Janda v. General Motors Corp.

• Decision Date: 07 December 1964
• Docket Number: No. 99,99
• Citation: 237 Md. 161,205 A.2d 228
• Parties: Otto JANDA et al. v. GENERAL MOTORS CORPORATION and Maryland Department of Employment Security
• Court: Maryland Court of Appeals

Page 161

237 Md. 161

205 A.2d 228

Otto JANDA et al. v. GENERAL MOTORS CORPORATION and Maryland Department of Employment Security

No. 99.

Court of Appeals of Maryland.

Dec. 7, 1964.

Lowell Goerlich, Washington, D. C., and Bernard G. Link, Baltimore, for appellants.

James N. Phillips, General Counsel, Dept. of Emp. Security, (Thomas B. Finan, Atty. Gen., and Bernard S. Melnicove, Sp. Asst. Atty. Gen., on the brief), Baltimore, for appellees.

Before HAMMOND, PRESCOTT, MARBURY, SYBERT and OPPENHEIMER, JJ.

HAMMOND, Judge.

The appellants are twenty-nine employees at a plant of the General Motors Corporation in Baltimore who were denied unemployment insurance benefits for a week in January 1963. The reason for the denials by the claims specialist of the Department of Employment Security of Maryland was that each claimant had received from the employer during the week in question 'pay in lieu of vacation' under a written contract between the employer and the union to which the claimant belonged, and that this 'vacation allowance' (in the words of the contract) constituted wages for benefit purposes under the Maryland Unemployment Insurance law, Code (1957-1964 Supp.), Art. 95A, Sec. 6(i)(2).

Timely appeals were noted and on June 12, 1963, came on for hearing before the Board of Appeals which, on August 21 adopted the reasoning and affirmed the conclusions of the claims examiner. The employees appealed to the Superior Court of Baltimore City which followed the examiner and the Board.

On February 18, 1955, this Court, in Allen v. Maryland Emp. Security Board, 206 Md. 316, 111 A.2d 645, held that where every eligible employee received a paid vacation which had to be taken under an employer-union contract (there being no option to continue to work uninterruptedly and receive the usual wages and also vacation pay in lieu of a vacation), such an employee who received vacation pay during a lay off for lack of work was not unemployed for as long a period following the payment as it would have taken to earn customary wages equal to the amount of the payment and, therefore, was not entitled to receive unemployment compensation benefits under Code (1951), Art. 95A, Sec. 19(l) which permitted a claimant 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 * * *.'

The Legislature at its 1956 session did away with the holding in the Allen case. By Ch. 95 of the Laws of that year paragraph 9 was added to subsection (n) of Section 19 of Art. 95A of the Code (1951 Edition and 1955 Supplement) to provide in the words of the title that '* * * vacation pay under certain conditions shall not be considered as 'wages' in the administration of the Unemployment Compensation Law.' See Marquette Cement Manufacturing Co., et al. v. Younkins, et al., Md., 205 A.2d 235. In 1961, following newspaper criticism of abuses in the unemployment compensation system, which were costly to the community and to the taxpayers in particular, the Legislature reacted by imposing various restrictions on the right of the unemployed worker to receive unemployment benefit payments. Ch. 883 of the Laws of 1961(a) repealed Sec. 20(n)(10) of Art. 95A of the Code (1957 Ed.) (which was the language added by the 1956 amendment as Sec. 19(n)(9) of Art. 95A to exclude from the definition of 'wages' the amount of '[v]acation pay earned or accumulated to the credit of the individual, paid or payable at the time of lay off or separation from employment'), and (b) added a new subsection 6(i) to Art. 95A to provide a new disqualification, as follows:

'For any week with respect to which he is receiving, has received, or has filed, or is eligible to file a claim for remuneration in an amount equal to or in excess of his weekly benefit amount in the form of: * * * (2) Vacation allowance (paid directly by the employer or indirectly from a fund); such payments when paid at the time of, or during, a lay off or separation from employment shall be allocated to a number of weeks following the date of payment equal to the number of weeks' pay received * * *.'

This amendment did not take effect June 1, 1961, as the act stated it was to do because proper petitions were timely filed to put Ch. 883 of the Laws of 1961 to referendum. The voters of Maryland approved the bill at the election of November 1962 and it became effective December 6, 1962. One hundred forty-five days later, on April 30, 1963, the Legislature passed as Ch. 729, House Bill 445, which as introduced on February 14, 1963, would have repealed Sec. 6(i) of Art. 95A of the Code (which had been added in 1961 and taken effect on December 6, 1962) in toto. House Bill 445, however, was amended to repeal and reenact with amendments Sec. 6(i) of Art. 95A to revise the disqualification for unemployment benefits where the claimant received dismissal payments or wages, or vacation allowances. As passed, Ch. 729 of the Laws of 1963, effective June 1, 1963, revised the provisions of the 1961 law as to vacation allowances, by adding the words italicized below, as follows:

'(2) Vacation allowance (paid directly by the employer or indirectly from a fund); such payments when paid at the time of, or during, a lay off or separation from employment shall be allocated to a number of weeks following the date of payment equal to the number of weeks' pay received; excepting, however, such allowances as are paid by the employer pursuant to the provisions of and during the period of a written contract in effect on December 6, 1962, between such employer and a collective bargaining agent for such employee if it is not the normal practice of the employer to grant the employee time off with pay for vacation purposes during the year.'

The contract between General Motors and the employees' union was dated September 20, 1961, and ran for three years expiring August 31, 1964. The contract and the testimony of the Director of the Unemployment and Workmen's Compensation Personnel Staff of General Motors Corporation make it plain that the negotiations that proceded the execution of the contract did not include serious discussions as to actual paid vacations and that they were not a major issue in the collective bargaining. It is also plain that the ultimate issue was how much money, in the coin of the realm or the equivalent the employees would be paid, working fifty-two weeks each year, if that much work were available, and not vacations with pay. There is no doubt that, under the contract, every employee, eligible for the vacation allowance by reason of length of service would be entitled to it and be paid it as soon as possible after a specified semi-annual eligibility date 'irrespective of any employment or unemployment' on the part of the employee. Paragraph 184 of the contract is headed 'Vacation Pay Allowances' and provides that: 'In lieu of vacation with pay, the vacation pay allowance provisions of this Section shall apply during the term of this agreement.' There can be no doubt, to use the words of the 1963 statute, that it was not, during the times here pertinent, 'the normal practice of the employer [General Motors Corporation] to grant the employee [each appellant] time off with pay for vacation purposes during the year.'

The primary and pertinent issues on which the case turns, and on which the appellants and the Department of Employment Security differ diametrically now come clearly into focus. The appellants, the employees, first say that, to use the words of the contract, the pay 'in lieu of vacation' received during a critical week by each appellant was not, within the meaning of the 1961 statute, a 'vacation allowance.' Second, they say, that even if it be assumed, or held, that such 'pay in lieu of vacation' was a 'vacation allowance' within the contemplation of the 1961 act, the language of the Legislature in the 1963 repeal and reenactment of the 1961 restriction--that such 'allowances' paid by an employer 'pursuant to a contract in effect on December 6, 1962' and so forth was intended to, and did, operate retrospectively and, therefore, was intended to, and did control and affect unemployment claims and rights occurring between December 6, 1962, and June 1, 1963.

The appellee, General Motors Corporation, in apparent recognition of the fact that for a number of years the unemployment benefits received by its employees have been far in excess of those necessary to require it to pay the maximum rate of unemployment taxes and because receipt of unemployment benefits by its employees tends to promote good employer-union relations, has not opposed the aims and positions of the appellants but apparently sympathizes with them. The other appellee, Department of Employment Security, says the 1961 act made receipt of pay in lieu of vacation a disqualification for benefits and that, in any event, the 1963 act was intended to and did operate prospectively and so affected and controlled only claims arising after June 1, 1963.

We think the legislative and judicial happenings which preceded the passage of the 1961 act and the language used in it by the Legislature reveal an intent to make receipt of vacation pay or allowance granted in lieu of a vacation with pay a disqualification for unemployment benefits. The Allen case held the law in effect in 1955 disqualified one from benefits even for a period during which he did not work if he received pay from his employer with respect to that period. The case clearly implied that if the money received by the employee during a period of separation from employment was not payable with respect to the week or weeks following the lay off but was a bonus or allowance earned because of service previously rendered, it was not then a disqualification. The inference the case suggested was that if the payments there involved had been for past services, without regard to a vacation, rather than, as t...