R.B.S. 165, 167 (1996) (per
curiam) (Board agrees with Director that container royalty is included in
average weekly wage); John Lopez, 23 B.R.B.S. 295, 300-01 (1990) (per
curiam) (container royalty is wage and not fringe benefit); Janet

                   28
IV.

Universal Maritime alternatively argues that if holiday, vacation,
and container royalty payments are "wages" under § 2(13), then
Wright's receipt of these payments during the period of his disability
constitutes a post-injury "wage-earning capacity" that must be sub-
tracted from his compensation under the Act. Cf. 33 U.S.C. § 908(e),
(h). The company adds that unless these payments are included in his
wage-earning capacity, Wright will receive an inequitable double
recovery. In other words, Wright would receive statutory compensa-
tion calculated on the premise that his injury prevented him from
earning vacation, holiday, and container royalty payments when, in
reality, he never lost these wages and will still receive these payments
in the future. This would effectively compensate Wright twice, result-
ing in a double recovery. While we conclude that these payments do
not reflect a residual (post-injury) wage-earning capacity, we agree
with the company that there is a potential for an inequitable double
recovery that must be addressed on remand.

A.

Universal Maritime essentially argues that the economic effect of
Wright's temporary disability did not render him"totally" disabled
because, while disabled, he continued to receive wages in the form of
vacation, holiday, and container royalty payments. We disagree.

This argument fails to distinguish between the receipt and the earn-
ing of wages. Section 8(h) provides that a claimant's post-injury
"wage-earning capacity . . . shall be determined by his actual earnings
if such actual earnings fairly and reasonably represent his wage-
_________________________________________________________________
McMennamy, 21 B.R.B.S. 351, 354 (1988) (per curiam) (interpreting
second sentence of § 2(13) which excludes"fringe benefits" from wages
as being consistent with holding of Morrison-Knudsen); Bridget Denton,
21 B.R.B.S. 37, 46-47 (1988) (per curiam) (foreign posting allowances
and cost of living supplements are not fringe benefits because their value
was readily calculable). "Although not controlling, the consistent prac-
tice of the agencies charged with the enforcement and interpretation of
the Act are entitled to deference." Morrison-Knudsen, 461 U.S. at 635.

                    29
earning capacity." Id. § 908(h). Whether wages are received during a
period of disability is irrelevant to this inquiry. Instead, we must ask
whether the claimant earned the wages while he was disabled. Uni-
versal Maritime "erroneously equates earning with receipt and
obscures the distinction between wages and wage-earning capacity."
Eagle Marine Servs. v. Director, OWCP, 115 F.3d 735, 737 (9th Cir.
1997) (receipt of holiday pay during disability does not reflect wage-
earning capacity); see also SEACO v. Richardson , 136 F.3d 1290,
1291 n.3, 1293 (11th Cir. 1998) (per curiam) (same). If wages are
earned before but received after an injury, they are only a "measure
of pre-injury earning capacity, not of postinjury earning capacity."
Eagle Marine, 115 F.3d at 737. Therefore, they cannot "`fairly and
reasonably represent' a wage-earning capacity under§ 8(h)." Id.

It follows that if Wright earned the vacation, holiday, and container
royalty payments before his injury but received them while he was
disabled, the payments reflect only pre-injury earning capacity. Simi-
larly, if he earned these payments while he was disabled because of
hours credited for his disability, the payments are not "wages"
because they were not paid for his "services." See supra at 24-25. One
of these two situations must apply, and in both situations the vacation,
holiday, and container royalty payments received while Wright was
disabled do not reflect a post-injury wage-earning capacity. Accord-
ingly, we hold that Wright did not have any wage-earning capacity
during his disability.

B.

We recognize, however, that there is still a potential for a double
recovery in this case. Although Universal Maritime is incorrect in
suggesting that this results from an inaccurate determination of
Wright's post-injury wage-earning capacity, an inappropriate calcula-
tion of Wright's pre-injury average weekly wages under § 10 could
yield a double recovery.

Section 8 demonstrates that one of the Act's central purposes is to
compensate workers who are injured on the job by providing disabil-
ity compensation equal to two-thirds of the decrease in earning capac-
ity that results from their injuries. See 33 U.S.C. § 908(a)-(c), (e);
supra at 8. To do this, the Act looks to the period after the injury and

                     30
asks two questions. What would the worker have been able to earn if
he was injury free and what will the worker earn given that he is, in
fact, injured? Taking the difference between (1) a claimant's earning
capacity after injury and (2) a projection of what his earning capacity
would have been had the injury never occurred, the Act calculates the
earning capacity lost after the date of injury. Cf. 33 U.S.C.
§ 908(c)(21), (e). Of course, both the injury-free and post-injury earn-
ing capacities for this (post-injury) period must be approximated, and
this is done under §§ 10 and 8(h), respectively. Section 10 uses a
claimant's "average weekly wages" before the injury (normally the
year prior to the injury) to estimate the earning capacity that he would
have had after the date of injury if he had been injury free. Cf. 33
U.S.C. § 910(a), (c), (d)(1). We refer to this as a claimant's pre-injury
earning capacity because this was his capacity to earn future wages
before the disabling injury. In other words, the Act looks to the past
to project what might have been in the future (after the date of injury).
Normally, this is a straightforward exercise, but the unusual manner
in which vacation, holiday, and container royalty payments are earned
adds a twist in this case.

Assuming that Wright worked 700 hours before the date of his
injury (April 17, 1995) in the contract year in which he became dis-
abled, he would have already become entitled to receive vacation,
holiday, and container royalty payments as of April 17, 1995. Even
if he failed to work a single hour between this date and the end of the
1994-1995 contract year (September 30, 1995), his 700 hours of work
still would earn him the vacation, holiday, and container royalty pay-
ments for this period. Similarly, if Wright had been able to work an
additional 700 hours between April 17 and September 30, 1995, he
would not have received a penny more from the vacation, holiday,
and container royalty funds. In other words, if (as we assume) Wright
was already entitled to these payments before he was injured, he had
no (pre-injury) capacity to earn any additional vacation, holiday, or
container royalty pay from April 17 until the next contract year began
on October 1, 1995. Should this be the case, the calculation of his pre-
injury average weekly wages under § 10(c) on remand must exclude
the value of these payments for the 1994-1995 contract year. This will
ensure that Wright's average weekly wage will "reasonably represent"
his pre-injury capacity to earn additional vacation, holiday, and con-
tainer royalty pay from work. Cf. 33 U.S.C.§ 910(c). A contrary

                     31
result would unjustly award disability compensation for wages that
could not have been earned or lost between April 17, 1995, and Sep-
tember 30, 1995.

However, under the assumption above, once the next contract year
begins (October 1, 1995) Wright's average weekly wages must be
readjusted to reflect his pre-injury ability to earn these payments for
the (new) 1995-1996 contract year. If Wright had not been injured
and had been able to work at the beginning of this year (October 1,
1995), he would have had the capacity to earn the 1995-1996 vaca-
tion, holiday, and container royalty payments as wages. Thus, even if
Wright had no capacity to earn additional payments for the 1994-1995
contract year, he certainly had the pre-injury capacity to earn them for
the following year. Accordingly, his statutory compensation from
October 1, 1995, through the end of his disability must reflect this
capability, if it can be demonstrated on remand.

These adjustments to Wright's average weekly wages under § 10(c)
will accurately reflect his pre-injury ability to earn wages after April
17, 1995, and will mitigate against a double recovery under the Act.20
_________________________________________________________________
20 Although Wright may still receive vacation, holiday, and container
royalty payments because of disability credit, his statutory compensation
will not overcompensate him for his disability. Overcompensation results
only when a worker is compensated for earning capacity that was not
lost. When holiday, vacation, and container royalty payments are earned
through disability credit and not work, however, they are not wages and
the capacity to earn them as wages has been lost. The fact that employers
provide supplemental disability coverage in the form of vacation, holi-
day, and container royalty payments does not affect the amount of the
Act's statutory compensation. If the union and employers wish to supple-
ment the LHWCA's compensation (which only replaces two-thirds of a
worker's lost earning capacity), they may do so. Likewise, if the com-
pany wishes to eliminate these supplements in the future, it is free to
attempt to negotiate a change in the next labor contract.

We recognize that, in some instances, hindsight will reveal that a
claimant was slightly overcompensated. This can occur when a claimant
recovers from a temporary, total disability in the middle of a contract
year and is still able to work 700 hours before the year ends. Because he
would earn vacation, holiday, and container royalty payments as "wages"

                    32
V.

In sum, we conclude that Wright's holiday, vacation, and container
royalty earnings are "wages" under § 2(13) of the Act if they were
earned through work. We also conclude that these payments do not
reflect a residual (post-injury) wage-earning capacity even though
they were received while Wright was disabled. The Board is therefore
affirmed on these points. Nevertheless, Wright's compensation may
be improperly inflated by including vacation, holiday, and container
royalty payments in his pre-injury average weekly wage if they were
already earned by the time of Wright's injury or if he did not demon-
strate the pre-injury capacity to earn these payments through work.
Because the stipulated facts do not disclose whether Wright's average
weekly wages should have been calculated by including these
amounts, we remand to the Board with instructions to remand to the
ALJ for further development of the record and for a recalculation of
Wright's benefits in a manner consistent with this opinion.

AFFIRMED IN PART, VACATED
IN PART, AND REMANDED
_________________________________________________________________
with this work, the Act's original compensation award (which was calcu-
lated in part to reflect a pre-injury capacity to earn these payments as
wages) would have included some compensation for payments that the
claimant was nevertheless able to earn after his disability ended.
Although the Act's approximation of the injury's economic effect is rea-
sonable during the claimant's disability, hindsight may reveal that this
approximation was not exact. The Act, however, does not require that we
perform the impossible task of determining a claimant's pre-injury earn-
ing capacity with absolute precision. Section 10(c) simply requires that
a claimant's average weekly wages "reasonably represent" his pre-injury
earning capacity. See 33 U.S.C. § 910(c), (d)(1). While the luxury of
hindsight might make a determination of this capacity more accurate,
waiting until the end of a disability clearly conflicts with the Act's gen-
eral policy of "encourag[ing] the prompt and efficient administration of
compensation claims," Rodriguez v. Compass Shipping Co., 451 U.S.
596, 612 (1981); cf. also Morrison-Knudsen, 461 U.S. at 636-37. In any
event, we believe that if any overcompensation does occur, it will occur
infrequently and the amount will be limited.

                   33
