General Elec. Co. v. Director of Division of Employment Sec.

• Decision Date: 04 May 1965
• Parties: GENERAL ELECTRIC COMPANY v. DIRECTOR OF the DIVISION OF EMPLOYMENT SECURITY et al. (and a companion case; see footnote 1).
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 289

207 N.E.2d 289

349 Mass. 207

GENERAL ELECTRIC COMPANY v. DIRECTOR OF the DIVISION OF EMPLOYMENT SECURITY et al. (and

a companion case; see footnote 1).

Supreme Judicial Court of Massachusetts, Essex.

Argued April 8, 1965.

Decided May 4, 1965.

Laurence S. Fordham, Boston, for General Electric Co.

Joseph S. Ayoub, Asst. Atty. Gen. (Israel L. Cohen, Boston, with him), for Director of Div. of Employment Security.

Warren H. Pyle, Boston, for Robert A. Snow and another.

Before WHITTEMORE, CUTTER, KIRK, SPIEGEL and REARDON, JJ.

CUTTER, Justice.

These claimants for unemployment benefits under G.L. c. 151A were employees of General Electric Company. The plant in which the claimants were employed was 'shut down during the weeks ending July 21 and July 28, 1962, for vacation purposes,' pursuant to the applicable collective bargaining agreement between the claimants' union and the company. No work was provided for the claimants during these two weeks. Under the collective bargaining agreement, 'an employee receives any vacation pay for which he is [then] eligible at the time of the vacation shutdown. An individual is eligible for vacation pay at the completion of one year of continuous service. If he is not eligible for vacation pay at the time of the vacation closing, but becomes eligible during the latter half of the year, he will be given vacation pay when he completes his year of service. Each of the * * * [claimants] would [have] become eligible for vacation pay at later dates during 1962.'

All but one of the claimants had less than one year's continuous service at the time of the regular vacation period. That employee (one Snow) was entitled to one week's vacation pay when the plant closed, which then was paid to him.

A review examiner, in behalf of the director, found on August 22, 1962 (and on September 17, 1962, with respect to Snow), that the claimants 'were in unemployment' during the period of closing and were entitled to waiting period credit and benefits for the two weeks (except for Snow who was found by another examiner to be so entitled for one week). The board of review (on November 27 and 29, 1962) sustained the review exminers' decisions. The company filed in the District Court petitions for review, and thereafter claimed appeals to this court from decisions of the District Court affirming the review board's decisions. The cases are before us upon reports by the judge of the District Court. From those reports if appears that all the claimants returned to work after the vacation shutdown and that each claimant, except Snow and one salaried employee, upon the anniversary date of his employment received vacation pay for one week. ¹ These anniversary dates occurred between August 8 and December 26, 1962.

The review board decided that 'any vacation pay received by the claimants subsequent to the closing of the plant is not remuneration that can be applied to the vacation shutdown weeks within the meaning of' G.L. c. 151A, § 1(r)(3). 'Therefore, it is also found that they were in total unemployment during the weeks in issue within the meaning of' § 1(r)(2). The relevant statutes are set out in the margin. ² The company, however, contends that the vacation pay disbursed to each claimant at some time after the two week vacation period was 'consideration * * * as payment for vacation allowance during a period of regular employment' and that it 'can reasonably be considered to apply' to the two weeks of vacation period within § 1(r)(2) and (3).

The relevant statutes are far from clear on the points at issue. Certainly, the 'vacation' payments, once the employee becomes eligible to receive them, seem to be intended as compensation for time spent in vacation. The period of the shutdown was the period prior to the actual 'vacation' payment (on the anniversary of employment) most clearly to be regarded as spent on vacation by these claimants. There is undoubtedly some atmosphere of duplicated compensation for the shutdown period, if an employee receives unemployment benefits at the time of the shutdown and later receives 'vacation pay' at not less than his full weekly rate at the end of his first year of employment. These considerations, however, are not necessarily conclusive.

The director, in his brief, lays emphasis upon c. 151A, §§ 38, and 39, ³ which, he contends 'emphasize the mandate of the Legislature for a prompt determination of claims.' At the time of a shutdown, in circumstances such as those here disclosed, he says 'it is irrelevant that the claimant may receive a sum of money at some future date, contingent upon his continuing his relationship with the employer, and that there be no intervention of death, illness, layoffs * * * or other unforeseen circumstances which would terminate his employment.' There can be no doubt that the 'vacation pay' was not available to these employees to meet the living expenses of their families when the plant was shutdown. They then had merely a form of expectant interest, which would cease to be contingent only at the end of the first year of employment.

The purpose of c. 151A is obviously 'to afford relief to those * * * [covered by the statute] when they are thrown out of work through no fault of their own,' and is to 'be construed liberally in aid of its purpose * * * to lighten the burden which now falls on the unemployed worker and his family.' See c. 151A, § 74 (as amended through St.1949, c. 290); Howes Bros. Co. v. Massachusetts Unemployment Compensation Commn., 296 Mass. 275, 282, 5 N.E.2d 720; Worcester Telegram Publishing Co. Inc. v. Director of the Div. of Employment Security, 347 Mass. 505, 512, 198 N.E.2d 892, note, 78 Harv.L.Rev. 1273, 1274. That purpose might in some degree be thwarted, of course, if a first year employee should be denied benefits because of his expectancy of vacation pay.

No Massachusetts case under c. 151A involving vacation pay has presented precisely the problem now before us. In Moen v. Director of the Div. of Employment Security, 324 Mass. 246, 250, 85 N.E.2d 779, 8 A.L.R.2d 429 the provisions of a collective bargaining agreement concerning vacation shutdowns were held to be binding upon each of the represented employees, so that one, not entitled to vacation pay under that bargaining agreement, was treated as voluntarily out of work under the statute, and, therefore, not entitled to benefits. In other States, on such facts, varying results have been reached. See Teichler v. Curtiss-Wright Corp., 24 N.J. 585, 588-591, 133 A.2d 320, and cases there collected; annotation, 30 A.L.R.2d 366. In any event, since the Moen decision, by St.1949, c. 476, ⁴ there has been added to § 1(r)(2) what is now its last sentence (see fn. 2). This amendment materially affected the rule stated in the Moen case, by providing that an 'individual * * * not entitled to vacation pay * * * shall be deemed to be in total unemployment' (emphasis supplied) during any vacation plant shutdown. The Moen case, of course, did not pass upon the meaning of the word 'entitled' in the amendment.

In Cerce v. Director of the Div. of Employment Security, 333 Mass. 130, 128 N.E.2d 793, this court sustained the action of the director in applying accrued vacation pay to the period immediately following the termination of an employee's employment, where, under the applicable collective bargaining agreement, the employee was to be paid such accrued vacation pay at the termination of the employment. This vacation pay thus was treated as 'remuneration' (see fn. 2) under § 1(r)(3) applicable to the period following the end of emploument. A generally similar result was reached in Kalen v. Director of the Div. of Employment Security, 334 Mass. 503, 505-506, 136 N.E.2d 257. In the Cerce and Kalen cases, the accrued vacation allowance was, of course, absolutely payable at the termination of the employment. The allowance was reasonably treated essentially as dismissal pay which would naturally be applicable to the period following dismissal. The cases are distinguishable from the present case in that there was no element of contingency about the dismissal payments in the earlier cases when the dismissals created a situation of unemployment. ⁵

The company has relied greatly upon Texas Employment Commn. and General Electric Co. v. International Union of Elec. Radio & Mach. Workers, 163 Texas, 135, 352 S.W.2d 252. This case also involved General Electric Company, the same or similar bargaining contract, a closely comparable statute, and circumstances generally like those now presented. The Texas court concluded (at pp. 141-143, 352 S.W.2d at pp. 256, 257) that the vacation pay, when eventually paid, constituted 'wages paid with respect to the vacation-shutdown period' so that 'during such time * * * [the employees] were not totally unemployed.' A lower court judgment awarding benefits was reversed. No other case has come to our attention which so squarely deals with the precise issue before us.

Our decision, however, must rest on interpretation of our own somewhat ambiguous statutes (fn. 2). We must determine whether these claimants were in total unemployment under § 1(r)(2) in the shutdown weeks because they received no remuneration in those weeks although later in 1962 they received a week of vacation pay. As bearing upon this issue we refer to the most directly relevant statutory provisions. (1) To be in total unemployment § 1(r)(2) requires that the 'week' be one 'for which * * * [the employee] receives no remuneration.' (2) Under § 1(r)(2) an employee in unemployment is an 'individual who is not entitled to vacation pay from his employer' (emphasis supplied). That receipt of that...