Ackerson v. Western Union Tel. Co.

• Decision Date: 01 June 1951
• Docket Number: No. 35432--3,35432--3
• Citation: 48 N.W.2d 338,234 Minn. 271,25 A.L.R.2d 1063
• Parties: , 25 A.L.R.2d 1063 ACKERSON et al. v. WESTERN UNION TEL. CO. et al.
• Court: Minnesota Supreme Court

Page 338

48 N.W.2d 338

234 Minn. 271, 25 A.L.R.2d 1063

ACKERSON et al. v. WESTERN UNION TEL. CO. et al.

No. 35432--3.

Supreme Court of Minnesota.

June 1, 1951.

Syllabus by the Court.

An employe who is discharged because of technological changes in the employer's business and upon dismissal receives severance payments in accordance with an existing contract between the employer and its employes, computed on the basis of the length of service of the employe, payable in a lump sum upon dismissal and not dependent upon the employe's employment status after discharge, is not thereby rendered ineligible for unemployment benefits under our employment and security law.

Coursolle, Preus & Maag, Minneapolis (Robert C. Barnett, J. A. C. McGann, New York City, of counsel), for relator.

J. A. A. Burnquist, Atty. Gen., K. D. Stalland, Asst. Atty. Gen. (George W. Olson, Harry M. Thor, Representative of Commercial Telegraphers Union, St. Paul, of counsel), for respondents.

KNUTSON, Justice.

Certiorari to division of employment and security to review a decision of the director allowing unemployment benefits to respondents.

The facts are not in dispute. Relator maintains a nationwide communications service. Prior to World War II, relator determined that in order to operate profitably and meet competition it was necessary to mechanize its transmitting and receiving operations. The war delayed the program, but upon cessation of the armed conflict the program of mechanization was again taken up and carried through to completion.

Realizing that mechanization would result in the elimination of jobs for many of relator's employes, the latter, bargaining through the American Federation of Labor, Commercial Telegraphers' Union, procured a provision in a contract entered into under date of July 1, 1949, which gives certain alternative benefits for displaced employes who would be affected by such mechanization. Section 23.02 of article 23 of the contract provides, among other things, that where a major change in operating methods involves displacement of personnel the affected employe shall have the option of:

'(a) Acceptance of pension, if eligible.

'(b) Acceptance of severance pay as hereinbelow outlined.

'(c) Acceptance of transfer to another office or major department as hereinbelow outlined. The offices in which this option is to be exercised shall be a subject for negotiation during the 60-day period mentioned above, at the division level for transfers within the division and at the national level for interdivision transfers.

'(d) Acceptance of work in a lower class of work.

'(e) A force-reduction furlough as hereinbelow outlined.'

Section 23.03 of article 23 provides in part:

'With respect to Subsection (b), (c) and (e) in Section 23.02 above, the procedure shall be as follows:

'(a) Severance pay. Any employee who has, or who will have, two years or more of company service sometime during the year in which the conversion is effected may choose to be paid a lump sum separation allowance. The separation allowance shall be determined on the basis of four weeks' pay at the regular rate of the position last occupied, for every year of service, and two days' pay for every month in which the employee worked in any period remaining that is less than a full year. The acceptance by an employee of a lump sum separation allowance under this proviso terminates his service with the company.' (Italics supplied.)

Claimant Hinrichs was employed by relator from March 1944 to February 24, 1950, as an automatic operator in relator's automatic department. She lost her employment as a result of the mechanization of the operations in which she had been employed. She elected to accept severance pay and was paid $1,123.20, computed on the basis of 24 weeks at the rate of $46.80 per week, which was based on six years' service as computed under the terms of the contract.

Claimant Ackerson was employed in a similar capacity from August 1944 to February 26, 1950. She likewise lost her employment and elected to receive severance pay. Based on five years and seven months' service, she received severance pay, as computed under the contract, in the sum of $1,067.04.

Each of these claimants filed claim for benefits under our unemployment compensation act on February 27, 1950. The local office denied the claims. The appeal tribunal, after a hearing, held that they were entitled to benefits, and, on appeal, the director affirmed.

It is the contention of relator that severance payments were intended to cushion the shock of separation from employment and should be allocated over the number of weeks from the date of separation which had been used in computing the amount payable. In other words, in the case of claimant Hinrichs, relator contends that the severance pay should be allocated over 24 weeks from the date of separation in lieu of wages which would have been earned during that period had she worked. Of course, if that theory of severance payments is adopted, claimant would be ineligible for unemployment compensation until the expiration of the period over which the severance payment is so allocated.

The case is one of first impression, and so far as we have been able to determine no court of last resort has passed on the question. Employment and security divisions of several states have passed on the matter, but have not arrived at the same conclusion. ¹

The case involves primarily a construction of the following statutory provisions. M.S.A. § 268.04, subd. 23, which reads: "Unemployment'--An individual shall be deemed 'unemployed' in any week during which he performs no service And with respect to which no wages are payable to him, or in any week of less than full time work if the wages payable to him with respect to such week are less than his weekly benefit amount. The director may, in his discretion, prescribe regulations relating to the payment of benefits to such unemployed individuals.' (Italics supplied.)

Subd. 25, which reads in part as follows:

"Wages' means all remuneration for services, employment, including commissions and bonuses and the cash value of all remuneration in any medium other than cash, except that such term shall not include:

'(4) Dismissal payments which the employer is not legally required to make;'

Section 268.08, subd. 3, which so far as here material reads:

'An individual shall not be eligible to receive benefits for any week with respect to which he is receiving, has received, or has filed a claim for remuneration in an amount equal to or in excess of his weekly benefit amount in the form of

'(1) dismissal payment or wages in lieu of notice whether legally required or not; or

'(2) vacation allowance; * * *

'Provided, that if such remuneration is less than the benefits which would otherwise be due under sections 268.03 to 268.24, he shall be entitled to receive for such week, if otherwise eligible, benefits reduced by the amount of such remuneration; provided, further, that if the appropriate agency of such other state or the federal government finally determines that he is not entitled to such benefits, this provision shall not apply.'

Section 268.04, subd. 23, provides that an individual shall be deemed unemployed in any week in which he performs no service And with respect to which no wages are payable to him. It is clear that from the use of the conjunctive 'and,' before an individual may be deemed to be unemployed, two things must exist: (1) He must perform no service during the week; and (2) he must be paid no wages for the week. In the case now before us, the first of those requirements clearly exists. Upon election to receive severance pay, the employment was completely severed. No claim is made that other employment was obtained. The employe was registered for work. So far as her former employer was concerned, she could do as she pleased from the date of separation. Relator claims, however, that the second prerequisite to 'unemployment' is lacking, in that severance pay constitutes wages for the number of weeks following the employe's separation which have been used to compute the amount thereof. In the case of claimant Hinrichs, relator contends that she has been paid for 24 weeks following her separation; hence, that she will not be unemployed within the statutory definition of that term until the expiration of such period of time.

The history and legislative purpose of our unemployment act is discussed in Bucko v. J. F. Quest Foundry Co., 229 Minn. 131, 38 N.W.2d 223, and Nordling v. Ford Motor Co., 231 Minn. 68, 42 N.W.2d 576, and we need not repeat what was said there. Suffice to say that it is the declared public policy of our state, as shown by the legislative declaration of public policy in the act, § 268.03, that benefits are intended to extend to those who are unemployed through no fault of their own.

Fazio v. Unemployment Compensation Board of Review, 164 Pa.Super. 9, 63 A.2d...