Opinion
12-28-1964
Edmund C. POWELL and Domenic C. Bottini, Oakland Tribune Employees, Plaintiffs and Appellants, v. CALIFORNIA DEPARTMENT OF EMPLOYMENT, Albert Tieburg, Director of the California Department of Employment, Defendants and Appellants, and California, Unemployment Insurance Appeals Board, Gerald F. Maher, Arnold L. Morse and Lowell Nelson, as members of said Board, and Oakland Tribune, a corporation, Defendants and Respondents. Wallance R. BYRD et al., Plaintiffs and Appellants, v. CALIFORNIA DEPARTMENT OF EMPLOYMENT, Albert Tieburg, Director of the California Department of Employment, Defendants and Appellants, and California Unemployment Insurance Appeals Board, Gerald F. Maher, Arnold L. Morse and Lowell Nelson, as Members of said Board, and Los Angeles Examiner, a corporation, Defendants and Respondents. Civ. 22032, 22033.
Charles P. Scully, Victor Van Bourg, San Francisco, for plaintiffs and appellants. Stanley Mosk, Atty. Gen., Clayton P. Roche, Walter J. Wiesner, Deputy Attys. Gen., Sacramento, for defendants and appellants. Jack D. Clevenger, Chief Referee, Cal. Unemployment Ins. Appeals Bd., Sacramento, for defendants and respondents. Lewis & Foster, San Francisco, for respondent Oakland Tribune. Flint & MacKay, Edwin Freston, Los Angeles, for respondent Hearst Pub. Co., Inc. (Los Angeles Examiner).
Edmund C. POWELL and Domenic C. Bottini, Oakland Tribune Employees, Plaintiffs and Appellants,
v.
CALIFORNIA DEPARTMENT OF EMPLOYMENT, Albert Tieburg, Director of the California Department of Employment, Defendants and Appellants,
and
California, Unemployment Insurance Appeals Board, Gerald F. Maher, Arnold L. Morse and Lowell Nelson, as members of said Board, and Oakland Tribune, a corporation, Defendants and Respondents.
Wallance R. BYRD et al., Plaintiffs and Appellants,
v.
CALIFORNIA DEPARTMENT OF EMPLOYMENT, Albert Tieburg, Director of the California Department of Employment, Defendants and Appellants,
and
Dec. 28, 1964.
For Opinion on Hearing see 45 Cal.Rptr. 136, 403 P.2d 392.
Charles P. Scully, Victor Van Bourg, San Francisco, for plaintiffs and appellants.
Stanley Mosk, Atty. Gen., Clayton P. Roche, Walter J. Wiesner, Deputy Attys. Gen., Sacramento, for defendants and appellants.
Jack D. Clevenger, Chief Referee, Cal. Unemployment Ins. Appeals Bd., Sacramento, for defendants and respondents.
Lewis & Foster, San Francisco, for respondent Oakland Tribune.
Flint & MacKay, Edwin Freston, Los Angeles, for respondent Hearst Pub. Co., Inc. (Los Angeles Examiner).
The petitioners in two consolidated cases appeal from an order denying their petitions for writ of mandate to compel payment to them of unemployment insurance benefits. QUESTIONS PRESENTED.
1. Under section 1252, Unemployment Insurance Code, were the dismissal or severance payments received by petitioners from their employers 'wages?'
2. Does section 1265 preclude these payments from being construed as 'wages' under section 1252? RECORD.
In the Byrd case (1 Civ. 22033) Byrd and his copetitioners had been employed by the Los Angeles Examiner Division or the Hillbro Newspaper Printing Company Division of respondent Hearst Publishing Company, Inc., in Los Angeles. On January 7, 1962, their employment was terminated by reason of the discontinuance of the Los Angeles Examiner.
In the Powell case (1 Civ. 22032) the claimants had been employed by the Oakland Tribune and were laid off work because of a reduction in the work force.
In both cases the claimants respectively were covered by the provisions of collective bargaining agreements providing for either 'severance pay' or 'dismissal pay.' In each instance they received this pay from their employers.
They applied to the California Department of Employment (hereinafter referred to as 'Department') to collect unemployment insurance for the same periods they were receiving severance or dismissal pay. The Department held that each claimant was ineligible for unemployment insurance benefits for the number of weeks following the termination of their employment equal to the number of weeks of pay they will receive in lieu of severance or dismissal pay, on the theory that the severance or dismissal pay was 'wages' under section 1252, hereinafter set forth, which prohibits the payment of unemployment insurance benefits when the claimant is receiving wages.
The claimants then appealed from the Department's decision to a referee of the California Unemployment Insurance Appeals Board (hereinafter referred to as 'Appeals Board'). The referee affirmed the Department's decision. Thereupon the claimants' appealed to the Appeals Board from that portion of the referee's decision which held that the dismissal or severance payments were wages and that consequently the claimants were not unemployed. The Appeals Board held that these payments constituted a duplication of, rather than a supplementation to, unemployment insurance benefits, and affirmed the decision of the Department.
Thereupon, pursuant to section 1094.5, Code of Civil Procedure, the claimants filed in the superior court petitions for writ of mandate to review the actions of the Department and Appeals Board and to compel payment to petitioners of unemployment insurance benefits.
The court denied the petitions, concluding that: (1) The severance or dismissal pay which the claimants received constituted 'wages' within the meaning of that term as used in section 1252. (2) The severance or dismissal pay which the claimants received was payable 'with respect to' the weeks following said claimant's termination of employment, to which they were allocated by the Department of Employment, and, therefore, during said periods claimants were not 'unemployed' within the meaning of that term as used in section 1252. (3) Severance or dismissal pay which each petitioner received did not constitute 'payments * * * for the purpose of supplementing unemployment compensation benefits' within the meaning of section 1265. 1. Were the Dismissal or Severance Payment Wages?
The facts are not disputed. In the Byrd case they were stipulated. In the Powell case they were accepted as found by the referee. Thus, the cases present only legal issues.
The California Department of Employment and its Director are now taking a position different from that taken in its decision and from that of the Appeals Board. They have joined with appellants in opposing their own decision and the decisions of the Appeals Board and the superior court. For brevity, when discussing the legal questions herein involved, our reference to appellants, unless otherwise noted, will include the Department and the Director.
In Byrd the collective bargaining agreements provide in pertinent part:
Los Angeles Examiner Division: 'Section 7(a): For the purposes of economy the Employer may release editorial employees as necessary * * * provided said released employee is given two (2) weeks' notice, pro rata vacation pay, and severance pay in keeping with the severance pay schedule.'
Section 9 provides for one week's severance pay for employees discharged after two months' to six months' service, and after six months' service severance pay in accordance with a certain schedule.
The Hillbro Newspaper Printing Company contract: 'Section 2(a): Discharges may be either (1) for good and sufficient cause, or (2) to reduce the force. The term 'reduce the force' as used herein shall be construed as synonymous with discharges for economy. In any case where the Employer contemplates the discharge of any employee of forty-five (45) or more working days, such employees shall be given two (2) weeks' notice (or two (2) weeks' pay in lieu thereof) with copy to the Guild, so that the Grievance Committee may consult with the Employer on the case. * * *'
'Section 5(a): When an employe 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: * * *' Hereinafter followed the schedule of payments based upon the length of employment.)
In Powell the agreement provides in pertinent part: 'ARTICLE VII (a) Discharges may be either (1) for good and sufficient cause, or (2) to reduce the force. (b) In any case where the Publisher discharges any regular employee of thirteen (13) or more consecutive calendar weeks' service, such employee shall, at the Publisher's option, be suspended for a period of two (2) weeks with pay or be required to remain on the job during such two (2) weeks' period. In either event, said two weeks' period shall begin at the time notice is given to the employee with copy to the Guild so that the grievance committee may, if it so elects, consult with the Publisher prior to the termination of said two (2) weeks' period.'
'ARTICLE VIII (a) When an employee * * * is discharged, he shall receive a dismissal payment in a lump sum or by mutual agreement in reasonable installments on regular payroll rates in accordance with the following schedule for years of continuous and uninterrupted employment.' (Here follows such schedule.)
Respondents Los Angeles Examiner and Oakland Tribune each reported and paid contributions for state unemployment insurance tax purposes.
It is contended that the severance or dismissal payments are not compensation for service (wages) but rather are partial compensation for the loss of anticipated future earnings, the present necessity to retain and acquire new skills and the need to seek and acquire new jobs without seniority rights.
In its determination that severance pay and dismissal pay are wages within the meaning of section 1252 the Appeals Board and the superior court relied heavily on Bradshaw v. California Emp. Stab. Comm. (1956) 46 Cal.2d 608, 297 P.2d 970. Appellants contend (a) that Bradshaw did not determine that such payments were wages within the meaning of the section and (b) that by the enactment in 1959 of section 1265 the Legislature intended to abrogate the effect of Bradshaw, if that case can be considered to have held the severance and dismissal payments to be wages, and that section 1265 precludes dismissal pay from being considered wages. (A) Did Bradshaw Hold These Payments to be Wages? YES.
Appellants' main argument that Bradshaw did not so hold is based upon the fact that there the opinion refers to the petitioners' concession that dismissal payments under the pertinent contract were 'wages' under section 1252 and hence, they say, the court never really determined whether, in fact, such payments were wages. We turn to a consideration of that case. The petitioner was discharged for reasons of economy from his position with the San Francisco Chronicle. Pursuant to a collective bargaining agreement between the Chronicle and his union, he received certain benefits including 'dismissal pay' based upon his length service. The Department of Employment decided that because he had received dismissal pay equal to his salary for working 41 1/2 days, he would not qualify for unemployment insurance benefits for the length of time and denied him such benefits. The Unemployment Insurance Appeals Board affirmed that decision. Bradshaw then petitioned the superior court for a writ of mandate under section 1094.5, Code of Civil Procedure, to vacate the decision of the Appeals Board and grant him such benefits. The court sustained a demurrer to the petition and Bradshaw appealed. The Supreme Court, by a four to three decision, affirmed.
Its decision stated: 'This case calls for an interpretation of section 1252 of the Unemployment Insurance Code. In part, that section provides: 'An individual is 'unemployed' in any week during which he performs no services and with respect to which no wages are payable to him * * *.' Section 1251 provides that unemployment compensation benefits are payable to 'unemployed individuals." (Bradshaw, supra, p. 610, 297 P.2d p. 972.) After stating that the petitioner conceded that dismissal payments were wages, the court states that 'The question then is whether dismissal payments are payable 'with respect to' a period before the employee's date of discharge or 'with respect to' a period after that date.' (P. 610, 297 P.2d p. 972.) The court continues: 'The state's purpose in providing unemployment insurance is 'to reduce involuntary unemployment and the suffering caused thereby to a minimum.' Unempl.Ins.Code, § 100. An unemployed person who satisfies the requirements of the Unemployment Insurance Act is entitled to receive from the Unemployment Fund payments reasonably sufficient to tide him over until he can secure employment.
'The parties to the contract involved in this proceeding obviously intended the dismissal payments provided for therein to serve the same purpose as unemployment compensation, namely, to tide the discharged employee over until he could secure employment. Although dismissal pay coverage under the contract was broader than coverage under the Unemployment Insurance Act, the fact still remains that an award of unemployment benefits to the petitioner for the dismissal period would seem to duplicate the dismissal payments he has received.
'Section 1252 contemplates that wage payments are to be allocated to specific periods. The week 'with respect to which' a wage payment it made by an employer to an employee depends upon the provisions of the employment contract. However, interpretations of employment contracts and of the Unemployment Insurance Act that result in duplication of payments to a discharged employee are not encouraged. This principle finds support in decisions of this court involving duplication of workmen's compensation by unemployment disability benefits. [Citations.] The policy against duplication of payments should not be thwarted by any so-called liberal construction of the act, especially when such construction is not justified by the language of the contract. Unemployment insurance was not intended to protect employees already protected for the same period by their private contracts.' (Bradshaw, supra, p. 611, 297 P.2d p. 972.)
'A holding that dismissal payments should be disregarded in determining whether an employee is entitled to unemployment benefits would create an anomalous distinction between dismissal pay on the one hand and 'in lieu of notice pay' and 'vacation pay' on the other. There is authority in this state to the effect that the receipt of 'vacation pay' or 'in lieu of notice pay' temporarily disqualifies an employee from claiming unemployment insurance benefits. [Citations.] By analogy dismissal pay should have the same effect.' (P. 612, 297 P.2d p. 973.)
It is clear from the last quoted paragraph that the court is determining the character of dismissal payments as 'wages' without regard to the petitioner's concession.
The court then goes on to distinguish dismissal payments from vacation pay which in Gilliam v. Cal.Emp. Stab. Comm. (1955) 130 Cal.App.2d 102, 278 P.2d 528, was held not to disqualify the recipient from claiming unemployment insurance benefits, pointing out that, 'The petitioner contends that dismissal pay is more analogous to 'in lieu' vacation pay than to the normal vacation pay involved in the Shand and Jones cases. This contention is untenable. As noted, the basis for the Gilliam award was the employee's option while he was employed to receive the supplemental payments. In contrast, the dismissal payments made to the petitioner were not available to him unless and until his employment was terminated.' (46 Cal.2d p. 612, 297 P.2d p. 973.) Here again the court is indicating its own interpretation of dismissal payments, rather than blindly acting upon the petitioner's concession.
The court concludes: 'It is concluded that the Appeals Board and the superior court properly construed the statute and held that, as a matter of law on the undisputed facts, the receipt of dismissal pay temporarily prevented the petitioner from qualifying for unemployment benefits.' (P. 613, 297 P.2d p. 973.) That the majority opinion was not relying solely on the petitioner's concession is well shown by the dissenting opinion where at considerable length, Carter, J. argues that dismissal pay is not wages.
A study of Bradshaw clearly indicates that the court definitely held that dismissal pay constituted wages under section 1252. In support of their argument appellants use case authority of other jurisdictions which have held favorably to appellants' theory and the opinions of the Attorney General of California. There are various reasons why the other jurisdictions have held dismissal payments not to be wages and to allow the claimants to receive unemployment benefits. In Ackerson v. Western Union Telegraph Co. (1951) 234 Minn. 271, 48 N.W.2d 338, 25 A.L.R.2d 1063, the court thought severance pay was partial compensation for the loss of seniority rights, loss of possible pension rights, and compensation for retraining or acquiring new skills. The New Jersey court in Western Electric Co. v. Hussey (1961) 35 N.J. 250, 172 A.2d 645, thought that severance pay was 'a means of recompense for economic exigencies and privations and detriments resulting from the permanent separation of the employee from service for no fault of his own.' (172 A.2d p. 651). Other grounds supporting the view of appellants can be found in 193 American Law Reports 2d 1327. However, the California Supreme Court does not think these other cases help solve the problem. 'Decisions in other states on the subject herein discussed are not helpful. It is stated in 25 A.L.R.2d at page 1070 that a general rule on the subject 'is not justified." (Bradshaw, supra, 46 Cal.2d 608, 610-611, 297 P.2d 970, 972.)
This brings us to appellants' second contention. B. Section 1265.
yBradshaw was decided in 1956. In 1959, the Legislature enacted section 1265 which reads: 'Notwithstanding any other provisions of this division, payments to an individual under a plan or system established by an employer which makes provisions for his employees generally, or for a class or group of his employees, for the purpose of supplementing unemployment compensation benefits shall not be construed to be wages or compensation for personal service under this division and benefits payable under this division shall not be denied or reduced because of the receipt of payments under such arrangements or plans.
'This amendment is hereby declared to be merely a clarification of the original intention of the Legislature and is not a substantive change, and is in conformity with the existing administrative interpretation of the law.' (Emphasis added.)
Section 1265 was designed by the Legislature to clarify the already existing rule pertaining to payments made by an employer, under a plan or system designed for the purpose of supplementing unemployment compensation benefits. That it was not intended to apply to dismissal payments where the contract under which they are made does not show that they were intended to be supplemental to said benefits, clearly appears from the legislative history of that section.
The Assembly Interim Committee of Finance and Insurance Report stated: 'Because a recent decision by the California Supreme Court in a dismissal pay case has been referred to as raising some question about the correctness of the Attorney General's ruling that supplementation as defined in the Ford SUB Plan is permissible under the present California law, we believe it important to distinguish clearly between dismissal payments and supplemental unemployment benefits.
'The case in question is Bradshaw v. California Employment Stabilization Commission, et al., CCH Calif. § 8780 (decided June 4, 1956), in which a terminated employee received payment in lieu of notice, payment in lieu of vacation and a dismissal allowance as provided in a collective bargaining agreement.
'An employee who receives such dismissal allowances from his employer is entitled to such payments upon occurrence of the dismissal regardless of whether he registers for work, seeks work and otherwise qualifies for state unemployment compensation. Such payments properly can be treated as wages because they are in the nature of deferred income for services previously rendered.
'In the Bradshaw case, accordingly, the court found that the dismissal allowance was intended by the employer and employees to serve the same purpose as unemployment compensation and held that under such circumstances to allow unemployment compensation for the same period would amount to improper duplication of benefits.
'An employee covered by the Ford SUB Plan, however, is not entitled to any supplemental benefit merely by reason of his having been laid off. Before he can qualify for a supplemental unemployment benefit he must satisfy each and every qualification under the state unemployment compensation law and, with the minor exceptions previously noted, must actually receive a state unemployment compensation benefit.
'Unlike the situation in the Bradshaw case, the intention not to duplicate state unemployment compensation is spelled out clearly and specifically in the Ford SUB Plan.
'Supplemental unemployment benefits, therefore, are clearly distinguishable from such payments as dismissal allowances, payments in lieu of notice and payments in lieu of vacation.'
In the same Interim Committee Report, John A. Despol, Legislative Representative for the California Industrial Union Council, affiliated with AFL-CIO, makes the same distinction, which is quoted below:
'3. The final consideration, and perhaps the most telling one, is that the effect of a ruling that SUB payments are to be regarded as wages or disqualifying compensation will not have the effect of conserving one single penny of the state's unemployment compensation funds.
'In almost every other case in which it is ruled that a certain kind of individual income is to be treated as wages or as otherwise disqualifying the recipient from receiving state benefits, the net effect of the ruling is to conserve in the fund, and for the benefit of those who must contribute to the fund, the unemployment compensation benefits that would otherwise be paid. In a sense, the usual determination of whether income is to be regarded as disqualifying the applicant represents a balance of the interests of the individual in obtaining the unemployment benefit and the interests of all others who must, in the end, contribute to the fund from which unemployment benefit is to be paid.
'This is not true of SUB plans. Because SUB plans are supplementary a ruling that SUB payments are wages does not prevent one single penny from being paid in state unemployment compensation benefits. The result, instead, is that the SUB payments are not made. The individual worker who is laid off, and who is qualified will continue to apply for and receive his state system benefits. The only effect of the adverse ruling will be to prevent him from receiving any supplemental benefits.
'This conclusion is not true with respect to severance pay, dismissal pay, pay in lieu of notice, vacation pay, or any of the other forms of payment which have been held in some states to disqualify the applicant from receiving unemployment compensation. In all of those cases, the payments are not conditioned on the unemployment compensation ruling. But, in the case of SUB plans, the payments, themselves are conditioned upon the approval of the principle of supplementation, and failure to approve the principle results in no SUB payment being made.'
In resolving the issue it is well to look again at the last paragraph of section 1265: 'This amendment is hereby declared to be merely a clarification of the original intention of the Legislature and is not a substantive change, and is in conformity with the existing administrative interpretation of the law.' (Emphasis added.)
Therefore, in determining whether the contract in this case is within the purview of section 1265, it is important to look at the Appeals Board decisions prior to the statute's enactment. The Morris Furniture Manufacturing Company Benefit Decision No. 6540 is a case similar to the case at bench. Claimant sought benefit payments from the state unemployment fund as well as supplemental payments made to him from his employer pursuant to a collective bargaining agreement. The contract in that case is patently different from the one before the bench. There the contract starts by saying: 'The declared purpose of the plan is to supplement state system unemployment benefits * * * and not to replace or duplicate them.' All through the contract the payments are referred to as 'supplemental unemployment payments.' The contract expressly stated that the employee did not have a vested right to payments from the fund and that the payments would not be made by the company but by a trustee of the trust fund. The payments were never referred to as dismissal or severance payments. In this situation the Appeals Board said: 'In the present case, the provisions of the plan declare that the supplemental unemployment benefits may not be considered wages. Although such a characterization standing alone may not necessarily be controlling in determining the application of the Unemployment Insurance Code, here it is supported by other provisions in the plan which may not be casually disposed of. For example, supplemental unemployment benefits are payable only if the individual is 'unemployed' and, with minor exceptions not pertinent here, is in receipt of or entitled to unemployment insurance benefits under the applicable state law. Unlike vacation and in-lieu-of-notice payments where, if certain conditions prior to lay-off or termination are satisfied, he has an absolute right to the payments which are generally considered wages under the collective bargaining agreement, there is no such absolute right to the supplemental unemployment benefits following the layoff. There are conditions upon which such payments depend that are not under the complete control of either the employer or the claimant; for instance, the fund 'position' through no fault of the employer or the employee may be too low to permit payment.
'The declared purpose of the Chrysler Corporation plan is to supplement state unemployment insurance benefits to specified levels and not to replace or duplicate them, which is the nature of vacation pay and severance and in-lieu-of-notice payments. We can find nothing in the Unemployment Insurance Code to make the state's plan exclusive in these matters or to forbid employers and unions from establishing a private plan, which we would effectively be precluding by interpreting supplemental unemployment benefits to be wages.' The Morris case Benefit Decision No. 6540 was reversed by the Superior Court of the County of Los Angeles. However, section 1265 was enacted immediately subsequent to the superior court's decision which held the supplemental unemployment payments were wages. The act states that section 1265 is to be 'in conformity with the existing administrative interpretation of the law.' If the Morris Benefit Decision is the administrative interpretation of the law, then the case at bench does not come within the purview of section 1265. As pointed out previously the intent which is manifested by the two different contracts is clear. The contract in the case at bench does not give any indication that the payments were some sort of plan set up by the parties to supplement the state unemployment relief benefits, while in Morris the intent of the agreement can be ascertained from the face of the contract.
Subsequent to the enactment of section 1265 the Appeals Board has followed the same procedure in determining whether a claimant is eligible for state unemployment benefits as well as a payment under a private contract. In the Matter of Florence M. Bayley Benefit Decision No. 6660 the Appeals Board passed on another contract involving supplemental payments. That recent decision was relied on by the Board when they determined that the claimants in this case were ineligible for state payments. The Appeals Board said in Bayley: 'Our opinion that section 1265 of the code is directed to the situation in which the provisions of the contract clearly indicate that the payments were made for the purpose of supplementing unemployment compensation benefits is also supported by the history of the section. [Citing the Morris case.]'
The administrative rule seems to be quite clear. The parties must spell out their intent in the contract. If they do not specifically provide that the agreement is to be supplemental in nature and not duplicatory then the agreement will not come within the ambit of section 1265. Administrative interpretations of the act are usually followed by the courts unless clearly erroneous. (See Cohon v. Dept. of Alcoholic Bev. Control (1963) 218 Cal.App.2d 332, 339, 32 (Cal.Rptr. 723.) It does not seem that such an interpretation given to section 1265 by the Appeals Board is unfair or erroneous.
After hearing all the facts and reading the contract, the Appeals Board found that the payments were not supplementary in nature but were duplicatory. The trial court in this mandate proceeding was authorized to exercise its independent judgment of the facts. (See Ashdown v. State of California (1955) 135 Cal.App.2d 291, 287, P.2d 176.) It found that the dismissal or severance payments did not constitute supplemental unemployment benefits within the meaning of section 1265. From these findings and the Appeal Board's interpretation of section 1265, it cannot be said that claimants are entitled to state unemployment benefits.
It is generally conceded that the Legislature enacted section 1265 because of the superior court's decision in Morris, (no appeal was taken) which reversed the Board's decision that supplemental unemployment benefits under the Chrysler Corporation plan involved in that case were not wages under section 1252 although the plan itself stated the benefits under the plan were to be supplementary to state unemployment insurance benefits. Thus the Legislature approved of the Board's position, in which, in effect, the Board distinguished between unemployment benefits intended to be supplemental and severance payments.
Subsequent to the enactment of section 1265 the Attorney General rendered opinions on questions involving the meaning of the language of section 1265 and concluded that payments made pursuant to any plan which could reasonably be interpreted to be for the purpose of supplementing unemployment insurance are not wages. The Appeals Board, however, interpreted the section to apply only to those cases in which it is abundantly clear that the intent of the compensation plan is for the purpose of supplementing unemployment insurance compensation benefits. In Benefit Decision 6660 of the Board (one of the decisions herein involved) the Board referred to the second paragraph of section 1265: "This amendment is hereby declared to be merely a clarification of the original intention of the Legislature and is not a substantive change, and is in conformity with the existing administrative interpretation of the law," and then stated '[B]oth prior to and subsequent to the Bradshaw case (June 1956), we held that a separation allowance or dismissal payment is wages within the meaning of section 1252 of the code, allocable to the period following the termination of employment, and renders the claimant ineligible for benefits for the period to which such payments are allocable. (Benefit Decisions Nos. 5784, 5964, 6134 and 6552.) Therefore, for a number of years the existing administrative interpretation with respect to severance pay has uniformly been in accordance with the principle of the Bradshaw case.' The Board then as additional support for its interpretation referred to the fact that the section was enacted immediately subsequent to Bradshaw and Morris. We agree with the Board's interpretation of the section.
The Legislature apparently has indicated by section 938 that it regards dismissal payments which the employer is required to make, as 'wages' for that section provides "Wages' does not include dismissal payments which the employer is not legally required to make.' (Emphasis added.)
Finally, the Attorney General argues that the employees had only contingent or nonvested claims to the severance pay. (See Collective Bargaining Contract, supra--employees could be dismissed without receiving any payments), and that the nonvested nature of the employees' interest in the severance pay would therefore preclude it from being wages within the purview of section 1252 of the Code. (See 27 Ops. Atty.Gen. 71 (1956).) This opinion relied on by the Attorney General was in response to the question whether a laid-off employee of the Auto Industry could collect unemployment insurance benefits as well as payments under the Supplemental Unemployment Benefit Plan designed by the Ford Motor Company and the United Auto Workers. The Attorney General believed they could and based his opinion on Appeals Board Decision No. 5569 (1950). In that case, members of the Garment Workers Union had a plan whereby they would receive payments from a trust fund set up by their employer as well as unemployment benefits during their lay-off periods. The terms of the trust stated that the employees had no vested interest or right in the fund. The Appeals Board held the workers were eligible for benefits, stating that: 'Ordinarily a right to remuneration accrues upon the rendition of the services by virtue of the contract of hire so that a provision that the employee has no right in a fund would tend to indicate that whatever is paid the employee out of the fund is not intended as remuneration for services * * * it cannot be said that payments from the Fund are remuneration for services and therefore wages within the meaning of Section 9.2 of the Act (Sec. 1252).'
The Attorney General's argument does not represent the position taken by the California State Supreme Court. The primary purpose of unemployment insurance benefits is to furnish income to eligible workers deprived of their wages due to unemployment, and thus alleviate economic hardship because of inadvertent idleness. (Bradshaw, supra, 46 Cal.2d p. 611, 297 P.2d 970.) Unemployment insurance benefits were not intended to protect employees already protected for the same period by their private collective bargaining agreement. (Bradshaw, supra, p. 611, 297 P.2d 970.) In fact, duplication of payments to a discharged employee is not encouraged and this policy should not be set aside by liberally construing the Act. (Bradshaw, supra, p. 611, 297 P.2d 970.)
In order to determine whether the severance payments were intended to be supplementary to unemployment benefits or wages the Appeals Board had to look to the collective bargaining contract. In rendering their decision they were well aware of the authorities cited by appellants. The Appeals Board interpreted section 1252 to encompass the situation which is now before the bench. When an administrative board interprets an act, the appellate courts will follow that interpretation unless it is clearly erroneous. (Cohon v. Dept. Alcoholic Bev. Control, supra, 218 Cal.App.2d p. 339, 32 Cal.Rptr. 723.) In light of the theory of the Bradshaw case and the fact that the collective bargaining agreements involved in the case at bench and Bradshaw are similar, it cannot be said that the Appeals Board erroneously construed the severance payments to be wages within the meaning of section 1252 of the Code.
The orders are affirmed.
SULLIVAN, P. J., and MOLINARI, J., concur. --------------- * Retired Presiding Justice of the District Court of Appeal of the State of California, First Appellate District, Division One, sitting pro tempore under assignment by the Chairman of the Judicial Council. 1 Unless otherwise noted, all section references are to the Unemployment Insurance Code. 2 At the same time, the Department held that each claimant was ineligible for unemployment insurance benefits for the number of weeks following termination of his employment equal to the number of weeks of pay received in lieu of notice, and pro rata vacation pay. Appellants are not contesting this ruling. 3 (Shand v. Cal. Emp. Stab. Comm., (1954) 124 Cal.App.2d 54 ; Jones v. California Emp. Stab. Comm. (1953) 120 Cal.App.2d 770 ). Those cases held that the receipt of 'vacation pay' or 'in lieu of notice pay' disqualifies pro tanto an employee from claiming unemployment insurance benefits. 4 The provisions of the collective bargaining agreement in Bradshaw with respect to dismissal or severance pay are similar to those in the collective bargaining agreements in the case at bench. (See Bradshaw dissenting opinion, p. 614, 297 P.2d 970; Bradshaw v. California Employment Stab. Comm. (1955) Cal.App., 286 P.2d 574.) 5 Ford Supplementary Unemployment Benefit Plan expressly states that its benefits are supplemental to Unemployment Insurance Benefits. Supplementary Unemployment Benefit plans (called SUB plans) were first developed in the automotive industry and were intended to supplement unemployment insurance benefits that would be received by the employee at the same time as his unemployment insurance benefits. They expressly show that one benefit was not to be substituted for the other, but were to be supplemental to each other.