State, Dept. of Indus. Relations v. Deslattes

• Decision Date: 23 May 1979
• Citation: 372 So.2d 867
• Parties: STATE of Alabama, DEPARTMENT OF INDUSTRIAL RELATIONS v. Calvin L. DESLATTES. Civ. 1795.
• Court: Alabama Court of Civil Appeals

Page 867

372 So.2d 867

STATE of Alabama, DEPARTMENT OF INDUSTRIAL RELATIONS v. Calvin L. DESLATTES.

Civ. 1795.

Court of Civil Appeals of Alabama.

May 23, 1979.

Rehearing Denied June 20, 1979.

George C. Cocoris, Gen. Counsel, State of Alabama, Dept. of Industrial Relations, and Wesley Romine, Asst. Gen. Counsel, State of Ala., Dept. of Industrial Relations, Montgomery, for appellant.

John E. Moeller, Jr., and James G. Lee, Tuscaloosa, for appellee.

HOLMES, Judge.

This is an unemployment compensation case.

Plaintiff filed a claim for unemployment compensation benefits which was denied by the local claims examiner and the compensation referee. Plaintiff successfully appealed the referee's denial to the Board of Appeals for the Department of Industrial Relations. The Board's decision was affirmed in the court below and the Department appealed.

The dispositive issue on appeal is whether the trial court erred in its determination that an employer's voluntary payment of a separation allowance does not disqualify a claimant from unemployment compensation benefits. We hold it did not and affirm.

The record reveals the following: Plaintiff and other employees of Gulf States Paper Company were involuntarily separated from employment upon Gulf States' decision to close its Tuscaloosa paper mill. At the time of the closing, plaintiff had worked for Gulf States for over thirty-five years.

Upon plaintiff's separation, Gulf States, though not legally obligated to do so, agreed with its employees that it would pay a lump sum termination allowance. The amount of the termination allowance was calculated on the number of years an employee had worked for Gulf States.

After termination, plaintiff received a lump sum allowance computed on his thirty-five years and nine months of employment with the company. He also received vacation and holiday pay for ten weeks of accrued vacation time.

Subsequent to plaintiff's receipt of these benefits, he applied for unemployment compensation. Upon the referee's denial of benefits, plaintiff appealed to the Department's Board of Appeals.

The Board found plaintiff qualified for benefits under § 25-4-71, Code of Ala.1975, on the basis that the company's payment of the lump sum termination allowance was not a payment of "wages" which would render plaintiff ineligible for benefits. In this regard, the Board specifically found that the payment plaintiff received under the plan was "indemnity for the loss of the job" and was not "wages." In the alternative, the Board found that the termination allowance was a "dismissal payment" which under § 25-4-16(8), Code of Ala.1975, is statutorily excluded from the definition of "wages." In addition to finding that plaintiff had not received "wages," the Board also determined that the payment was not made with respect to any particular week or weeks after plaintiff's separation from work but that the allowance was paid with respect to weeks prior to the date employment was terminated.

Upon the circuit court's affirmance of the Board's decision, the Department appealed.

The Department contends that pursuant to § 25-4-71, a claimant is disqualified for unemployment benefits if he receives a lump sum separation allowance. Specifically, the Department maintains that such remuneration is the payment of "wages" and that such "wages" are attributable to weeks subsequent to the date the employee was separated from employment. We disagree.

At the outset, we note that our Unemployment Compensation Act is remedial in nature: its beneficent purpose should be liberally construed and its disqualification provisions should be narrowly interpreted. Holmes v. Cook, 45 Ala.App. 688, 236 So.2d 352 (1970).

Under the Act, an individual is eligible for benefits if he is unemployed. § 25-4-77(4). An individual is deemed unemployed in any week if two conditions are satisfied: (1) he performs no services during that week And (2) with respect to which no wages are payable to him. The two conditions are not to be confused; an individual is not deemed unemployed even though he performs no services during a given week If he receives wages attributable to weeks after his termination from employment. § 25-4-71. See also Director of Dept. of Ind. Relations v. Butler, Ala.Civ.App., 367 So.2d 496 (1979).

In the instant case, there is no dispute that plaintiff rendered no services subsequent to his departure from the company. The Department contends, however, that plaintiff may not be deemed unemployed under § 25-4-71 because payment of the allowance is the payment of "wages" attributable to the weeks after termination from the job. We hold that plaintiff is unemployed as that term is defined in § 25-4-71.

The statute defines "wages" as every form of remuneration paid or received for personal services. § 25-4-16, Code of Ala.1975. "Wages," with certain express statutory exceptions, does not, however, include remuneration which an employer is under no legal obligation to make. For example, § 25-4-16(8) provides that dismissal payments which an employer is not legally obligated to make are not considered "wages."

There is further support for the conclusion that remuneration voluntarily made is not considered "wages." Section 25-4-78(8) provides that a person who receives pension payments Made pursuant to a contract, i. e., a legal obligation, is disqualified for benefits. Thus the converse is equally true; payments voluntarily made do not disqualify the claimant. See, e. g., Holmes v. Cook, supra.

In the case at bar, it is stipulated that the company paid its employees voluntarily, it was under no legal compulsion to do so. Inasmuch as the termination allowance was voluntarily made, it cannot be considered the payment of "wages" which disqualify an applicant under § 25-4-71. In addition, and as a factual question, we are mindful that the Board of Appeals found that the company's payment of the allowance was not the payment of "wages" in that it was intended to award employees a "dismissal allowance" and/or as an "indemnity for loss of the job."

We are further of the opinion that even assuming Arguendo that the separation allowance in this instance can be considered "wages," it is not attributable to weeks following termination from employment. As we noted above, in order for the receipt of "wages" to disqualify a claimant under § 25-4-71, the payment must constitute wages for the weeks Following separation as opposed to payment for services rendered prior to termination of employment. Stated alternatively, the disqualifying provisions of § 25-4-71 apply to weeks with respect to which payments are made, not the week in which payment is received. See, e. g., Ackerson v. Western Union Tel. Co., 234 Minn. 271, 48 N.W.2d 338 (1951). The determination of whether payments are made with respect to weeks following separation from employment is a question of fact. See Schenley Distillers, Inc. v. Review Bd. of Ind., Employment S.D., 123 Ind.App. 508, 112 N.E.2d 299 (1953).

As we noted above, the Board of Appeals found that the termination payment did not apply to weeks following separation from the job. The trial court apparently agreed. We find support in the record for this conclusion.

The record indicates that plaintiff accumulated substantial job equity while serving his company for over thirty-five years. The value of this job equity was further enhanced by other benefits to which plaintiff was entitled such as hospital and medical coverage, seniority rights and profit sharing benefits. Thus, to this court it is plausible to conclude that the company intended the termination allowance to indemnify plaintiff for loss of his job and for services rendered prior to termination rather than compensation attributable to weeks subsequent to separation.

In addition, we observe that the company's agreement is conspicuous in the absence of language that the plaintiff's payment was intended to apply to weeks subsequent to separation. Contra, Fazio v. Unemployment Comp. Bd. of Rev., 164 Pa.Super. 9, 63 A.2d 489 (1949). Furthermore the computation of the amount of plaintiff's benefit relates only to factors which occurred prior to separation of employment.

We are in agreement with the court in Southwestern Bell Tel. Co. v. Emp. Sec. Bd., 189 Kan. 600, 371 P.2d 134 (1962), which viewed the absence of such factors significant in its holding that a termination payment did not disqualify the claimant from receiving benefits. In so holding, the court stated:

In the absence of such provisions it may not be presumed that the contracting parties meant to pay wages for no services, and allocate such payments to a period After termination. Generally speaking, wages are tied to the week of work and not to the week in which they are paid. In order to associate pay with specific weeks, there must be some connection between the two. The termination allowances here involved were in no way related to or dependent upon the claimants' employment status after termination. . . .

. . . All of the...