Opinion
8-3-1955
Jack W. BRADSHAW, Petitioner and Appellant, v. CALIFORNIA EMPLOYMENT STABILIZATION COMMISSION, James G. Bryant, C. A. Herbage, Edward Cain, Michael B. Kunz, Glenn V. Walls, as the Members of said Commission, California, Unemployment Insurance Appeals Board, Michael B. Kunz, Glenn v. Walls, and Edward Cain, as the Members on said Board, James G. Bryant, as Director of Employment of the State of California, and Chronicle Publishing Company, a corporation, Respondent.* Civ. 16457.
Herbert Pothier, Marcel E. Cerf, Robinson & Leland, San Francisco, for appellant. Edmund G. Brown, Atty. Gen., Irving H. Perluss, Asst. Atty. Gen., William L. Shaw and Vincent P. Lafferty, Deputy Attys. Gen., for respondents.
Jack W. BRADSHAW, Petitioner and Appellant,
v.
CALIFORNIA EMPLOYMENT STABILIZATION COMMISSION, James G. Bryant, C. A. Herbage, Edward Cain, Michael B. Kunz, Glenn V. Walls, as the Members of said Commission, California, Unemployment Insurance Appeals Board, Michael B. Kunz, Glenn v. Walls, and Edward Cain, as the Members on said Board, James G. Bryant, as Director of Employment of the State of California, and Chronicle Publishing Company, a corporation, Respondent.*
Aug. 3, 1955.
As Modified on Denial of Rehearing Sept. 2, 1955.
Hearing Granted Sept. 28, 1955.
Judgment reversed and cause remanded with directions.
Herbert Pothier, Marcel E. Cerf, Robinson & Leland, San Francisco, for appellant.
Edmund G. Brown, Atty. Gen., Irving H. Perluss, Asst. Atty. Gen., William L. Shaw and Vincent P. Lafferty, Deputy Attys. Gen., for respondents.
FRED B. WOOD, Justice.
The question upon this appeal is whether or not the 'dismissal payment' received by each of certain employees of the Chronicle Publishing Company, when discharged upon reduction of the force, was allocable to a determinable period of time following his discharge and constituted wages payable 'with respect to' that period and thus characterized him as not 'unemployed' during that period. If unemployed within the meaning of that term as used in section 9.2 of the Unemployment Insurance Act (now § 1252 of the Unemployment Insurance Code), he was entitled to benefits under that act during that period; otherwise, not.
In respect to the dismissal payment, section 7 of the applicable employer-employee contract provided: '(a) When an employee other than those exempted from the terms of this contract as herein provided is discharged, he shall receive a cash dismissal payment in a lump sum in accordance with the following schedule for years of continuous and uninterrupted employment:
"Less than six months employment ............................ None "Six months and less than one year .................................. 2 weeks "One year and less than one and one-half years ........................ 3 weeks * * * * * * "(The intervening schedule adds one week for each additional 1/2 year of service)................ "Nineteen and one-half years and over .............................. 40 weeks
'(b) From the dismissal pay the Publisher may deduct any levy or tax to which the employee is subject under local, state or federal legislation.
'(c) Dismissal pay shall be computed at the highest weekly salary (exclusive of bonuses and payments for special work) for the fifty-two (52) weeks previous to discharge, except that, in the case of employees paid in whole or in part by commissions, dismissal pay shall be computed at the average weekly salary and commissions (exclusive of bonuses and payments for special work) for the fifty-two (52) weeks previous to discharge. * * *
'(d) In the event of the death of any employee with six (6) or more months of service, the Publisher agrees that the beneficiaries of the deceased, designated by the employee in writing in advance, shall be paid a sum equivalent to that which the deceased would have been paid had he been discharged under the terms of his contract, but in no event less than five hundred dollars ($500.00), less any legal costs or expenses caused the Publisher in making said payment.
'(e) Dismissal pay need not apply to an employee discharged for dishonesty or in the case of self-provoked discharge, for the purpose of collecting dismissal pay. * * *'
Section 2 of the contract required the discharge of an employee if, for certain reasons, he lost good standing in the union, and provided that upon such a discharge he employee 'shall receive no dismissal pay.'
Section 5 provided that upon discharge other than for cause the 'discharged persons shall be placed upon a rehiring list, without priority or seniority.'
Section 13 related to the military leave of any employee who had been employed more than six months and provided that if he suffered incapacitating physical disability in the service 'and if the Publisher is unable to place the employee in other acceptable employment, the Publisher shall pay the employee his dismissal pay as of the date he left the employment of the Publisher with additional credit for time served' in the armed forces. 'If the employee dies while in' military service, 'the Publisher shall * * * pay dismissal pay, calculated as of the time the employee left the empoyment of the Publisher with additional credit for time served * * * [in the armed forces] * * * to the employee's beneficiary previously designated in writing by the employee.'
Literally, the 'cash dismissal payment' is not made 'with respect to' any period of time though computed by means of a formula which increases the amount in proportion to the number of year of prior service until the maximum is reached.
Upon the occurrence of any of the stated events (discharge, death while employed, death or physical incapacity while in military service), the amount thus ascertained becomes due as a dubt without obligation of any kind running from the recipient to the debtor. Upon the discharge of an employee, he is free to take another job the very next day with his old or with a new employer and without abatement or refund of any of his dismissal pay. But in such a case it is a new job, a new employment without priority, seniority, retirement rights or other benefits which were his and would have continued to be his under the contract but for the discharge. This loss of job security, we think, points up the true nature of this dismissal payment. It was a mutually advantageous arrangement: To the employee, reasonable assurance of tenure and the attendant benefits and privileges; to the employer, reasonable assurance of continuous service and the avoidance of disruptive labor turnover without preventing reduction of force when necessary because of changes in operating methods or for the sake of economy.
These factors were well expressed by the Supreme Court of Minnesota, concerning a similar severance pay plan, in Ackerson v. Western Union Tel. Co., 234 Minn. 271, 48 N.W.2D 338, 342, 25 A.L.R.2d 1063: 'Severance pay was in no way related to or dependent upon the employe's employment status after separation. She received the payment even though she might secure a job the next day. It is true that the amount was measured by the length of service, but there may have been many reasons for adopting the length of service as the yardstick in determining the amount of severance pay due a discharged employe. The type of work performed by claimants in this case was such that it was unlikely they could again procure work of a similar nature. Relator had virtually a national monopoly on the business. No other employer was likely to provide the discharged employees with an opportunity to use the skill acquired over opportunity to use the skill acquired over these many years of service with relator. It is undoubtedly true that one of the objectives of dismissal or severance pay, such as we have to deal with here, is to ease the employe's financial burden while looking for a new job. However, there are other objectives which we must also keep in mind in considering the nature of such payment. Partial compensation for loss of seniority rights; loss of possible pension rights; compensation for retaining or acquiring new skills; and many others could be mentioned. Relator undoubtedly considered the desirability of retaining its trained personnel until the job of mechanization could be completed. It is reasonable to assume that in arriving at a contract by collective bargaining, under which relator became obligated to make such payments, it did so with full knowledge of the advantages to be gained by it in making such payments, without any strings tied to it, in return for the continued service of its employes until the time arrived when such services could be dispensed with.'
The severance pay cases upon which respondents rely are not persuasive of a different view. Thus, in Schenley Distillers v. Review Board of Ind. Emp. S. D., 123 Ind. App. 508, 112 N.E.2d 299, the court attached considerable significance to evidence that severance pay had there been provided for the purpose of tiding the employee over until he could find a new job and that it was the employer's practice not to reemploy one who had received severance pay unless he repaid "that portion which would otherwise be duplicated by subsequent salary payments." 112 N.E.2d at page 302. In Krupa v. Western Union Tel. Co., 90 Ohio App. 90, 103 N.E.2d 784, 786, the majority of the court held that because of 'some evidence from which it may be inferred that the severance pay was remuneration for the period of unemployment * * *, we can not find and determine that there was prejudicial error in the judgment of the Common Pleas Court * * *,' holding the severance pay allocable to the period following discharge, 103 N.E.2d at page 786; cogently and convincingly criticised in a dissenting opinion, 103 N.E.2d at pages 786 to 788. In our case there is, quite properly, no such 'evidence' in the record; nothing but the text of the contract itself.
In Mooney v. Unemployment Compensation Comm., 336 Mich. 344, 58 N.W.2d 94, the Supreme Court of Michigan did not pass upon the merits of the question because it found that the trial court did not have jurisdiction to review the action of the state administrative agency involved. Phillips v. Western Union Tel. Co., 234 N.C. 453, 67 S.E.2d 362, is a memorandum decision with no facts stated. It cites as authority In re Mitchell, 220 N.C. 65, 16 S.E.2d 476, which was a decision that the trial court's decree that the employers involved were not liable for compensation under the statute had become res adjudicata because the employee, the real party in interest, had not appealed.
Nor do we consider that pension cases are of precedential value, principally because in such cases the cessation of work is voluntary. See Campbell Soup Co. v. Board of Review, etc., 24 N.J.Super. 311, 94 A.2d 514, 518.
Respondents invoke also a goodly number of cases in which it is held that payment to a discharged employee of the monetary equivalent of a vacation which he has earned but not yet enjoyed is paid 'with respect to' a period of time (following discharge) equal to the accumulated vacation period. That ruling is sound in respect to that kind of payment but is not applicable to the 'dismissal payment' here under consideration.
The administrative referee, as we read his decision herein, fell into the same error. He treated the dismissal payment as if it were truly analogous to the vacation pay which each of the claimants herein received and to the in lieu of notice pay which all except two of them received. But they are not analogous.
As to the earned but not yet enjoyed vacation, the employer could keep the employee on the payroll, on vacation, for the required number of days and then discharge him, or he could discharge him at once and pay the amount of his wages for the vacation period. In the latter case it is clear that the wages are paid 'with respect to' the ensuing period equal to the vacation period. Likewise, in respect to notice of discharge, the employer could give the notice and keep the employee on the payroll for two weeks, or discharge him immediately and pay him two weeks' salary. Shand v. California Emp. Stab. Comm., 124 Cal.App.2d 54, 55-57, 268 P.2d 193. As to vacation pay, see also Jones v. California Emp. Stab. Comm., 120 Cal.App.2d 770, 774, 262 P.2d 91; Cal. Unemp. Ins. App. Board Benefit Dec. No. 5578. As to in lieu of notice pay, see also McCloskey v. Division of Labor, etc., 9 Cir., 200 F.2d 402. The rationale of those holdings obviously does not apply to the 'dismissal payment' here under consideration.
The latter, instead, bears considerable resemblance to the 'bonus in lieu of vacation with pay.' We refer to the case in which, pursuant to contract, the employee takes no vacation but earns and is paid each year the monetary equivalent of a vacation. Payment of so much of that as has accumulated at the time of discharge is considered a bonus and not a payment 'with respect to' any period of time following discharge. Cal. Unemp. Ins. App. Bd. Benefit Dec. No. 6047; Gilliam v. California Emp., etc., Comm., 130 Cal.App.2d 102, 278 P.2d 528; Renown Stove Co. v. Michigan Unemploy. Comp. Comm'n, 1950, 328 Mich. 436, 44 N.W.2d 1, 4; Hubbard v. Mich. Unemployment Comp. Comm'n, 1950, 328 Mich. 444, 44 N.W.2d 4, 7.
It appears from the referee's decision that he attached considerable importance to the absence of 'evidence showing that the allocations of the various types of pay was precluded by the contract.' Seemingly, he assumed there was either a legal presumption or a permissible inference in fact of an intent to allocate to the period following the date of discharge unless expressly negatived by 'evidence.' We are aware of no such presumption nor do we see a basis for any such inference. The contract, in this case, is the evidence and all of the evidence. Analysis of its provisions discloses the intent of the parties.
Finally, respondents argue that if the dismissal payment is not allocated to a period of time after discharge, a double burden will be imposed upon the employer and a double benefit will be conferred upon the employee who will then receive unemployment compensation benefits chargeable to the employer's account. Such an argument should be addressed to the Legislature in support of a recommendation that the statute be amended, not to a court in support of a request that the court re-write the statute. See Ackerson v. Western Union Tel. Co., supra, 234 Minn. 271, 48 N.W.2d 338, 342.
We conclude that the Unemployment Insurance Appeals Board, which affirmed the referee's decision, correctly determined that the 'vacation pay in each case is allocable to the period immediately following the last day of work' and that 'the notice of discharge or in lieu pay is allocated to the weeks next following' but erroneously decided that the 'dismissal pay is allocated to the weeks occurring thereafter.'
Accordingly, the judgment is reversed and the cause remanded with directions to overrule the demurrer to the petition and proceed to a determination of the issues framed by the petition and the answer or answers thereto, not inconsistently with the views herein expressed.
PETERS, P. J., and BRAY, J., concur. --------------- * Opinion vacated 297 P.2d 970. 1 ' § 9.2. An individual shall be deemed 'unemployed' in any week during which he performs no services and with respect to which no wages are payable to him * * *.' (Emphasis added.) The parties appear to be in agreement that the sismissal payments are 'wages' as defined in § 11(a)(1) of the Act, § 926 of the code. 2 Section 15 of the contract governing the employment provided that upon reaching age 65 or upon completion of 25 years of continuous and uninterrupted service or upon permanent physical incapacity, the employee may, at his option, terminate his employment and receive a lump sum payment based upon length of service, in lieu of any other termination of employment payment elsewhere in the contract provided. 3 Section 18 of the contract provided for one weeks' vacation with pay, after 6 months' employment; two weeks, after one year; three weeks, after three years or more. It also declared that 'any employee discharged or who resigns after six months' service shall receive pro rata vacation pay.' 4 Section 3 of the the contract required, in respect to the discharge of a person employed 45 days or more, that the 'employee shall be given two (2) weeks' notice (or two (2) weeks' pay in lieu thereof)' except in the case of a discharge for gross misconduct. 5 The referee also found that the weekly amounts thus allocated 'in each instance exceeded the claimant's maximum possible weekly award' of unemployment compensation benefits. 6 The judgment was rendered upon the sustaining of respondents' general demurrer to the petition and petitioner's refusal to amend. During the hearing of the demurrer and pursuant to stipulation of the parties a certified copy of the administrative record, prepared with reference to the provisions of section 1094.5 of the Code of Civil Procedure, was filed with the court 'for all purposes herein including reference by the court in determining the merits of the demurrer.' That brought before the court for consideration the evidence which had been presented to the referee. The principal significant item of evidence was the text of the contract between the San Francisco Newspaper Publishers Association and the San Francisco-Oakland Newspaper Guild, which governed the claimants' employment relation during the period in question. The referee expressly excluded parol evidence of the intent of the parties when they negotiated the contract, saying "the contract speaks for itself' plays an important part in my decision.'