Opinion
May 6, 1958 —
June 3, 1958.
APPEAL from a judgment of the circuit court for Dane county: RICHARD W. BARDWELL, Circuit Judge. Affirmed as to two Plaintiffs; reversed as to two.
For the appellants there was a brief by Max Raskin, attorney, and Philip L. Padden of counsel, both of Milwaukee, and oral argument by Mr. Raskin.
For the respondent Industrial Commission there was a brief and oral argument by Arnold J. Spencer of Madison.
For the respondent Electric Auto-Lite Company there was a brief and oral argument by H. W. Goranson of Toledo, Ohio.
On January 28, 1957, four employees of Electric Auto-Lite Company brought separate actions against their employer and the Industrial Commission seeking reversal of orders of the commission denying unemployment compensation benefits.
Plaintiffs' claims had been heard before an appeal tribunal of the commission in September, 1956. Each of the employees had sought benefits for the week beginning July 8, 1956 (designated week 28). The appeal tribunal affirmed initial determinations previously made by a commission deputy that each employee was ineligible for benefits for that week. Upon petition for review the commission affirmed. On November 14, 1957, judgment was entered in the circuit court confirming the decision of the commission. Plaintiffs appealed.
The employer is the same as was involved in the companion case of Darling v. Industrial Comm., ante, p. 345, 90 N.W.2d 597. The facts involved in the companion case occurred in 1954, in this case in 1956.
On January 25, 1956, Mr. Padesky, the manager of the La Crosse plant, met with the bargaining committee of the local union and was asked, "We would like to question the plant manager if he is going to designate any weeks for unemployment as vacation." Padesky replied, "Ya, I think we will. We're shooting at, I think its a good thing for the people to know, we are shooting at having a two-week shutdown for vacation this year so anybody that can't afford to get that extra two weeks off better plan on that. Arranging their vacation. I can't guarantee that. It will happen in July, if it happens. Two weeks." On March 9, 1956, Auto-Lite's director of industrial relations at Toledo sent a memo to all plant managers stating, "It has been decided as a matter of over-all company policy that all plants will close for vacation this coming summer. The four Toledo plants will close from June 29th to July 17th. Every effort should be made to shut down during that period, if at all possible. . . ."
On April 5, 1956, the union posted notices in the La Crosse plant as follows:
"The plant manager has informed the committee that he is almost certain that he will close the plant the second and third week in July so anyone not wanting more than two weeks vacation should sign for these two weeks, then if the plant doesn't close down they will be allowed to take their vacations at this time regardless of how many sign up or cancel them and take them at a different date."
On April 12, 1956, the union posted notices as follows:
"The plant manager has informed the bargaining committee that the plant will definitely be shut down the second and third week in July for vacation. . . ."
In the latter part of June form letters were sent by Mr. Jones, the director of personnel at the La Crosse plant to all employees laid off prior to July 8th informing them that the company was allocating vacation pay to unemployment compensation weeks 28 and 29. This was followed by another letter dated July 6, 1956, in which the company notified the employees that the company waived the declaration of vacation pay to wages for week 29, but stated that the employees must still declare their vacation pay as wages for week 28. The reason for the second letter was that there had been a strike in week 3 of 1956 and the company had indicated to the local union at the time of settlement that week 3 could be counted as vacation. The second letter was sent in recognition of the allocation of one week of the vacation to week 3.
The plant was shut down, with immaterial exceptions, in weeks 28 and 29. The national agreement and local agreement referred to in the companion case had expired in 1955 and new agreements had been executed and were in effect during 1956. Article VIII of the national agreement was, however, the same as in 1954 and provided for vacation pay in terms of a percentage of total straight-time earnings for the previous twelve months' period. The percentage increased with the length of service of the employee involved. "Time off" was also provided at one week for employees with six months' to five years' service and two weeks for employees with longer service. Article VIII also included the following provision:
"Vacation pay shall be paid not later than the time the vacation is taken provided the company is notified of such vacation period not later than two weeks previous to the last day worked before vacation. The vacation period shall be set at a convenient time by the company, except that the wishes of the individual employees as to their vacation period shall be taken into consideration as much as possible."
Article VIII of the national agreement provides that the vacation pay shall be based on earnings for the twelve months' period June 1st to June 1st. The agreement between the La Crosse plant and the local union provides that vacation shall be paid as specified in the national agreement except that the period upon which earnings are computed will be the twelve months' period from January 1st to December 31st and that the employees on the pay roll as of December 31st shall be eligible for vacation pay.
The local agreement in effect in 1956 contained a provision which was not found in the local agreement in effect in 1954. Paragraph 4 of article I of the local agreement provided, "The company shall not change, modify, or repeal any past practice affecting rates of pay, wages, hours of employment, or other conditions of employment, except as it may be in direct conflict with this agreement, or has been mutually agreed to by the union."
Article XV of the national agreement provided, "The terms of the present local agreements between the company and local unions concerning local job classifications, rates, standards, working conditions or practices, and seniority and grievance procedure shall remain in effect during the term of the local agreement to the extent that they are not inconsistent with the provisions of this master agreement. In all other respects the terms of this master agreement are substituted therefor. . . ."
Testimony in the hearing before the appeal tribunal in the companion case was incorporated by stipulation in the record of the hearing in this case. There was also testimony by Mr. Jones that in years previous vacation pay was allocated to leave-of-absence periods. There was also read into the record a portion of the company's brief in the previous case which stated as follows:
"The company has taken into consideration the wishes of the individual employees as to their vacation period' as much as possible when it permitted the allocation of the vacation period to the following if they occurred prior to the layoff with which we are concerned:
"1. A layoff during the vacation year preceding the one in which the designated vacation occurred.
"2. A personal leave of absence preceding the layoff.
"3. Time off for compensable injury occurring prior to the layoff.
"This was in line with company practice to allow designation of same as vacation if they occurred prior to the vacation period. However, once vacation-time credits are eliminated subsequent events of the foregoing nature have no effect. The contingency that they might occur cannot require the company to postpone the designation of vacation period."
Mr. Jones also testified that what they did in 1956 with reference to denying allocations of vacation pay to leave-of-absence periods was a change in past practice.
The situation of the four plaintiffs is not identical. It was stipulated before the appeal tribunal that the decision as to each plaintiff except Keller would determine the result of the claims of a specified group of other claimants.
Plaintiff Mildred Chapman was absent on a leave of absence in week 7 in February of 1956. She did not ask for her vacation check at that time. She was eligible for two weeks' vacation and she received her vacation pay on June 29, 1956. She contended that her vacation pay should be allocated to week 3 and week 7 and that it should not be allocated to week 28. She testified that at the time that she took leave in week 7 she had no knowledge that the plant would be shut down for any specific vacation period. By stipulation the decision on her claim will control the claims of 15 others. On July 10th she signed a statement for the unemployment compensation department in which she said, "I was entitled to 2 weeks vacation with pay. In my opinion I have already taken these 2 weeks vacation. One such week was the week we were on strike-week No. 3. The other week was week 7. I requested and was granted leave for that week in order to be with and take care of my husband who had just returned from the hospital. I received no pay for either of weeks 3 or 7."
Plaintiff Alvin Danielson requested a leave of absence of one week from April 30, 1956, to May 7, 1956. The leave was requested April 17th. There was a notation on the leave form, "Req. Vac. Check." The leave was stamped with Mr. Jones' signature. Auto-Lite issued the check for vacation pay to Danielson at that time. The leave form bore no notation indicating that the leave was applied on vacation. At the time that Danielson took the leave, he knew that the company would close down for two weeks in July. Danielson testified that when he applied for the leave, he asked that it be allocated to his vacation period and that in prior years if you took a leave of absence you could allocate it to your vacation and that that had been the practice for twelve years. Danielson contended that his vacation pay should be allocated to weeks 3 and 18 and should not be allocated to week 28. By stipulation the decision on Danielson's claim will control the claims of 15 others. He signed a statement on July 10th, for the unemployment compensation department in which he said, "I took week No. 18 (week ending 5/5/56) as a week of vacation. I believe that week No. 3 (the week of the strike) and week No. 18 are correctly my two weeks of vacation and I am eligible for benefits during weeks 28 29 of 1956."
Laura Lind was entitled to two weeks' vacation and received her vacation pay June 29, 1956. Her husband's vacation was the two weeks following the shut-down period at Auto-Lite, weeks 30 and 31. On July 6th she requested leave for those two weeks and it was granted. She registered for work and claimed benefits for weeks 28 and 29 when the plant was closed but not during weeks 30 and 31 during her husband's vacation. By stipulation the decision as to her claim would control the claims of two others. On July 11th, she signed a statement for the unemployment compensation department in which she said, "I am entitled to 2 weeks vacation with pay. I received my full 2-week-vacation check on June 29, 1956. 1 feel that half of that check should be allocated to week 3 — the week that we were on strike. I feel the other half should be allocated to week 31. I plan on being on vacation with my husband week 31. On July 6th I requested and was granted a leave of absence by employer for weeks 30 and 31. I feel that no vacation pay should be allocated to weeks 28 and 29."
Plaintiff Herbert Keller had been laid off on January 27, 1956, and had not been recalled to work at the time of the hearing. He was entitled to two weeks' vacation and received his vacation pay in week 26. On July 16th, he obtained employment with La Crosse county. He had registered for work and claimed benefits in week 28 but was ineligible because of his other employment in week 29. He claimed that his vacation pay should be allocated to weeks 3 and 29 and not to week 28. No other claimant was grouped with plaintiff Keller. On July 17th he signed a statement for the unemployment compensation department in which lie said, "I maintain that my vacation cannot be allocated to week No. 28, the week ending July 14, 1956. I feel that I can use week No. 29, the week ending 7/21/56. Last week, week No. 28, I was unemployed and this week, wk. No. 29, I am working."
An employee, Roy Olson, had applied on January 26, 1956, for leave from February 22d to February 29th. He requested his vacation check at that time and it was paid to him on February 17th. The carbon copy of the leave slip contained the notation, "app. vac." as well as "req. vac. check." It was testified that this meant "apply vacation" but the notation "app. vac." had been crossed, out on the original slip. The appeal tribunal apparently decided that under these circumstances Olson had been granted one week vacation in February as well as the vacation in week 3 and therefore that he was entitled to benefits for week 28. Apparently Auto-Lite took no action to review that decision.
Minutes of meetings of the bargaining committee of the union and management were incorporated in the record. Reference has already been made to the meeting of January 25th. The matter of the allowance of the week 3 as a week of vacation and the intention of the company to shut down for vacation in July were also the subject of discussion at meetings on February 8th, April 4th, April 11th, and April 18th. On April 11th, a union representative said, "We would like to question the plant manager as to why Jones refuses to make leaves out for vacation when applied for." A management representative replied, "Our vacation period is set for July." The union representative said, "Our leaves before in the past the leave was made out one week or two weeks to apply as vacation." Padesky replied, "That two weeks is definitely set. We are definitely going to have those two weeks. I am going to arrange it so we do." The union representative asked, "Can we tell the people and be sure of it" and Padesky replied, "Ya."
The legal issues presented on this appeal differ in some respects from those presented in the companion case, ante, p. 345. One such difference, although we do not view it as controlling, is that in 1956 sec. 108.05(4) (b), Stats., was in force. It provides as follows:
"(b) An employee's vacation pay shall, for benefit purposes, be treated as wages for a given week only if it has by the close of that week become definitely allocated and payable to the employee for that week and he has had due notice of such allocation; provided that, in any case where an employee's vacation pay has not been thus allocated to a given week, his employer may:
"1. Allocate it to a future week of the employee's unemployment, with due notice to him and to the commission; or
"2. Deduct from such pay, without penalty under section 108.24, such benefits paid for a past week as the employee would not have received if such pay had been currently allocated to such week, in which event the employer shall promptly transmit the amount thus deducted to the commission for his account in the fund and the commission shall correct the employee's benefit credits accordingly."
This section was included in Bill No. 64, S., which became ch. 527, Laws of 1955. The bill was recommended by the advisory committee appointed under the Unemployment Compensation Act and a note explaining the foregoing provision read as follows:
"In most cases an employee's vacation pay is clearly allocated to a specific week, in advance; so he knows that it's wages for that week and will be so treated for benefit purposes.
"In some cases, however, an employee is unemployed before he has any vacation pay coming; or he doesn't know to what weeks his vacation pay will later be allocated. In such `iffy' or uncertain cases, such possible pay must be ignored for benefit purposes, in order to handle claims and payments promptly.
"In such a case, if the employee later receives vacation pay which hasn't been promptly allocated to a current week of actual vacation or unemployment the employer may apply such pay to a future week of unemployment or may withhold from it benefits for a past week, as specified above."
As suggested in our opinion in the companion case, we view the quoted provision as a clarification of the procedure which an employer is to follow in allocating vacation pay to certain weeks which would otherwise be weeks of unemployment. We do not view this provision as giving the employer a right to allocate vacation pay to certain periods if his right to specify the time for vacations is limited by contract.
As pointed out in our opinion in the companion case, Auto-Lite had normally set a "vacation period" of several months' duration in which individual choices of vacations were accepted as a matter of course unless production was interfered with by a concentration of selections. Conceivably the plaintiffs might have questioned the right of the company under the terms of the vacation provisions of the contract to constrict the vacation period designated by the company to two weeks. Such constriction of the period did, however, serve the convenience of the company since it permitted a virtually complete shutdown for two weeks evidently at a time when orders for the plant's production for 1956 models of automobiles had been fulfilled and orders for 1957 models were not yet forthcoming. In any event, plaintiffs have not raised that question; it appears that the local union, through its bargaining committee, discussed the shutdown plan over a number of months with representatives of management; and there is a suggestion in the record that the company's right to shut down for two weeks for vacations may have been considered in negotiations at a national level. Because of all these circumstances, we have not given consideration to this particular question.
Plaintiffs urge that the provision of the local agreement at La Crosse prohibiting alteration of past practices in the absence of mutual agreement required the company to permit plaintiffs to designate periods of leave of absence as their vacations notwithstanding the company's designation of the specific week 28.
It is apparently undisputed that in prior years the practice at La Crosse would have been to permit employees who were absent on leave for personal reasons at any time during the year to forego an absence for vacation purposes and to apply their vacation time to the leave which they took either before or after the vacation period designated by the company.
Assuming, however, that this practice of permitting allocation of vacation to leave of absence at the employee's option was the type of past practice contemplated by the local agreement, it nevertheless seems clear that it was in conflict with the designation of a period of shutdown as the time for taking vacations. This latter decision was made at the home office of Auto-Lite and its propriety, as previously noted, has not been challenged. Thus an employee, like plaintiff Chapman who took a period of leave in February and did not prior to the determination by the company that weeks 28 and 29 were the convenient time for vacations, request that her February week of leave be considered as part of her vacation, cannot rely upon local past practice to defeat the policy determined by the company in the exercise of its rights under the national agreement. Similarly an employee like plaintiff Lind who preferred to be away from work for vacation during different weeks from the ones designated by the company could not rely upon past practice to compel the company to grant those weeks as vacation at a time later than the weeks determined as a convenient time by the company.
By determining to shut down the plant during two weeks in July, the company as pointed out by the circuit court, made those two weeks unquestionably the most convenient time for employees' vacations from the company's point of view. Unless this, action was improper under its contract, the company had the right to insist that all vacation time be taken during the period of shutdown.
The situation of plaintiff Keller is somewhat different. The company originally decided upon a shutdown of two weeks, and as has been stated, thus made those two weeks a convenient time for vacations. Because of an agreement between the management and the local union, week 3, in which there had been a strike, was designated as a vacation week and the company designated the other week as week 28. It did, however, continue with its shutdown during week 29 and since plaintiff Keller, for reasons of personal advantage, prefers his vacation during week 29, the company cannot say that week 29 is any less a convenient time than week 28. For reasons similar to those set forth in our opinion in the companion case, we consider that the company's convenience being equal, plaintiff Keller had the right to choose and therefore benefits for week 28 should not have been denied.
In the case of employee Olson, not here on appeal, the commission apparently found that the company had granted a request of Olson that a week of leave in February be considered a vacation week. In the case of plaintiff Danielson, the appeal tribunal did not make the finding whether the employer granted or denied plaintiff's request that a week of leave of absence from April 30th to May 7th be treated as vacation. The appeal tribunal did find, however, that about two weeks prior to the end of April, Danielson had requested the leave and requested that he receive his vacation pay at that time and that those requests were granted. Even though the appeal tribunal found that Danielson then knew that the company had indicated that weeks 28 and 29 would be the vacation period, we consider that the evidence required a finding that Danielson's week of leave in early May did constitute a vacation week. This is true because he timely requested vacation pay and the company paid it to him at that time. Accordingly, his claim for benefits for week 28 should not have been denied. By the Court. — As to plaintiffs Lind and Chapman the judgment is affirmed; as to plaintiffs Danielson and Keller the judgment is reversed, and the cause remanded with instructions to enter judgment setting aside the decision of the commission and remanding the record for further proceedings.
I dissent from the majority opinion only with respect to allowance of the claim for benefits of the plaintiff Keller.
On July 6th he, as well as the other employees, was notified that week 28 was to be the other vacation week in addition to week 3. The company under the contract clearly had the right to do this, and vacation pay checks were issued on this basis. This was binding on Keller as well as all other employees who had not previously, with company approval, designated a different vacation period.
I am authorized to state that Mr. Justice BROADFOOT concurs in this dissent.