Allen v. Maryland Employment Sec. Bd.

• Decision Date: 18 February 1955
• Docket Number: No. 79,79
• Citation: 111 A.2d 645,206 Md. 316
• Parties: Joseph J. ALLEN et al. v. The MARYLAND EMPLOYMENT SECURITY BOARD.
• Court: Maryland Court of Appeals

Page 316

206 Md. 316

111 A.2d 645

Joseph J. ALLEN et al. v.The MARYLAND EMPLOYMENT SECURITY BOARD.

No. 79.

Court of Appeals of Maryland.

Feb. 18, 1955.

Bernard G. Link, Baltimore, for appellants.

James N. Phillips, Baltimore, Atty. for Board (Edward D. E. Rollins, Atty. Gen. and Herbert L. Cohen, Sp. Asst. Atty. Gen. for the Board, on the brief), for appellee.

Before DELAPLAINE, COLLINS, HENDERSON and HAMMOND, JJ.,

HAMMOND, Judge.

Under the Maryland Unemployment Compensation Act, one is entitled to receive benefits, as unemployed, in any week 'during which he performs no services and with respect to which no wages are payable to him * * *.'Code 1951, Art. 95A, § 19(l).The question which this appeal presents, on agreed and stipulated facts, is whether some ninety employees who received vacation pay from their employer at the time of lay-off for lack of work were unemployed following the lay-off whether, in other words, the vacation pay was payable with respect to the week or weeks, as the individual case may have been, immediately after the payments.The Employment Security Board found that the employees were not unemployed during the weeks in question, and denied benefits.The lower court affirmed.

The true meaning and effect of the applicable statutes must be decided in the light of the terms of the labor-management agreement between the employer and the employees' union.Art. XV of the agreement deals with vacations.An employee with from one to five years continuous service 'shall receive one week's vacation with pay'; an employee with from five to fifteen years service shall receive two weeks vacation with pay; and an employee with fifteen or more years of service shall receive three weeks vacation with pay; provided, in each instance, that he has worked at least 750 hours during the preceding calendar year.Vacation pay is calculated at the current hourly rate 'at the time the vacation is taken or the vacation pay otherwise becomes payable'.A vacation week is the average number of hours worked by the eligible employee for the past ten weeks but is to be not less than forty, nor more than forty-eight hours.If an eligible employee becomes disabled before he has had an earned vacation, he is paid his vacation pay when released.If he dies, it is paid to his survivors, and 'an employee who is laid off and who has fulfilled the requirements for a vacation but has not received it, shall receive his vacation pay at the time of lay-off.'If an employee quits or is discharged, he forfeits all vacation rights.

The vacation is to be taken, under section 7 of Art. XV of the agreement, between January 1 and December 31'as operations of the company permit', although a vacation begun before December 31 is considered to have been taken in the year it began.It is stipulated that the practice is to permit employees to take vacations at the time of their own choosing, insofar as the work schedule permits.There is no provision in the agreement which allows an employee to continue his work, refuse a vacation and receive vacation pay as well as regular pay.Indeed, one provision of the agreement is that if the company fails to provide a vacation to an eligible employee during the stated period, the employee must be paid one and a half times the vacation pay due him.

The ninety workers, who are appellants, were laid off at various times from January to May, 1953.Promptly, they applied for unemployment benefits to be paid from the date of the lay-off and were refused for the first week or weeks thereafter--for the length of time it would have taken to earn the vacation pay which was paid them.It is agreed, entirely correctly we think, that the employees performed no services for the employer after they were laid off, and that vacation pay is wages within the meaning of the statute.The decisive question is whether the money paid to the employees was payable with respect to the week or weeks immediately following the lay-off, or whether it was a bonus for services rendered during the preceding year.

The courts of other states have had to deal with similar questions and the decisions have varied as the facts, or the court's interpretation of the facts, fell on one side or the other of the line.The distinction which leads to the two different results is pointed up by the Supreme Court of Michigan.In Renown Stove Co. v. Michigan Unemployment Comp. Comm., 328 Mich. 436, 44 N.W.2d 1, 3, the employer laid off a number of its employees indefinitely, for lack of work.They began to draw unemployment benefits.Some three months later, the employer paid eligible employees vacation pay, some for one week and some for two weeks, for a vacation period beginning on a designated day.The Michigan statute disqualifies an employee for benefits for any week 'with respect to which'he is receiving or has received payments in the form of 'vacation with pay'.Two groups of employees were involved, belonging to different unions.The Court said: 'It was clearly the legislative intent, in enacting the disqualifying provisions * * * to disqualify an individual from benefits even for a period during which he did not work for his employer, if he received pay from his employer with respect to that period.The act discloses no legislative intent to make such disqualification for the period in question dependent upon whether the individual happened to have been working for the same employer the weeks immediately preceding and following such period, or to render the disqualification inoperative, if, during that self-same period, the individual * * * failed to relax because he lacked the assurance that immediately following said period he would be able to return to his old job.The controlling question in this case is, then, whether the employer did pay the employees for or with respect to the one or two week period which commenced July 5th.If it did, then it follows that the employees received vacation with pay within the meaning of the statute and are disqualified from receiving benefits.'

The court found, as to one group of employees whose union contract with the company provided for paid vacation, earned in a manner similar to those in the case at bar, that the pay received after the employees had been laid off for three months was with respect to the week or weeks beginning on the day designated by the employer.As to the employees who were members of the other union, a different result was reached, because the contract in their case provided that there should be given a vacation of so many hours' pay and that "employees will be permitted to receive 40 hours' or 80 hours' pay in lieu of the vacation".The court said that it was to be noted that: '* * * the employer did not have the option of laying employees off for one or two weeks, declaring the lay-off to be a vacation and designating the 40 or 80 hours' pay in lieu of vacation provided for in the contract, to be, in fact, vacation pay; on the contrary, the option rested with the employees to elect whether they would take...