Opinion
Nos. 35634 and 35671
Decided December 3, 1958.
Unemployment Compensation Act — Statutory construction — Individual "totally unemployed," when — Section 4141.01 (M), Revised Code — "Remuneration" construed — "Personal services" rendered, when — Supplemental unemployment benefit payments — Compensation for personal services rendered.
APPEALS from the Court of Appeals for Mahoning County.
The plaintiff Posey, an employee of the Republic Steel Corporation, was laid off August 1, 1957, for lack of work.
Five days later he filed with the Bureau of Unemployment Compensation of Ohio an application for a determination of benefit rights. His application was allowed and he was paid the sum of $33 for the week ending September 7, 1957. Also he was given a dependency allowance of $6 for that week.
Later the plaintiff informed the bureau that he had received the sum of $31 under the terms of a supplemental unemployment benefits agreement between his employer and his labor union. He was then ordered to repay $29 of the amount he had been paid.
The plaintiff then appealed to the referee who sustained the administrator's decision.
The plaintiff perfected a further appeal to the Board of Review where the referee's decision was sustained.
On a further appeal to the Court of Common Pleas of Mahoning County, the decisions below were reversed.
On a still further appeal to the Court of Appeals, the judgment of the Court of Common Pleas was affirmed.
The cause is in this court by reason of the allowance of the administrator's motion to certify the record.
Mr. Arthur J. Goldberg, Mr. David E. Feller, Mr. Herschel Kriger and Mr. Robert Murphy, for plaintiff appellee in cause No. 35634.
Mr. William Saxbe, attorney general, Mr. John W. Hardwick, Mr. Eugene P. Everhart, Mr. A.L. Greenspun, Mr. Louis H. Orkin, Mr. John J. Chester, Mr. Richard B. Metcalf, Mr. Joseph P. Kinneary and Mr. Fred J. Milligan, for appellants in cause No. 35634.
Messrs. Manchester, Bennett, Powers Ullman, Mr. William T. Swanton, Mr. Paul Fleming, Messrs. Harrington, Huxley Smith, Mr. David E. Jones, Mr. H.C. Lumb and Mr. Frank Manak, for defendant appellees in cause No. 35634.
Mr. Herschel Kriger, Mr. David E. Feller and Mr. Robert M. Murphy, for plaintiff appellee in cause No. 35671.
Mr. William Saxbe, attorney general, Mr. John W. Hardwick, Mr. Eugene P. Everhart and Mr. A.L. Greenspun, for appellants in cause No. 35671.
Mr. H.C. Lumb, Mr. Frank Manak, Mr. Vincent L. Matera, Mr. William T. Swanton and Mr. David E. Jones, for defendant appellee Republic Steel Corporation in cause No. 35671.
Although the court has been deluged with hundreds of pages of briefs, the question in this case is simply one of statutory construction.
It perhaps should be emphasized that this court is not permitted to concern itself with the question whether supplemental unemployment benefits should be sanctioned by the law of this state. That, of course, is not a judicial problem but one of legislative policy for determination by the General Assembly or by constitutional amendment. And, as has been said repeatedly in matters of statutory construction, it is not a question as to what the Legislature intended to enact; rather it is a question of the meaning of that which the Legislature did enact. Slingluff v. Weaver, 66 Ohio St. 621, 64 N.E. 574.
In this instance the statutes primarily involved are Sections 4141.29 and 4141.01 (M). The first reads in part as follows:
"Each eligible individual shall receive benefits as compensation for loss of remuneration due to total or involuntary partial unemployment in the amounts and subject to the conditions stipulated in Sections 4141.01 to 4141.46, inclusive, of the Revised Code."
Section 4141.01 (M) reads:
"An individual is `totally unemployed' in any week during which he performs no services and with respect to such week no remuneration is payable to him."
Was the plaintiff employee "totally unemployed?" More specifically, did he perform no "service" and was no "remuneration" paid to him for that week? If either of these occurred, then he definitely was not "totally unemployed" as defined by the Legislature. When he was paid supplemental unemployment benefits in the sum of $31, did he receive "remuneration?"
Section 4141.01 (H), Revised Code, contains the following definition:
"`Remuneration' means all compensation for personal services, including commissions and bonuses and the cash value of all compensation in any medium other than cash."
That the plaintiff employee received remuneration for personal services can not well be denied when it is remembered that hourly work for hourly pay was by no means the sole feature of his employment contract. At no time during that week did he lose his status as an available employee. He retained his seniority; he retained his pension rights; he retained his right to severance pay; he performed the required service of reporting to his employer; and he was required to register and report for state compensation.
This is consistent with the following decision in the case of Social Security Board v. Nierotko, 327 U.S. 358, 90 L. Ed., 718, 66 S. Ct., 637, 162 A.L.R., 1445:
"Since Nierotko remained an employee under the definition of the labor act, although his employer had attempted to terminate the relationship, he had `employment' under that act and we need consider further only whether under the Social Security Act its definition of employment, as `any service * * * performed * * * by an employee for his employer,' covers what Nierotko did for the Ford Motor Company. The petitioner urges that Nierotko did not perform any service. It points out that Congress in considering the Social Security Act thought of benefits as related to `wages earned' for `work done.' We are unable, however, to follow the Social Security Board in such a limited circumscription of the word `service.' The very words `any service * * * performed * * * for his employer,' with the purpose of the Social Security Act in mind, import breadth of coverage. They admonish us against holding that `service' can be only productive activity. We think that `service' as used by Congress in this definitive phrase means not only work actually done but the entire employer-employee relationship for which compensation is paid to the employee by the employer."
It is urged that since in the instant case the supplemental unemployment benefit payment was made by a trustee and no service was performed for the trustee, such payment could not have been remuneration. However, this device in no way alters the fact that the payments are made for services rendered to the employer, and it is the employer who, in the first instance, considers and allows or disallows the claims. The trustee simply pays the claims as instructed.
The plaintiff employee also questions the authority of the administrator to require repayment of the $29 previously mentioned. This contention is untenable since the provisions of Section 4141.35, Revised Code, expressly authorize this to be done either by requiring repayment in cash or ordering that it be withheld from any future benefits.
A further contention of the plaintiff is that supplementation of unemployment benefits is authorized by Section 4141.36, Revised Code, reading as follows:
"No agreement by an employee to pay any portion of the contribution or other payment required to be made by his employer under Sections 4141.01 to 4141.46, inclusive, of the Revised Code, is valid. No employer shall make a deduction for such purposes from the remuneration or salary of any individual in his employ. Such sections do not affect the validity of voluntary arrangements by which employees individually or collectively agree to make contributions for the purpose of securing benefits in addition to those provided by Sections 4141.01 to 4141.46, inclusive, of the Revised Code."
However, a study of the statute discloses that clearly its purpose is to prevent an employer from evading the expense of unemployment compensation by shifting it to his employees, and that the last sentence thereof as quoted above clearly refers to voluntary arrangements by and between employees and not to the type of supplemental benefit plan involved herein.
These views as to the substantive questions render it unnecessary to consider the procedural questions presented in companion case No. 35634.
Hence, in each case the judgment of the Court of Appeals is reversed, and a final judgment is hereby entered for the defendant appellants. If such a plan of supplemental unemployment benefits is to be approved in this state, that approval should not be left to mere inference but should be placed on the sound basis of definite statutory or constitutional amendment.
Judgments reversed.
WEYGANDT, C.J., STEWART, MATTHIAS, BELL and HERBERT, JJ., concur.
ZIMMERMAN and TAFT, JJ., dissent.
I concur generally in the majority opinion in these cases, but I desire to expand my views upon the problem confronting us. In so doing, I shall first resort to some trite truisms.
The Unemployment Compensation Act is entirely statutory and as such is a creature of the General Assembly. This court has no authority to make such a law or to change or modify it. Our sole function is to interpret the meaning of what the General Assembly has said.
According to the Unemployment Compensation Act, there must be deducted from any payments under the act any remuneration paid to the employee by the employer for services to that employer, and the question which confronts us is whether supplemental unemployment benefit payments as herein involved constitute such remuneration.
Supplemental unemployment benefits, referred to herein as SUB, are the result of a contractual arrangement entered into by collective bargaining between a vigilant intelligent union and a vigilant intelligent management. Under such arrangement the employer pays stipulated wages for work performed and, as a fringe benefit, pays to a trustee certain sums based upon employees' wages, which sums shall be available to employees when they are not receiving their regular wages because of lack of work. These SUB payments are not contributions from the employer; they are not gratuitous gifts; they are not deductions from the wages of employees; but they are fringe benefits in the way of remuneration to be paid for services, as enumerated in the majority opinion, when, for lack of work, the employees are not receiving their regular wages.
With commendable candor, all parties concede that at the time SUB payments are made to the trustee they constitute remuneration to the employees, but it is contended that, by some fourth-dimension legerdemain, such payments become something else after they are lodged in the trust fund. I cannot follow the intricacies of such a mysterious metamorphosis. In my opinion, SUB funds paid to the trustee, which are disbursed to the employees when they are not receiving their regular wages, retain the character of remuneration and, as such remuneration, are paid to each employee for the week in which he is not receiving his regular wage. If this be so, then, under the law as enacted by the General Assembly, such remuneration must be deducted from unemployment compensation.
It is contended that SUB payments are not deductible because when the employees receive them they are payments for periods of time different from the ones in which they were earned, but it seems to me that as long as such funds remain with the trustee they constitute a fund from which, in the first instance upon the decision of the employer, payments are made to the employee for the period in which he is without his regular wage.
It would be a pleasant experience, of course, for an employee to receive in full both his SUB payments and unemployment compensation, but, as we have said, this court does not write legislation, nor has it authority to change or modify statutory enactments. Such action upon the part of the court would constitute legislative usurpation and upset the constitutional concept of the separation of the powers of the three branches of government, upon which so much of our freedom and prosperity depends.
The General Assembly, however, which has full power, within constitutional limits, to enact statutes and to change and modify them, can change its present enactment requiring remuneration to be deducted from unemployment compensation and, with little more than a stroke of a pen, can pass legislation providing that unemployment compensation shall be paid in full without any deduction on account of SUB payments.
The new session of the General Assembly convenes early in January of next year, and doubtless very early in its session the problem of unemployment compensation and SUB payments will be in its lap. That is where it belongs.
HERBERT, J., concurs in the foregoing concurring opinion.
The majority opinion suggests that, in order to be lawful, supplemental unemployment benefits, herein referred to as SUB, should be approved by some statutory or constitutional provision. However, that is not the question to be decided. The question to be decided is whether the General Assembly has expressed an intention that SUB payments must be deducted from amounts that would otherwise be payable to an unemployed worker under the Unemployment Compensation Act. See Moore v. Board of Review, Bureau of Unemployment Compensation, 165 Ohio St. 526, 530, 138 N.E.2d 245. The decisions rendered in the instant cases appear to me to have resulted from the inclination of the majority of the court to find an intention which has not been expressed by the General Assembly and which cannot reasonably be implied from the words used by the General Assembly but which the majority believes the General Assembly should have expressed.
SUB plans have been provided for by agreements between certain employers with labor organizations representing their workers. Under the Unemployment Compensation Act, the weekly benefits payable to an unemployed worker are largely dependent upon wages paid him in the highest earning quarter of a base period. Section 4141.30, Revised Code. Under the usual SUB plan, supplemental payments are made from a trust fund to a worker in an amount sufficient to bring the total received by him during a week of unemployment to a certain percentage of the average weekly wage that he had earned when working.
For example, take an SUB plan providing for supplementation to 55 per cent of such wage and an unemployed worker whose average wage had been $120 per week. Such worker might get only $33 under the Unemployment Compensation Act. To bring him up to 55 per cent would require an additional payment of $33. Under such an SUB plan, he would be entitled to that payment on meeting requirements of the plan for qualification therefor.
These supplemental benefits are payable only out of a fund, held by a trustee and established by contributions from the employer of a certain number of cents for each hour worked by each of his employees. The employee has a right to payments from the fund on the happening of contingencies such as those which make him eligible for payments under the Unemployment Compensation Act but such employee has no right against his employer for any part of such payments.
For example, under a particular SUB plan such contributions may amount to three cents an hour. Sometimes provisions are made for higher contributions for each hour worked until the fund has reached a certain level. Also provisions may be made for reducing the percentage level to which compensation is to be supplemented by the plan in the event that the fund falls below a certain amount.
Although as pointed out in the majority opinion the employer in the first instance considers and advises the trustee of the fund whether a claim for SUB payments should be allowed or disallowed, the SUB plan provides that "if any difference shall arise between the company and any employee as to * * * benefits payable * * * under the plan * * *, then the question shall be referred to an impartial umpire" for decision in accordance with the provisions of the plan. The only other responsibility or obligation of the employer with regard to this SUB plan is to make the contributions for hours worked by employees at the time those hours are worked. The employer has no obligation under the plan to make payments to employees on account of their unemployment or to supplement the fund if it becomes insufficient to make such payments.
If we assume that the majority opinion is correct in considering plaintiff Posey as not being "totally unemployed" because he did not lose his status as an available employee, because he retained his seniority, pension rights and rights to severance pay, because he reported to his employer and because he registered and reported for state compensation, plaintiff would then at least come within the definition in Section 4141.01 (N), Revised Code, of an individual who is "partially unemployed."
Section 4141.01 (N), Revised Code, provides:
"An individual is `partially unemployed' in any week if, due to involuntary loss of work, the total remuneration payable to him for such week is less than his weekly benefit amount."
So far as pertinent, Section 4141.30, Revised Code, provides:
"Benefits are payable to each partially unemployed individual * * * on account of each week of * * * partial unemployment * * * in an amount equal to his weekly benefit amount less * * * the remuneration payable to him with respect to such week * * *."
Admittedly, plaintiff's "weekly benefit amount" for the week ending September 7, 1957, was the $39 paid to him under the Unemployment Compensation Act. Appellants claim that $29 of the $31 of SUB payments paid plaintiff during that week should have been deducted from that $39. In order to prevail, appellants must contend that the $31 SUB payment was, within the meaning of Section 4141.30, Revised Code, "remuneration payable to" plaintiff "with respect to" or "for the week" ending September 7.
The General Assembly apparently used the words "with respect to such week" interchangeably with the words "for such week" and thereby indicated an intention that they should be given the same meaning. Compare Sections 4141.01 (M) and (N), and 4141.30, Revised Code.
In Section 4141.01 (H), Revised Code, "remuneration" is defined as meaning "all compensation for personal services."
In my opinion, the SUB payments to plaintiff did not represent compensation for personal services. Certainly they did not represent payment for anything he did in the week ending September 7, 1957. They were paid from a fund created by payments of a certain amount for each hour worked by plaintiff and his fellow employees. None of plaintiff's work for which payments were made to that fund was work done in the week ending September 7. In order to be deductible under Section 4141.30, Revised Code, from "benefits * * * on account of" a "week of * * * partial unemployment," "remuneration" must be for work done in that week. Any other conclusion would lead to absurd results. For example, if plaintiff worked for 40 hours at the rate of $3 per hour during the week ending August 24 and was not paid for that week's work until two weeks later on September 6, it would be absurd to say that, within the meaning of Section 4141.30, Revised Code, such payment represented "remuneration payable to him with respect to" the week ending September 7.
To argue that the SUB payments to plaintiff represented "remuneration" is hardly more reasonable than to make the absurd argument that the unemployment compensation benefits paid to plaintiff under the Unemployment Compensation Act represented "remuneration." SUB payments are much more accurately described by those words of Section 4141.01 (C), Revised Code, defining "benefits" as "money payments * * * for loss of remuneration due to * * * unemployment."
The construction contended for by appellants would appear to be the extreme opposite of the liberal construction of the Unemployment Compensation Act which the General Assembly directed in Section 4141.46, Revised Code, unless we conclude that the General Assembly did not intend such liberality to be to the potential beneficiaries under the act. But see Moore v. Board of Review, supra, and Acierno v. General Fireproofing Co., 166 Ohio St. 538, 544, 144 N.E.2d 201.
Actually, in enacting the Unemployment Compensation Act, the General Assembly expressly approved SUB. Thus, in Section 4141.36, Revised Code, it stated that the provisions of the Unemployment Compensation Act "do not affect the validity of voluntary arrangements by which employees * * * collectively agree to make contributions for the purpose of securing benefits in addition to those provided by" the Unemployment Compensation Act. Essentially, the only difference between the "arrangements" so expressly approved and SUB is that, instead of "collectively" agreeing "to make contributions" directly themselves "for the purpose of securing benefits in addition to those provided by" the Unemployment Compensation Act ( i. e., supplemental benefits), the employees have collectively made an agreement with their employer under which the employer is to make such contributions for their work. It may reasonably be concluded that, in effect, the employees are making those contributions. Their amount is determined by the hours of and payment is made at the time of and is part of the compensation for their work. Instead of making an additional payment to each employee for each hour worked, the employer, pursuant to the collective agreement of his employees, makes that payment to a fund established "for the purpose of [their] securing benefits in addition to those provided for by" the Unemployment Compensation Act.
It is argued that the supplemental benefits contemplated by the foregoing provisions of Section 4141.36, Revised Code, must be benefits payable under the act and cannot be merely benefits payable under some private plan or from some nonpublic fund. However, the unsoundness of any such argument is demonstrated by the statutory words describing those benefits as "benefits in addition to those provided by" the Unemployment Compensation Act. What else could these supplemental unemployment benefits be other than "benefits in addition to those provided by" the Unemployment Compensation Act?
It may be suggested that approval of such supplemental benefits is limited to those resulting from contributions by employees. The reason why the General Assembly spoke in Section 4141.36, Revised Code, only of supplemental benefits so resulting is apparent from a reading of the other two sentences of that same statutory section. Those sentences make invalid any "agreement by an employee to pay any portion of the contribution * * * required to be made by his employer under" the Unemployment Compensation Act, and also prohibit "a deduction for such purposes from the remuneration or salary of" any employee. In view of those parts of the statute, there might have been doubt whether employees could lawfully contribute to any plan for supplemental unemployment benefits. There are no provisions in the act which could reasonably suggest any doubt as to the lawfulness of employer contributions to such a plan and hence there was no reason for mentioning an SUB plan except where it involved employee contributions. Certainly, there is no apparent reason why supplemental unemployment benefits should be unlawful if paid from a fund created by employer contributions if they are not unlawful when paid from a fund created by employee contributions.
ZIMMERMAN, J., concurs in the foregoing dissenting opinion.