Texas Employment Commission v. Huey

CourtSupreme Court of Texas
Citation161 Tex. 500,342 S.W.2d 544
Docket NumberNo. A-7789,A-7789
PartiesTEXAS EMPLOYMENT COMMISSION, Petitioner, v. Clara HUEY et al., Respondents.
Decision Date01 February 1961

Will Wilson, Atty. Gen., C. K. Richards, Asst. Atty. Gen., for petitioner.

Mullinax, Wells & Morris, Dallas, for respondents.


Clara Huey and other plaintiffs sought benefits under the Texas Unemployment Compensation Act for the period during which they were out of work while the Nardis Sportswear, Inc., plant was substantially shut down. The case is one purely of statutory construction: were these plaintiffs eligible for benefits under the Act or were they disqualified because of the provision of the union contract with Nardis? Other employees of other plants, not covered by any such contract, are considered by the Texas Employment Commission to be eligible for benefits under similar circumstances. It is the union contract which, in the opinion of the Commission, disqualifies the plaintiffs from benefits. The Commission had paid unemployment benefits to people thus laid off at the Nardis plant from 1946 through 1955 when it changed its position. This suit ensued.

From the standpoint of the plaintiffs, Clara Huey et al., they were simply laid off without pay while the employer was without orders and was changing to new styles. From the standpoint of the employer (with which the Employment Commission now agrees), the shutdown coincided with a period of vacation for employees. Employees with seniority received vacation pay during the period while those like Clara Huey who had been with the company less than a year received none. The Employment Commission contends that the employees had agreed, through their unions, to this 'vacation period' without pay and were thus disqualified from receiving benefits under the Act.

The Act, in the general language of the preamble, says that it is to the public good that the unemployment benefit funds be set aside 'to be used for the benefit of persons unemployed through no fault of their own.' 1 The Act says, 'An individual shall be deemed 'totally unemployed' in any benefit period during which he performs no services and with respect to which no wages are payable to him.' 2 It is stipulated that the plaintiffs performed no services and received no wages during this period. The Act, as applicable here, disqualifies a person from benefits if 'he has left his last work voluntarily without good cause connected with his work.' 3

The trial court sustained the action of the Commission in denying the plaintiffs a recovery. The Court of Civil Appeals reversed that judgment and held that these plaintiffs were not disqualified because of the union contract from receiving benefits under the Act. 332 S.W.2d 366. It held, among other things, that these people had not left their employment 'voluntarily without good cause connected with their employment.' We here affirm that judgment.

The facts are stipulated. Since at least 1946, it had been the practice of Nardis to shut down substantial parts of its operations between its summer and fall seasons. Its summer merchandise was primarily cotton. Its fall line was primarily of woolen and heavy cotton garments. The practice had been that at the close of the summer season, when there were no more orders for summer garments, to shut down. The time of the shutdown varied from year to year depending upon the volume and timing of sales. Nardis employed people when work (orders for finished merchandise) was available. When work was short or unavailable, it laid off employees. None of the employees was guaranteed any set number of hours per week or per year, and sometimes the factory had been shut down for lack of work when such shutdown did not coincide with the period when vacations were taken.

Beginning about 1946, the collective bargaining agreement provided that Nardis would grant a week's vacation to employees who had been there a year. The vacation pay was 40 times the employee's average hourly wage. If the employee had been there 5 years, he was entitled to two weeks' vacation during which he received 80 times his average hourly wage. The agreement was silent as to employees who had been there less than a year. It provided that the vacation period would be determined by the employer, Nardis, at some time between June 1 and September 30 of each year. It made no provision for a plant shutdown.

In March of 1955, the contract was revised to read:

'A. The object of establishing the Vacation Plan hereinafter set forth is to provide the workers with diversion and rest from steady continuity of work and to contribute to their health and welfare.

'B. It is the desire and intention of the parties that eligible employees receive and enjoy annually the benefits of paid vacations. Employees are therefore expected not to accept other employment during such vacation periods, otherwise the actual purpose of this vacation plan will be defeated. Acceptance by an employee of work elsewhere during a vacation shall terminate his or her employment status with the Employer at the discretion of the Employer.

'C. The Employer agrees to grant one (1) week's annual vacation with pay * * * to all workers who as of May 1st, of any calendar year during which this agreement is in effect have at least one (1) year's service with the Employer immediately prior to such date; and, two (2) weeks' vacation with pay * * * to all workers who as of the same date have at least five (5) years' service with the Employer.

'D. The vacation period shall be determined by the Employer at times between May 1st and June 30th of each year.'

During the period May 21 through June 4, 1956, Nardis Sportswear shut down a substantial portion of its operations. Employees who had earned a two weeks' paid vacation in accordance with the terms of a collective bargaining contract, also employees who had earned a one week's paid vacation, were told to take their vacations during the shutdown period. Some of the employees in a few departments who had not earned any paid vacation were furnished work during the shutdown. Others, including Clara Huey et al. who had not worked long enough to be entitled to paid vacations, were laid off during the shutdown. They applied for unemployment compensation for the period of time they were laid off without vacation pay during the shutdown. Their claims were denied.

The production facilities of Nardis, though carried on in one building, are divided into two factories. The 120 employees in the third-floor factory work largely on dresses and suits. The 140 employees in the second-floor factory work mainly on skirts and blouses. Of the employees on the first floor, approximately 50 are engaged in finishing and pressing garments produced in the second and third-floor factories; approximately 15 work as cutters, approximately 16 work in the belt department, and approximately 15 in the bundling department.

In 1956 approximately two weeks before the vacations were taken, Nardis notified the employees that the factories would be closed from May 21 through June 4, 1956. During this period Nardis substantially ceased all production operations in its second-floor factory. During the same period, operations were substantially reduced in its third-floor factory. Employees working on that floor who were not entitled to paid vacations under the contract were generally given work during this period. But in the second-floor factory, no work was available. With but a few exceptions, none of the second-floor employees worked during the vacation or shutdown period.

Most of the first-floor employees continuted to work during the period May 21 through June 4 because their duties were finishing operations and work was available for them. Thereafter those on the first floor who were entitled to paid vacations received a vacation on a staggered basis with various employees taking their vacations at different periods of time. Such vacations were taken to coincide with the employer's production schedule so that nonvacationing employees would be available to perform the necessary finishing work as the garments came down from the second and third floors for completion.

The parties stipulated that:

'6. At all times material hereto each of the claimants was carried on the employment rolls of Nardis Sportswear. During the period May 21, through June 4, 1956, claimants were so carried on the Nardis payroll records. Likewise, at all times when employees have been on layoff status, regardless of the reason for such layoff, laid-off employees have continued to be carried on the Nardis employment rolls.

'16. Throughout the years that vacations have been given the union has never agreed that the vacations should be by plant shutdown. The decisions substantially to shut down the factory during the time when vacations are given has always been the employer's decision in accordance with the terms of the contract.

'17. Although the union at all times material hereto was the collective bargaining representative for all of the production employees, some of the employees were not members of the union, including some of the employees who received no vacation pay because of insufficient seniority and those who received one week's vacation pay only because of insufficient seniority. It is agreed, however, that most of the employees were members of the union.

'18. At no time did nay of the plaintiffs request or authorize the union to agree that they or any of them or any employee similarly situated was to receive a vacation without pay whether for a period of one week, two weeks or any other period of time, and the union did not at any time request or agree with Nardis that any such employee was to be given unpaid vacations for any period of time, except to the extent, if any, that they were bound by the contract between the union and the employer of which all employees had notice.

'19. Neither management nor...

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