Southwestern Bell Telephone Co. v. Employment Sec. Bd. of Review

• Decision Date: 05 May 1962
• Docket Number: No. 42513,42513
• Citation: 371 P.2d 134,189 Kan. 600
• Parties: , 93 A.L.R.2d 1312 SOUTHWESTERN BELL TELEPHONE COMPANY, a Coporation, Appellant, v. EMPLOYMENT SECURITY BOARD OF REVIEW of the State of Kansas, Gwendolyn J. Price, Emma J. Johnston, Betty Jane Merriman, Nancy Rose Thomas and Aleda Hawkins, Appellees.
• Court: Kansas Supreme Court

Page 134

371 P.2d 134

189 Kan. 600, 93 A.L.R.2d 1312

SOUTHWESTERN BELL TELEPHONE COMPANY, a Coporation, Appellant, v. EMPLOYMENT SECURITY BOARD OF REVIEW of the State of Kansas Gwendolyn J. Price, Emma J. Johnston, Betty Jane Merriman, Nancy Rose Thomas and Aleda Hawkins, Appellees.

No. 42513.

Supreme Court of Kansas.

May 5, 1962.

Syllabus by the Court

Where five employees were terminated from their employment through no fault of their own after two and three years net credit service as employees, and where, during the weeks following the date of termination, they neither performed services nor received wages, they were unemployed within the meaning of G.S.1961 Supp. 44-703(m), and the fact that upon separation they received certain lump-sum payments from their employer in the form of termination allowances pursuant to a Collective Bargaining Agreement then in effect between the employer and a labor union, did not render them ineligible for unemployment compensation benefits for the period following their termination since the receipt of the lump-sum payments, although constituting 'wages' as defined in G.S.1961 Supp. 44-703(o), did not constitute the receipt of wages 'with respect to' any period following the termination of their employment.

William A. Gray, Topeka, argued the cause, and was on the briefs for appellant.

Lynn D. Smith, Topeka, argued the cause, and Joseph Payne, Kansas City, was with him on the briefs for appellee, Employment Security Board of Review of the State of Kansas.

Robert C. Eckhardt, Houston, Tex., argued the cause, and Jack A. Quinlan, Topeka, was with him on the briefs for individual appellees; Charles V. Koons, Washington, D. C., of counsel.

FATZER, Justice.

This appeal involves the interpretation of the Employment Security Law (G.S.1949, 44-701 et seq., as amended) as to whether the five individual appellee-claimants were 'unemployed' as that term is defined in G.S.1961 Supp. 44-703(m), for the weeks for which they claimed unemployment compensation benefits.

Unless otherwise designated, all subsequent reference to the Employment Security Law found in G.S.1949, 44-701 et seq., as amended, is to G.S.1961 Supplement.

The facts are not in dispute. Services of the five employees were terminated on November 14, 1959, without fault on their part when the telephone exchange at Coffeyville was converted from manual equipment to dial. When conversion occurred, there was not enough work in the exchange to warrant retaining any of them in the service of the company.

The collective bargaining agreement then in effect between the company and the Communication Workers of America, of which the claimants were members, provided for payment of a termination allowance to persons laid off or retired, payable in a lump sum upon termination, based upon wage history and the period of employment. The employees here involved received two or three weeks of termination allowance based upon the formula of the agreement. Provision was also made for mitigation or deferment of a part of the employer's obligation if it re-employed a person within a lesser number of weeks than that number which measured the termination allowance, but the terminated person was not on standby status and was to treat the allowance as absolute and final.

Upon being terminated, the employees filed individual claims for unemployment compensation benefits (44-709[a]), which were consolidated for hearing before an examiner (44-709[b]) who found that each claimant was eligible for unemployment benefits irrespective of the payment of a termination allowance. Following statutory procedure, the company appealed (44-709[d][f]) and the claims were affirmed by the examiner and by the Employment Security Board of Review. Upon judicial review (44-709[h]), the district court adopted the findings of fact and conclusions of law of the referee and the board and rendered judgment that the termination allowance paid to each of the claimants was paid for past services rendered and not with respect to the weeks subsequent to termination of employment and that no wages were payable to claimants with respect to the weeks following their termination for which unemployment compensation was claimed. The appeal is from the judgment finding each of the claimants eligible for unemployment compensation benefits.

The company contends that under the agreement and the law, an employee may not receive both a termination allowance and unemployment benefits for the period following termination equal to the number of weeks upon which the termination payment was computed. Citing one case as an example, Gwendolyn Price received an equivalent of three weeks wages in termination allowance; the company contends she cannot lawfully receive three weeks of unemployment compensation benefits for the three weeks following termination.

The individual appellees and the Employment Security Board of Review contend that since the termination allowances paid to the claimants were computed on a past service base and paid in a lump sum, there is no logical way by which such payments may be said to have been made 'with respect to' any specific number of weeks following termination; that the claimants were unemployed following termination, and that they were entitled to unemployment compensation benefits.

The condition precedent to eligibility under the Employment Security Law is that a claimant be 'unemployed.' That term is defined in 44-703(m) as follows:

'An individual shall be deemed 'unemployed' with respect to any week during which he performs no services and with respect to which no wages are payable to him * * *.'

The terms 'performs no services' and 'respect to which no wages are payable' are used in the conjunctive, and to be eligible for benefits both conditions must exist. The terms are not to be confused; they mean separate things with respect to the application of the statute.

The parties are agreed that the claimants performed no services for the company following their termination on November 14, 1959; that they were free to locate work elsewhere, but they had no employment during subsequent weeks. They are also agreed that the lump-sum payments received by the claimants as 'termination allowances' were wages as defined in 44-703(o). Thus, it is clear the claimants met the first part of the conjunctive requirement, and they met the second part and were entitled to full benefits, if the termination allowances were not wages 'with respect to' the weeks following termination for which unemployment compensation is claimed.

In support of its contention that it should not be compelled to provide duplicate benefits to the claimants, the company points out that both unemployment compensation benefits and termination allowances are financed by the company, and it bases its argument upon two premises. First, it was the intent of the contracting parties that, as manifested by the terms of the agreement, the termination allowances were to forestall 'economic insecurity' which were to be in lieu of unemployment benefits 'with respect to' the number of weeks upon which the termination allowances were calculated, and that so long as the termination pay mitigated against the 'crushing forces' of unemployment, such allowances were to be considered as wages earned in the past to be enjoyed in the future, when the contractual conditions presedent had been met, although conceding that its agreement with the union made no allocation of wages (termination allowances) to any specific week, either before or after termination, and second, that the statute itself, and the legislative policy which produced its enactment, does not establish, nor did it intend to establish, a principle that the unemployed should receive a 'bonus' for being terminated, or receive double payments or treatment superior to those who are still retained in service; that the statute is best served by a construction which does not permit dual benefits, and to so hold, would discriminate between an employer who provides a termination allowance by compelling duplicate payments, while other employers who do not provide for such an allowance would only be required to make a single payment, and that the overall effect of sustaining the judgment of the district court would be to grant a windfall to the terminated employees, and produce an inequitable and unjust penalty against the company.

It must be borne in mind that in order to receive a termination allowance, definite services must have been performed. In no sense of the word is a termination allowance a mere gratuity. The prerequisite to qualify for such an allowance is the performance of services, which entails regular employment, for a definite number of years, and so forth, all of which were provided for in the employees' contractual rights to receive such payments. Hence, we inquire: Does the agreement show any specific intent by the parties to avoid payment of duplicate benefits in the form of termination allowances and unemployment compensation benefits? The company...