Anderson v. Board of Review of Indus. Com'n of Utah, Dept. of Employment Sec.
| Decision Date | 24 April 1987 |
| Docket Number | No. 20574,20574 |
| Citation | 737 P.2d 211 |
| Parties | Arlend V. ANDERSON, et al., Greyhound Employees, Plaintiffs, v. BOARD OF REVIEW OF the INDUSTRIAL COMMISSION OF UTAH, DEPARTMENT OF EMPLOYMENT SECURITY, Greyhound Lines, Inc., Defendants. |
| Court | Utah Supreme Court |
Arthur F. Sandack, Salt Lake City, for plaintiffs.
K. Allan Zabel, Lorin R. Blauer, Salt Lake City, for defendant Indus. Com'n.
David A. Anderson, Salt Lake City, for defendant Greyhound.
Plaintiffs ("the employees") are seventy-five Amalgamated Transit Union ("the union") members claiming unemployment compensation under the Utah Employment Security Act ("the Act"). Utah Code Ann. §§ 35-4-1 to -26 (1986). They appeal from a decision of the Industrial Commission Board of Review affirming the administrative law judge's holding that they were not entitled to unemployment benefits for the period during which they were on strike against their employer, Greyhound Lines, Inc. ("Greyhound"). The employees claim that they were improperly denied benefits because the work stoppage was caused by the company's constructive lockout and not by a strike. Alternatively, the employees contend that Greyhound caused the strike by violating federal labor laws and that they are therefore eligible for unemployment benefits. We affirm the decision of the Board of Review.
In 1980, the union and Greyhound entered into a collective bargaining agreement. The agreement expired at midnight on October 31, 1983. Prior to the expiration of the contract, Greyhound advised the union that it was losing money and would request economic concessions in the new contract, seeking parity in wages and benefits with other carriers. Formal negotiations between Greyhound and the union began on September 14, 1983. On October 5, 1983, the union broke off negotiations in order to take a membership vote on Greyhound's proposal. The proposal was rejected by the union on October 24th, and the membership authorized the union leadership to take strike action.
Greyhound presented a final offer to the union on October 31st, the day the contract expired. That offer represented an 18 to 25 percent reduction in wages and benefits. The union rejected this offer and proposed instead to operate under the old contract for one additional year. Greyhound rejected the union's offer and countered by proposing to extend the terms of the 1980 contract as modified by Greyhound's October 31st offer for a mutually-agreed-upon number of days to permit additional negotiations. Greyhound's offer also provided that when the parties reached a new agreement, it would be made retroactive to November 1st. The union rejected these terms and reaffirmed its offer to extend the 1980 agreement for a year. Greyhound again rejected the union's proposed extension.
On October 31st at 7:00 p.m., the union voted to strike. The 1980 agreement was extended for 48 hours to minimize inconvenience to the public, and the strike began on November 3rd. Greyhound notified the employees that work was available for any employee who wished to work during the strike under the terms of Greyhound's October 31st offer. The employees involved in this action did not attempt to return to work. A final agreement on a new contract containing a substantial reduction in wages and benefits was reached on December 3, 1983.
The employees submitted claims for unemployment insurance for the period of the strike, November 3rd to approximately December 3rd. These claims were denied by the administrative law judge, whose decision was upheld by the Board of Review.
Before the Board, the employees claimed that there was a constructive lockout, not a strike, because Greyhound refused the union's offer to continue work under the terms of the 1980 contract and unilaterally changed the status quo. This change in the status quo, the employees argued, is equivalent to a lockout and cannot operate to deny them unemployment compensation. They relied upon the Pennsylvania Supreme Court decision in Erie Forge & Steel Corp. v. Unemployment Compensation Board of Review, 400 Pa. 440, 163 A.2d 91 (1960). 1
The Board of Review accepted the applicability of the Erie Forge test, but held that there was no constructive lockout in this case. In reaching this conclusion, the Board first found that the employees had not qualified for the Erie Forge test because "the union did not agree to maintain the status quo for a reasonable time." Alternatively it found that because of deregulation in the common carrier transportation industry, Greyhound would suffer "serious financial hardship" if the status quo had been maintained. Therefore, the Erie Forge test could not be satisfied because Greyhound qualified for the employer's hardship exception to that rule. See Oriti v. Board of Review, Ohio Bureau of Employment Services, 7 Ohio App.3d 311, 313-14, 455 N.E.2d 720, 723-24 (1983). This appeal followed.
Before this Court, the parties and the Board essentially reargue the correctness of the Board's application of the Erie Forge rules. However, we conclude that all parties' reliance on the status quo test and its exceptions, as spelled out in Erie Forge and Oriti, is misplaced.
Explaining our rejection of the premises relied upon by both the employees and the Board requires a rather lengthy examination of a portion of Utah's unemployment compensation statute. At issue is the application of the Utah Employment Security Act, Utah Code Ann. § 35-4-5 (1986), which states:
An individual is ineligible for benefits or for purposes of establishing a waiting period:
....
(d) For any week in which the commission finds that his unemployment is due to a stoppage of work which exists because of a strike involving his grade, class, or group of workers at the factory or establishment at which he is or was last employed.
(1) If the commission finds that a strike has been fomented by a worker of any employer, none of the workers of the grade, class, or group of workers of the individual who is found to be a party to the plan, or agreement to foment a strike, shall be eligible for benefits. However, if the commission finds that the strike is caused by the failure or refusal of any employer to conform to the provisions of any law of the state of Utah or of the United States pertaining to hours, wages, or other conditions of work, the strike shall not render the workers ineligible for benefits.
Under the terms of the Act, the Industrial Commission must make three specific findings to determine eligibility for benefits: (i) whether there was a work stoppage, (ii) if there was a work stoppage, whether it was caused by a strike, and (iii) if it was caused by a strike, whether the strike was caused by the employer's failure to conform to either state or federal laws on hours, wages, or other working conditions. In illustrating the application of these criteria to the present case, each of the statutory requirements will be separately analyzed.
The first question is whether there was a work stoppage. A majority of states interpreting the term "stoppage of work" in similar statutes have ruled that it refers to a substantial cessation or stoppage of the employer's operation, not of the individual employee's work. 2 In those states, therefore, a "work stoppage" is distinguished from a "strike" because a strike does not always result in a substantial cessation of an employer's operations. For example, some businesses continue to operate during a strike by replacing striking personnel, or a strike may affect only one operating unit and other units may maintain normal production. E.g., Continental Oil Co. v. Board of Labor Appeals, 178 Mont. 143, 155-58, 582 P.2d 1236, 1243-45 (1978).
A minority of jurisdictions consider "stoppage" and "strike" as synonymous terms and argue that "stoppage of work" refers to the labor of the individual employee. 3 Under this rule, an individual who stops work because of a labor dispute is disqualified from unemployment benefits regardless of whether the employer's operation is shut down during the strike. See, e.g., Board of Review v. Mid-Continent Petroleum Corp., 193 Okla. 36, 141 P.2d 69 (1943).
The Utah statute is consistent with the majority rule. The statute uses both "stoppage of work" and "strike" in the same sentence and in a context which shows that they are not coterminous: an employee is ineligible for benefits when his unemployment is due to a "stoppage of work which exists because of a strike." Thus, ineligibility for benefits will occur only when there has been a strike and when that strike results in a work stoppage. This Court impliedly accepted the majority rule in Employees of Utah Fuel Co. v. Industrial Commission, 99 Utah 88, 104 P.2d 197 (1940). We now expressly adhere to that position.
In the instant case, the Commission did not expressly find that Greyhound experienced a work stoppage. However, the arguments of all the parties, both here and below, are based upon the assumption that a work stoppage did, in fact, occur. There is no indication in the record that Greyhound experienced anything less than a substantial cessation of operations forty-eight hours after the strike vote. The theory of the employees' case is based upon the existence of a work stoppage. Under the circumstances, we can proceed only on the assumption that this presumed fact is true.
The second question to be answered in determining whether the employees are entitled to compensation under section 5(d) of the Act is whether Greyhound's work stoppage existed "because of a strike." Utah's section 5(d) is rather unique, and an explanation of its origins assists in its interpretation.
In 1935, Congress passed the Social Security Act. Ch. 531, 49 Stat. 620 (1935) (). Under it, states could qualify for federal funding of state unemployment compensation programs; however, the state programs had to meet certain...
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