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

• Decision Date: 04 November 1972
• Docket Number: No. 46594,46594
• Citation: Southwestern Bell Telephone Co. v. Employment Sec. Bd. of Review, 502 P.2d 645, 210 Kan. 403 (Kan. 1972)
• Parties: SOUTHWESTERN BELL TELEPHONE COMPANY, a Corporation, Appellant, v. EMPLOYMENT SECURITY BOARD OF REVIEW of the State of Kansas, and Marie T. Dailey, Appellees.
• Court: Kansas Supreme Court

Page 645

502 P.2d 645

210 Kan. 403

SOUTHWESTERN BELL TELEPHONE COMPANY, a Corporation, Appellant, v. EMPLOYMENT SECURITY BOARD OF REVIEW of the State of Kansas and Marie T. Dailey, Appellees.

No. 46594.

Supreme Court of Kansas.

Nov. 4, 1972.

Rehearing Denied Dec. 14, 1972.

Syllabus by the Court

1. K.S.A. 44-718 of the Employment Security Act is construed to invalidate a collective bargaining agreement or any other agreement requiring mandatory retirement at age sixty-five to the extent that the provisions of the agreement waive, release, or commute unemployment compensation benefits.

2. The construction of K.S.A. 44-718, used as a basis for the decision in Goodyear Tire & Rubber Co. v. Employment Security Board of Review, 205 Kan. 279, 469 P.2d 263, is disapproved.

T. Larry Barnes, Topeka, argued the cause, and Lawrence A. Dimmitt, Topeka, was with him on the brief for appellant.

Marlin A. White, Holton, argued the cause and was on the brief for appellees.

OWSLEY, Justice:

This is an appeal from a decision of the district court affirming an order of the Kansas Employment Security Board of Review finding Marie T. Dailey was entitled to maximum unemployment compensation benefits upon her retirement at age sixty-five. Marie T. Dailey will be referred to as Dailey, Southwestern Bell Telephone Company as Bell, and the Kansas Employment Security Board of Review as the Board.

Broadly stated, the issue is whether one who wishes to continue working is entitled to unemployment benefits after retirement under a mandatory retirement plan which is part of a union-management agreement.

Dailey entered Bell's service in 1938 as a telephone operator. At that time Bell had adopted and was maintaining a 'Plan for Employees' Pensions, Disability Benefits and Insurance.' The plan called for retirement at age sixty-five, which was known by Dailey. In 1941 an agreement was made between Bell and the Union (Communications Workers of America, AFL-CIO), of which Dailey was a member, that no change would be made in the 'plan' without the consent of the Union.

On February 1, 1969, Dailey, having reached the age of sixty-five, was retired. Her retirement pension amounted to $85.56 per month and on May 31, 1969, it was raised to $125.00 per month. She is also receiving social security payments in the sum of $146.00 per month. Her salary prior to retirement had been $105.50 per week.

On February 28, 1969, Dailey filed an application for unemployment benefits. On March 3, 1969, an examiner found she was disqualified. On appeal, a referee reversed the decision of the examiner. On review by the Board, it was found that Dailey was entitled to unemployment benefits. The decision of the district court was in accord with the Board and Bell has appealed to this court.

The jurisdiction of this court on review of the action of an administrative body is not in question. The parties agree that the issue hereinbefore stated is a question of law and as such is subject to judicial review under K.S.A.1971 Supp. 44-409(i).

A large portion of the monies used for administration of the unemployment benefit laws comes from taxes on employers. The method of assessing and collecting these taxes is set out in K.S.A.1971 Supp. 44-710 et seq., which establishes an employer's 'experience rating.' The experience rating is determined by the number of times ex-employees obtain benefits without periods of disqualification. If there is no period of disqualification the employer's account is charged with the full amount which the claimant receives. If the claimant is disqualified for any statutory reason he is disqualified 'For the week in which he left work . . . and for the six (6) consecutive weeks which immediately follow such week: . . ..' (K.S.A.1971 Supp. 44-706(a).) After the seven-week period has passed, the claimant is then permitted to receive unemployment compensation if he still meets the eligibility requirements. Payments are not charged to the experience rating of the employer when claimant leaves his employment voluntarily without good cause. (K.S.A.1971 Supp. 44-710(c).) The result is that the employee who voluntarily left the labor market through no fault of the employer may be allowed a limited amount of compensation, but the employer will not be taxed for these payments.

Eligibility conditions are found in K.S.A. 44-705 (now K.S.A.1971 Supp. 44-705), which sets forth five requirements. Eligibility is frequently questioned under requirement (c) which provides claimant 'is able to work, is available for work, and is making reasonable efforts to obtain work'. Bell does not question Dailey's eligibility under this statute.

Disqualifications for benefits are found in K.S.A. 44-706 (now K.S.A.1971 Supp. 44-706.) When a disqualification rule applies, a claimant may still be eligible to receive benefits, but not for the full twenty-six weeks. This case involves Dailey's disqualification. The pertinent part of the statute reads:

'An individual shall be disqualified for benefits:

'(a) For the week in which he left work voluntarily without good cause and for the six (6) consecutive weeks which immediately follow such week: Provided, That if an individual leaves work by his own action because of domestic or family responsibilities, not including pregnancy, self-employment or to retire because of disability or old age, or to attend school such individual shall be disqualified for benefits until he again becomes employed and has had earnings of at least eight (8) times his weekly benefit amount.'

The issue presented in this appeal is one of first impression in this state. It might be advisable, however, to review our unemployment benefit cases to the extent they might bear on the issue in this case.

In Clark v. Board of Review of Employment Security Division, 187 Kan. 695, 359 P.2d 856, the claimant, having reached mandatory retirement age, was retired on a pension from his employer, Skelly Oil Company. The case was decided against the claimant on the eligibility issue of availability for work. We did not consider the effect of the mandatory retirement. We did state, however, that the public policy of the state is to '. . . protect against involuntary unemployment-that is, to provide benefits for those who are unemployed through no fault of their own and who are willing, anxious and ready to support themselves and their families, and who are unemployed because of conditions over which they have no control; . . ..' (p. 698, 359 P.2d p. 859.)

In Goodyear Tire & Rubber Co. v. Employment Security Board of Review, 205

Kan. 279, 469 P.2d 263, we considered a vacation shutdown of two weeks and said:

'Under a collective bargaining agreement which authorized the employer to shut down all or part of its plant for two weeks for vacation purposes, and those employees eligible to a vacation were required to take their vacations during the shutdown period, unless they elected to defer all or part of their vacation to the following year, or had scheduled their vacation for some other time during the vacation year, in which case they were considered on a 'leave of absence,' it is held, that employees who elected to take their vacations at some other time than during the shutdown period were voluntarily unemployed and, thus, were not eligible for unemployment compensation benefits under the law.' (Syl. 2.)

This was a four-three decision. The dissent was principally based on K.S.A. 44-718, which provides 'No agreement by an individual to waive, release, or commute his rights to benefits or any other rights under this act shall be valid. . . .' It was said:

'. . . The holding of the majority now makes an employee's eligibility for benefits dependent upon the niceties of expression found in each collective bargaining agreement and disregards the conditions of eligibility specifically enumerated in the act. Actually, the court's interpretation of the agreement in question amounts to a waiver of rights to which an employee is otherwise entitled. Such agreements are invalid under the provisions of the act.' (p. 291, 469 P.2d p. 272.)

In Pickman v. Weltmer, 191 Kan. 543, 382 P.2d 298, we said the provisions of the Kansas Employment Security Law should receive a liberal interpretation.

In Southwestern Bell Telephone Co. v. Employment Security Board of Review, 189 Kan. 600, 371 P.2d 134, we held that lump sum payments on termination of employment pursuant to a collective bargaining agreement did not render employees ineligible for unemployment compensation benefits. We also stated that need of the claimant was not a prerequisite to eligibility.

Our approach to the issue is set by the rule of liberal interpretation. (Pickman v. Weltmer, supra.) The public policy of the state is to 'protect against involuntary unemployment.' (Clark v. Board of Review of Employment Security Division, supra.) Lump sum payments on termination of employment pursuant to a collective bargaining agreement to not render an employee ineligible and need of an employee is not a prerequisite to eligibility. (Southwestern Bell Telephone Co. v. Employment Security Board of Review, supra.) The effect of Goodyear will be later discussed.

Turning to other case law, we find the first mandatory retirement case to reach the appellant courts was Campbell Soup Co. v. Bd. of Review, Div. of Employment Security, 13 N.J. 431, 100 A.2d 287 (1953). The opinion was written by Mr. Justice William J. Brennan, Jr., now of the Supreme Court of the United States. This case squarely presented the question of whether workers who were required to retire on pension at age sixty-five by a collective bargaining agreement left work voluntarily without good cause so as to be disqualified for unemployment compensation. The court held the workers had left their employment involuntarily and were awarded benefits. The court considered the use of the word 'voluntary', considered the controlling effect of a union...