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PENFLEX v. KENNETH BRYSON ET AL. AND COMMONWEALTH PENNSYLVANIA UNEMPLOYMENT COMPENSATION BOARD REVIEW (12/07/84)

SUPREME COURT OF PENNSYLVANIA


decided: December 7, 1984.

PENFLEX, INC., APPELLEE,
v.
KENNETH BRYSON ET AL. AND COMMONWEALTH OF PENNSYLVANIA UNEMPLOYMENT COMPENSATION BOARD OF REVIEW, APPELLANTS

NO. 70 EASTERN DISTRICT APPEAL DOCKET, 1983, Appeal from Order Dated March 24, 1983 of the Commonwealth Court in Nos. 1875 and 2714 C.D. 1981 Reversing Orders of the Commonwealth of Pennsylvania Unemployment Compensation Board of Review, Decision Nos. B-197119 through and including B-197147, all Dated July 13, 1981 and Decision No. B-200 263 Dated October 15, 1981, 73 Pa. Commonwealth Ct. 111, Nix, C.j., and Larsen, Flaherty, McDermott, Hutchinson, Zappala and Papadakos, JJ. Larsen, J., files a Concurring Opinion. Zappala, J., files a Concurring and Dissenting Opinion. Nix, C.j., files a Dissenting Opinion.

Author: Hutchinson

[ 506 Pa. Page 281]

OPINION OF THE COURT

Appellants, former employees of the appellee, Penflex, Inc., appeal by allowance a Commonwealth Court order reversing orders entered by the Unemployment Compensation Board of Review.*fn1 The Board, in turn, had affirmed decisions of the Referee and the Office of Employment Security awarding unemployment compensation benefits to the appellants. We now reverse Commonwealth Court and reinstate the orders of the Review Board.

The factual circumstances surrounding the instant controversy are undisputed. The appellants were members of a collective bargaining unit represented by Plumbers Union Local 690. The Union and appellee Penflex, Inc., appellants' employer, entered into a collective bargaining agreement which expired on June 30, 1980. The parties engaged in continuing negotiations but failed to agree on the terms of a new contract before July 1, 1980.

The Union advised its members not to engage in a work stoppage. Nevertheless, the membership disregarded that advice and failed to report to work, establishing picket lines at the employer's plant beginning on July 1, 1980. The Union had not notified the Federal Mediation and Conciliation Service of the contract dispute before the work stoppage as required by Section 8(d) of the Labor Relations Management Act (Taft-Hartley Act), 61 Stat. 136 (1947), 29 U.S.C.A. § 158(d) (1976) (hereafter "LRMA").*fn2 [The record

[ 506 Pa. Page 282]

    does not show, however, that any notice provision was written into the collective bargaining agreement itself, nor does it show any provision in that agreement extending its term in the absence of such statutory notice.] Consequently, the employer terminated the appellants' employment on July 1, 1980 for participating in what it considered an illegal strike.*fn3 On July 3, 1980, appellants offered to return to work. However, appellee did not accept their offer.

Out of work because of this termination, appellants subsequently applied for unemployment compensation benefits pursuant to the Unemployment Compensation Law, Act of December 5, 1936, Second Ex.Sess., P.L. (1937) 2897, as amended, 43 P.S. § 751 et seq. (1964 & Supp.1983-84). The Office of Employment Security initially determined that appellants' unemployment was caused by a "lockout" instituted by appellee (hereafter "employer") and that, therefore, under Sections 401 and 4(u) of the Compensation Law,*fn4 appellants (hereafter "employees") were eligible for compensation benefits beginning the week ending July 5, 1980.

The employer appealed to the Unemployment Compensation Board of Review arguing that, by engaging in a strike,

[ 506 Pa. Page 283]

    its former employees were ineligible for initial benefits by virtue of Section 402(d) of the Unemployment Compensation Law which denies compensation to an employee for any week "[i]n which his unemployment is due to a stoppage of work, which exists because of a labor dispute (other than a lockout) at a factory, establishment or other premises at which he is or was last employed . . . ." 43 P.S. § 802(d). The employer argued further that its employees' participation in a work stoppage in violation of Section 8(d) of the LRMA constitutes willful misconduct, that the employees were terminated on account of that willful misconduct and that, consequently, they remain ineligible for benefits under Section 402(e).*fn5

Following a hearing, the Referee initially observed that, since the parties' bargaining agreement had already expired, the July 1, 1980 work stoppage was not the usual "wild-cat" strike, i.e., a work stoppage which occurs in spite of a "no strike -- no lockout" provision in an extant collective bargaining agreement. He therefore concluded that the strike did not constitute a breach of contract and was not illegal for that reason.

The Referee further determined that participation in a strike in violation of the federal labor statute did not establish willful misconduct within the meaning of Section 402(e) of Pennsylvania's Unemployment Compensation Law. The Referee reasoned that an employee's failure to comply with the thirty-day notice requirements of Section 8(d) results in his loss of employee status only for purposes of his LRMA-conferred right to contest his dismissal before the

[ 506 Pa. Page 284]

NLRB as an unfair labor practice.*fn6 Therefore, the Referee refused to rule that, in effect, any employee who has engaged in a work stoppage not protected by the LRMA automatically forfeits his right to benefits pursuant to Section 402(e) of Pennsylvania's Unemployment Compensation Law.

In addition, the Referee noted that if the employees' strike were the only factual circumstance presented for his consideration, they would be ineligible for benefits under Section 402(d). However, the Referee further noted that the employer terminated the employees on the same day the work stoppage began. Accordingly, he ruled that the cause of the employees' unemployment was not a work stoppage resulting from a labor dispute, but, instead, their discharge from employment. Therefore, he affirmed the Office of Employment Security's compensation award.

The Review Board agreed with the Referee's reasoning and affirmed his determination. In short, the compensation authorities determined that the failure to comply with the notice provision of the LRMA, Section 8(d) before terminating the contract did not, on these facts, constitute willful misconduct under Section 402(e) of our Unemployment Compensation Law. The employer then appealed the Board's decision to Commonwealth Court.*fn7 Commonwealth Court held that the work stoppage initiated by the employees did constitute willful misconduct and concluded, therefore, that they were ineligible for compensation benefits under Section 402(e).

[ 506 Pa. Page 285]

Commonwealth Court acknowledged that it was not confronted with a wildcat strike and that only such strikes had been held to be illegal work stoppages amounting to willful misconduct under prior decisional law. However the court, citing Houck v. Com., Unemployment Compensation Board of Review, 45 Pa. Commonwealth Ct. 587, 589, 405 A.2d 1062, 1064 (1979), stated that, under the law, willful misconduct includes "a disregard of standards [of behavior] which the employer has a right to expect of his employee" and that, by striking in violation of Section 8(d), the employees here demonstrated such disregard. See Weimer v. Unemployment Compensation Board of Review, 176 Pa. Superior Ct. 348, 354, 107 A.2d 607, 610 (1954).

Commonwealth Court reasoned that:

[W]here, as here, Employer and Union have undertaken to engage in collective bargaining under the aegis of the NLRA, then the Employer has a right to expect that the notice provisions of Section 8(d) will be complied with prior to an employee strike.

Furthermore, . . . if we were to accept the Claimants' and Board's arguments, then a striker, ineligible under the provisions of Section 402(d) of the Law, would become eligible for benefits upon the exercise by the employer of its right to discharge the striker for violations by the striker of Section 8(d) of the NLRA. We therefore would be encouraging strikers to violate Section 8(d). Such a result would, we believe, so inhibit the exercise by an employer of its federal rights that a serious question of invalidity under the Supremacy Clause of the United States Constitution would be raised.

73 Pa. Commonwealth Ct. 111, 116-17, 457 A.2d 234, 236 (1983) (citations and footnote omitted) (emphasis in original).

We disagree with Commonwealth Court's determination that the employees here exhibited a disregard of behavioral standards which their employer could reasonably expect of them and now hold that their participation in a work stoppage in violation of Section 8(d) of the LRMA does

[ 506 Pa. Page 286]

    not constitute willful misconduct within the meaning of Section 402(e) of our Unemployment Compensation Law. In reaching our decision, we are mindful of the circumscribed scope of appellate review.

It is now axiomatic in an unemployment compensation case, that the findings of fact made by the Board, or by the referee as the case may be, are conclusive on appeal so long as the record, taken as a whole, contains substantial evidence to support those findings. (citations omitted) The appellate court's duty is to examine the testimony in the light most favorable to the party in whose favor the Board has found, giving that party the benefit of all inferences that can logically and reasonably be drawn from the testimony, to see if substantial evidence for the Board's conclusion exists.

LeGare v. Com., Unemployment Compensation Board of Review, 498 Pa. 72, 76, 444 A.2d 1151, 1152-53 (1982) (quoting Taylor v. Unemployment Compensation Board of Review, 474 Pa. 351, 355, 378 A.2d 829, 831 [1977]). Our review is further constrained by policy considerations underpinning the Unemployment Compensation Law. "This Act was designed to alleviate the rigors of unemployment and most specifically to assuage the distress of the individual unemployed worker." Gladieux Food Services, Inc. v. Unemployment Compensation Board of Review, 479 Pa. 324, 330, 388 A.2d 678 (1978). For this reason, the eligibility sections of the law must be liberally interpreted to provide the maximum amount of benefits allowable under the statute to a claimant who has experienced involuntary unemployment. Renne v. Unemployment Compensation Board of Review, 499 Pa. 299, 305 n. 4, 453 A.2d 318, 321 n. 4 (1982). Conversely, disqualification provisions, such as Section 402(e), should be narrowly construed and a claimant must not be denied compensation unless he is unequivocally excluded by the plain language of these provisions. See Penn Hills School District v. Unemployment Compensation Board of Review, 496 Pa. 620, 625, 437 A.2d 1213, 1215 (1981); Gladieux, 479 Pa. at 331, 388 A.2d at 682.

[ 506 Pa. Page 287]

Given the limited range of our inquiry, we turn to the matter before us. This case involves the interrelationship between Sections 402(d) and 402(e) of the Pennsylvania Unemployment Compensation Law, 43 P.S. § 802(d) and 802(e), respectively. Ordinarily, where a claimant is temporarily "unemployed" as a result of his involvement in a labor-related activity, only Section 402(d) governs the determination as to whether he is disqualified from receiving compensation benefits. However, that provision applies only in the context of an ongoing employer-employee relationship. A striking employee, strictly speaking, never leaves his employment.

A striker continues as an employee during the strike and only removes himself from actual labor. He retains his status at all times and again becomes a working employee when the strike is terminated.

Pramco v. Unemployment Compensation Board of Review, 396 Pa. 560, 564, 154 A.2d 875, 876-77 (1959). See Sprague & Henwood, Inc. v. Unemployment Compensation Board of Review, 207 Pa. Superior Ct. 112, 116, 215 A.2d 269, 272 (1965).

Section 402(d) applies only if employment terminates as a result of a labor dispute. In interpreting the causation requirement precedent to that Section's application to unemployment we have held that we "confine our inquiry to the immediate cause and avoid the maze that would result from an attempt to ascertain indirect or chronologically remote causes." Gladieux Food Services, Inc. v. Unemployment Compensation Board of Review, 479 Pa. at 330, 388 A.2d at 681 (emphasis added). Where the employer-employee relationship is permanently severed, the employee no longer has any real interest in the outcome of the labor dispute.*fn8 Accordingly, the dispute is not the immediate

[ 506 Pa. Page 288]

    cause of his unemployment and the disqualification set forth in Section 402(d) is inapplicable to him. See Sprague & Henwood, Inc. v. Unemployment Compensation Board of Review, 207 Pa. Superior Ct. 112, 215 A.2d 269 (1965); Oluschak v. Unemployment Compensation Board of Review, 192 Pa. Superior Ct. 255, 263, 159 A.2d 750, 754 (1960).*fn9

Nevertheless, Section 402(d) does not "immunize an employee during a work stoppage in a labor dispute from the consequences of his willful misconduct connected with his work involving flagrant breach of duty to his employer and to his union." Yellow Cab Co. v. Unemployment Compensation Board of Review, 170 Pa. Superior Ct. 625, 631, 90 A.2d 599, 602 (1952).*fn10 See H.J. Heinz Co. v. Unemployment Board of Review, 172 Pa. Superior Ct. 324, 329,

[ 506 Pa. Page 28994]

A.2d 82, 84 (1953). Accordingly, "[a]n employe . . . may forfeit his right to unemployment compensation because of willful misconduct even though the misconduct which induced his discharge by the employer is related to a stoppage of work involved in a labor dispute." Weimer v. Unemployment Compensation Board of Review, 176 Pa. Superior Ct. at 354, 107 A.2d at 610 (quoting Yellow Cab Co., 170 Pa. Superior Ct. at 631, 90 A.2d at 602).

Accordingly, where a claimant becomes temporarily absent from work as a result of a labor dispute, other than a lockout, he is unquestionably ineligible for benefits under Section 402(d) during the time he is involved in the work stoppage. However, if the claimant's employer terminates his employment, the labor dispute which resulted in the work stoppage no longer directly concerns him. The question then becomes whether he was fired for willful misconduct. Houck v. Unemployment Compensation Board of Review, 45 Pa. Commonwealth Ct. 587, 589, 405 A.2d 1062, 1064 (1979). Generally, if the claimant's participation in the work stoppage constituted willful misconduct, he remains ineligible for benefits following his discharge from employment under Section 402(e); otherwise, his disqualification under Section 402(d) is lifted and he is entitled to compensation.*fn11

The specific question presented here for our consideration is one of first impression. We are asked to decide whether employee participation in a strike, which is purportedly in violation of a LRMA provision designed to reduce strike incidence, constitutes willful misconduct under

[ 506 Pa. Page 290]

Section 402(e) of the Pennsylvania Unemployment Compensation Law. "Willful misconduct" may be defined as:

     an act of wanton or willful disregard of the employer's interest, a deliberate violation of the employer's rules, a disregard of standards of behavior which the employer has the right to expect of his employe, or negligence indicating an intentional disregard of the employer's interest or of the employe's duties and obligations to the employer. Detterer Unemployment Compensation Case, 168 Pa. Superior Ct. 291, 294, 77 A.2d 886; Sopko Unemployment Compensation Case, 168 Pa. Superior Ct. 625, 82 A.2d 598; Krawczyk Unemployment Compensation Case, 175 Pa. Superior Ct. 361, 104 A.2d 338.

Weimer v. Unemployment Compensation Board of Review, 176 Pa. Superior Ct. at 354, 107 A.2d at 610. Employee conduct which renders a claimant ineligible for benefits under Section 402(e) must be willful and "not merely conduct which appears to be contrary to the employer's interests." Unemployment Compensation Board of Review v. National Aluminum Co., 22 Pa. Commonwealth Ct. 519, 522, 349 A.2d 527, 529 (1975) (emphasis in original).

[ 506 Pa. Page 291]

Our courts have consistently held that employees who participate in a work stoppage in violation of the terms of an existing collective bargaining agreement are deemed to have engaged in willful misconduct under Section 402(e) and are, therefore, ineligible to receive unemployment compensation benefits if they are terminated. Progress Manufacturing Co. v. Unemployment Compensation Board of Review, 406 Pa. 163, 165-66, 176 A.2d 632, 633 (1962); Weimer v. Unemployment Compensation Board of Review, 176 Pa. Superior Ct. at 353, 107 A.2d at 609; American Viscose Corp. v. Unemployment Compensation Board of Review, 173 Pa. Superior Ct. 251, 253, 98 A.2d 257, 258 (1953); H.J. Heinz Co. v. Unemployment Compensation Board of Review, 172 Pa. Superior Ct. 324, 329, 94 A.2d 82, 84 (1953); Bays v. Com., Unemployment Compensation Board of Review, 62 Pa. Commonwealth Ct. 421, 423, 437 A.2d 72, 73 (1981); Moran v. Com., Unemployment Page 291} Compensation Board of Review, 42 Pa. Commonwealth Ct. 195, 200, 400 A.2d 257, 259 (1979). We approve those decisions.

Conversely, where there is no existing bargaining agreement, the courts have held that a work stoppage by employees is not considered willful misconduct making the strikers ineligible for unemployment compensation benefits if terminated. Birdsboro Corp. v. Com., Unemployment Compensation Board of Review, 59 Pa. Commonwealth Ct. 462, 466 n. 4, 430 A.2d 361, 363 n. 4 (1981). See Sprague & Henwood, Inc. v. Unemployment Compensation Board of Review, 207 Pa. Superior Ct. 112, 215 A.2d 269 (1965).

In the instant case, the parties' collective bargaining agreement had expired prior to the employees' work stoppage. Therefore, the employees' strike was not a breach of contract and, thus, was not, for that reason, illegal. However, their union's failure to give the thirty-day notice required by Section 8(d) of the LRMA constitutes an apparent violation of federal labor law.*fn12 The employer argues that the employees' participation in a strike which is apparently "illegal" under federal law must be deemed "willful misconduct" under the Pennsylvania Unemployment Compensation Law. We disagree. Appellee directs our attention to Houck, supra, in support of its position. However,

[ 506 Pa. Page 292]

    that case is clearly distinguishable on its facts from the one now before us.

There, employees struck in support of their efforts to have their employer recognize a particular union local as their exclusive bargaining representative. At the time, a petition to so certify the union was pending before the Pennsylvania Labor Relations Board. The employees were immediately advised that further unauthorized absences would result in dismissal. Several days later the employer discharged the strikers. In addition, the employer rejected the employees' subsequent unconditional offer to return to work. Commonwealth Court affirmed the Review Board's determination of ineligibility under Section 402(e) concluding that:

Willful misconduct includes a disregard of standards which an employer has a right to expect of an employee. Where a method exists for conclusively establishing rights which exist by virtue of statute or contract, we believe that, absent bad faith, an employer ordinarily has a right to expect his employees to utilize such methods rather than to resort to a disruptive strike.

45 Pa. Commonwealth Ct. at 589-90, 405 A.2d at 1064 (citations omitted). In Houck the strike was unnecessary as the employees could have achieved their goal by complying with the certification procedures prescribed by the Pennsylvania Labor Relations Act, 43 P.S. § 211.1 et seq. More significantly, the employees chose to disregard their employer's directive to return to work on pain of dismissal. We considered the employees' refusal to return to work a flagrant disregard of their employer's interests.

In both Houck and the instant case, the striking employees were not bound by the terms of a collective bargaining agreement. However, unlike the employees in Houck, the appellants here had no available statutory procedures by which they could achieve their demands. The work stoppage was the only means at their disposal by which they could show support for the union's position at the bargaining table. Moreover, the employer at no time

[ 506 Pa. Page 293]

    warned appellants that continued participation in the work stoppage could result in termination. Finally, here the contract itself apparently contains no language which would give that warning. In the absence of such language, we do not believe the discharged workers were precluded from unemployment compensation benefits by their union's failure to give a notice, required only by federal law, that a contract for a term certain would not be extended beyond that term.

The appellee argues that there is no meaningful distinction between participation in a strike in disregard of procedures prescribed by state statute and a strike which contravenes a federal labor statute. We disagree. To hold that participation in a strike in contravention of federal law constitutes willful misconduct under Section 402(e) would require the courts, in every case, to determine whether an alleged infraction of federal law in fact occurred and, if so, whether the strike must be deemed illegal on account of the infraction. Any such attempt to construe and apply federal law in these situations would constitute an impermissible intrusion into the regulatory jurisdiction of the National Labor Relations Board under Section 8 of the LRMA.

In New York Telephone Co. v. New York State Department of Labor, 440 U.S. 519, 99 S.Ct. 1328, 59 L.Ed.2d 553 (1979) (plurality opinion, judgment of the court announced by Mr. Justice Stevens), the United States Supreme Court held that a New York statute authorizing unemployment compensation benefits to strikers did not impermissibly conflict with collective bargaining policy favoring the free play of economic forces established in the federal labor statutes and, therefore, did not violate the Supremacy Clause.*fn13 See United States Constitution Art.

[ 506 Pa. Page 294]

IV, cl. 2. More important for our purposes is the dictum contained in the opinion. That dictum is directly applicable to the case hereunder review:

[W]e reject petitioners' contention that the NLRA at the least forbids the States from awarding benefits to participants in illegal strikes. See Communication Workers of American (New York Telephone Co.), 208 N.L.R.B. 267 (1974) (declaring part of the strike involved in this case illegal). Because such a rule would inevitably involve the States in ruling on the legality of strikes under § 8, it would invite precisely the harms that the pre-emption doctrine is designed to avoid.

Id. at 529, n. 15, 99 S.Ct. at 1335 (emphasis in original).

Furthermore, our determination that the employees' striking activities in the matter at hand were not willful misconduct is not unfair or impermissibly discriminatory. A reading of the disqualification provisions of the Unemployment Compensation Law establishes that the Legislature intended to treat labor activities differently than individual conduct or other concerted activity.

For example, Section 402(a) provides that an employe shall be ineligible for compensation for any week:

In which his unemployment is due to his failure, without good cause, either to apply for suitable work . . . or to accept suitable work when offered to him by the employment officer or by any employer, irrespective of whether or not such work is in "employment" as defined in this act . . . . [H]owever this . . . shall not cause a disqualification of a waiting week or benefits . . . when work is offered by his employer and he is not required to accept the offer pursuant to the terms of the labor-management contract or agreement, or pursuant to an established employer plan, program or policy . . . .

[ 506 Pa. Page 29543]

P.S. § 802(a) (Supp.1983-84). Section 802(a) must be read in conjunction with Section 4(t) which defines "suitable work" and which states that:

[N]o work shall be deemed suitable in which . . . the position offered is vacant, due directly to a strike, lockout, or other labor dispute . . . .

43 P.S. § 753(t). See Quaker Oats v. Com., Unemployment Compensation Board of Review, 65 Pa. Commonwealth Ct. 33, 442 A.2d 367 (1982); Lebanon Steel Foundry v. Com., Unemployment Compensation Board of Review, 50 Pa. Commonwealth Ct. 441, 413 A.2d 34 (1980). Similarly, Section 402(b)(1), the provision disqualifying an employee who voluntarily quits, states, in so many words, that an individual employee absent from work due to a work stoppage existing because of a labor dispute may not be deemed to have left his employment without good cause. 43 P.S. § 802(b)(1).

Under our law, including the Unemployment Compensation Law, the strike and lockout are expressly recognized as legitimate bargaining weapons in the economic tug-of-war between employer and employee. Mackintosh-Hemphill Div., E.W. Bliss Co. v. Unemployment Compensation Board of Review, 205 Pa. Superior Ct. 489, 495-96, 211 A.2d 23, 27 (1965). During that tug-of-war each side tries to win concessions from the other while at the same time maintaining the expectation that the dispute will be resolved eventually and operations at the workplace will return to normal. Involvement in a strike, absent a prohibition contained in a valid bargaining agreement, may not properly be viewed as a disregard of standards of behavior which an employer has a right to expect. Workers have the right to engage in a lawful strike*fn14 and, consequently, they

[ 506 Pa. Page 296]

    retain a reasonable expectation of continued employment during the work stoppage. Subsequent loss of employee status is not in any real sense voluntary. Accordingly, we find no statutory policy considerations which militate against our holding today that appellants were not discharged from employment on account of willful misconduct. Indeed, the unemployment compensation statute, as a whole, appears to require such treatment.

Our holding today is a very narrow one which will not apply in most labor disputes. Specifically, employees are still ineligible for compensation benefits if they are dismissed for participation in a wildcat strike or one that otherwise contravenes the laws of this state or where, during the course of a legal strike, the employer directs his employees to return to work or suffer dismissal. In these two situations the errant employees have no reasonable expectation of continued employment and it is not unfair to conclude, when their improper labor activities culminate in discharge, that their unemployment has been voluntarily induced.

The order of Commonwealth Court is reversed and the orders of the Unemployment Compensation Board of Review are reinstated.

LARSEN, Justice, concurring.

I agree with both the Majority Opinion and Dissenting Opinion that appellants are entitled to unemployment compensation and therefore concur in the result.

[ 506 Pa. Page 297]

ZAPPALA, Justice, concurring and dissenting.

While I join in the legal analysis of the dissenting opinion authored by Mr. Chief Justice Nix, I disagree with him as to when the status of employer-employee terminated. My review of the record indicates that the Unemployment Compensation Board of Review found as a fact that the employees were terminated on July 1, 1980. Therefore, I find it unnecessary to remand for that determination and concur in the result reached by the majority.

NIX, Chief Justice, dissenting.

In my judgment the majority's analysis fails to precisely identify the operative facts upon which the resolution of this issue should turn. Moreover, a critical fact, i.e., the point in time the underlying employment relationship between Penflex, Inc. and the members of the bargaining unit herein involved terminated, does not appear in the record before us.*fn1 It is my opinion the record clearly establishes

[ 506 Pa. Page 298]

    that the work stoppage was initiated by the employees on July 1, 1980 and consequently under section 402(d) of the Unemployment Compensation Law, Act of December 5, 1936, Second Ex.Sess., P.L. (1937) 2897, as amended, 43 P.S. § 802(d), they were not entitled to unemployment benefits during the period of that labor dispute.

At some later point the underlying employment relationship between Penflex, Inc. and the members of this bargaining unit terminated. From the moment of that termination the former employees would then have been eligible for benefits, unless they had gained employment elsewhere. Although I am of the view that the members of the bargaining unit did participate in a strike, thus rendering them ineligible for benefits during that strike, I share with the majority the opinion that their activities did not constitute willful misconduct that would bar their recovery under section 402(e) once the underlying employment relationship was severed. 43 P.S. § 802(e).

I therefore would remand the matter to the Unemployment Compensation Board of Review for purposes of determining when the expectation of continued employment ended and the underlying employment relationship was severed. I would direct the Board to award benefits from that date, unless other impediments, then present, precluded such an award.

It is not unusual in the area of labor-management relations that differences arise in the negotiations for collective bargaining agreements. Unfortunately there are times when those differences are irreconcilable. Fortunately, in most instances they are resolved, a new agreement is reached and the differences are accommodated. The avoidance of a work stoppage during these trying and traumatic periods is in the best interests of all. However, there are situations where a strike or a lockout is the only vehicle capable of encouraging serious negotiations. Nevertheless,

[ 506 Pa. Page 299]

    it is in the best interest of society to design its rules governing this segment of our activities to encourage the resolution of these disputes without a work stoppage and the concomitant unemployment. Most importantly, a permanent rupture of the employment relationship is to be avoided whenever possible. The legislature was obviously mindful of these societal objectives in designing a scheme for the payment of employment benefits. The judiciary has an equal responsibility in interpreting those provisions to give full force and effect to that design.

The majority's analysis in this case appears to turn upon the action of the employer taken in response to the employees' participation in a strike. In so doing, it obfuscates what I consider to be the critical issues in this case. Under these facts a clear distinction has to be drawn between the collective bargaining contract which sets the terms and conditions of employment and the underlying employment relationship. Moreover, the majority fails to consider the Vrotney rule*fn2 and its application to the facts of this case.

A collective bargaining agreement does not create, nor does its termination destroy the employer-employee relationship. Rather, a collective bargaining agreement merely establishes the terms and conditions which will govern that relationship during the life of the agreement. In J.I. Case Co. v. N.L.R.B., 321 U.S. 332, 64 S.Ct. 576, 88 L.Ed.2d 762 (1944), the United States Supreme Court observed:

Collective bargaining between employer and the representatives of a unit, usually a union, results in an accord as to terms which will govern hiring and work and pay in that unit. The result is not, however, a contract of employment except in rare cases; no one has a job by reason of it and no obligation to any individual ordinarily comes into existence from it alone. The negotiations between union and management result in what has often

[ 506 Pa. Page 300]

    been called a trade agreement rather than a contract of employment.

Id. at 334-35, 64 S.Ct. at 578-79.

Accord, Amalgamated Association of Street, Electric Railway and Motor Coach Employ. of America, Div. 85 v. Pittsburgh Railways Co., 393 Pa. 219, 223, 142 A.2d 734, 736, cert. denied, 358 U.S. 882, 79 S.Ct. 123, 3 L.Ed.2d 112 (1958). Thus, during a work stoppage precipitated by the inability of the parties to negotiate a new collective bargaining agreement prior to the expiration of the old, the employer-employee relationship continues; only actual work has ceased. From the expiration of the collective bargaining agreement, during the period of the negotiation of the new contract, the underlying employment relationship continues and is restructured by the terms of the new collective bargaining agreement that results.

By promoting continuation of the commercial enterprise during the period between expiration of a collective bargaining agreement and the negotiation of its successor, application of the Vrotney rule avoids the commercial, economic and social dislocation that invariably ensues from production interruptions. Vrotney Unemployment Compensation Case, 400 Pa. 440, 444-445, 163 A.2d 91, 93-94 (1960). Accord, Fairview School District v. Commonwealth, Unemployment Compensation Board of Review, 499 Pa. 539, 454 A.2d 517 (1982); Borello v. Unemployment Compensation Board of Review, 490 Pa. 607, 417 A.2d 205 (1980); Unemployment Compensation Board of Review v. Sun Oil Co., 476 Pa. 589, 383 A.2d 519 (1978), appeal dismissed, 440 U.S. 977, 99 S.Ct. 1782, 60 L.Ed.2d 237 (1979); Philco Corporation v. Unemployment Compensation Board of Review, 430 Pa. 101, 242 A.2d 454 (1968). Vrotney fosters maintenance of the status quo established under the terms and conditions of the expiring contract during the negotiation period. As we recently emphasized in Local 730, United Assoc. of Journeymen and Apprentices of the Plumbing and Pipe-fitting Industry v. Commonwealth, Unemployment Compensation Board of Review (Trane),

[ 506 Pa. Page 301505]

Pa. 480, 480 A.2d 1000 (1984), the sole test for determining whether a work stoppage is a lockout or a strike for purposes of entitlement to unemployment compensation benefits is which side, union or management, first refused to continue operations under the status quo.*fn3 Trane, supra, 505 Pa. at 484, 480 A.2d at 1002.

A majority of this Court unfortunately deviated from Vrotney's clear and easily applied rule in High v. Commonwealth, Unemployment Compensation Board of Review, 505 Pa. 379, 479 A.2d 967 (1984), embracing a theory which permits a shifting of the initial responsibility for the work stoppage on the basis of subsequent offers to restore the status quo.*fn4 As pointed out by Justice Larsen in his dissent in High,

[ 506 Pa. Page 302]

Responsibility for the work stoppage, and thus, the determination of whether the stoppage is a strike or a lockout is established at its inception. Actions taken after the cessation of work activity cannot erase the initial responsibility and place the parties in the positions they previously occupied. If it were otherwise, responsibility for a work stoppage would be subject to repeated change. A lockout on Monday could be a strike on Wednesday, a lockout again on Friday, and so on and so forth. This would tend to encourage parties to continually jockey for position at the expense of sincere negotiations toward a settlement . . . . Fixing responsibility at the outset forces the parties to act responsibly, sincerely and in good faith at the initial stages of a potential work stoppage.

Id., 505 Pa. at 390, 479 A.2d at 972-73. (Larsen, J., dissenting, joined by Nix, C.J., and Zappala, J.)

Thus, the salutary rule of Vrotney, heretofore consistently applied by this Court, should remain the exclusive test for determining entitlement to benefits.

Vrotney, of course, applies to situations where the underlying employment relationship continues to exist. In a situation where the employer-employee relationship is totally severed following the expiration of a collective bargaining agreement, the person seeking benefits is clearly "unemployed" as that term is defined in section 4 of the Act. 43 P.S. § 753(u) (1964). Whereas the Vrotney rule should be applied in such a manner that the initial responsibility for the work stoppage controls the status of the employee for unemployment compensation purposes during that period where the employment relationship continues, a different situation is presented the moment the underlying contract of employment is severed. In that instance the employees are unemployed and their status for unemployment compensation purposes is properly at that point reevaluated. Absent a showing that the severance of the employment relationship resulted from the willful misconduct on the

[ 506 Pa. Page 303]

    part of the employee, he or she would be eligible for benefits. Section 402(d) and Vrotney presuppose the continuation of the underlying employer-employee relationship and thus do not extend to individuals who are no longer employed.*fn5

In the instant case the status quo was first disrupted by the employees when they withheld their services and set up picket lines, contrary to the advice of their union, on July 1, 1980. Thus under Vrotney the work stoppage was a strike and the employees are not entitled to benefits for the period during which they refused to work. Their July 3, 1980 offer to return to work and its rejection by the employer should not affect that determination. Here, however, at some point further negotiations terminated and the underlying employment relationship ended. Such altered condition would then justify a reevaluation of the claimant's status for unemployment compensation purposes.

On this record, it cannot be determined precisely when negotiations were ultimately abandoned and the prospect of a return to work no longer existed. A remand to the Board for that purpose is proper. As of that time section 402(d) was no longer applicable, since the cessation of work was no longer due to a labor dispute, but rather, from that point, resulted from the severance of the employment relationship. Further, I agree with the majority's conclusion that this record does not establish a showing that the discharge resulted from willful misconduct as described in subsection 402(e).

Accordingly, I would remand with instructions that the instant appellants should be determined to be entitled to benefits from the date that it is found that the employment relationship ceased, if they otherwise qualified for benefits.


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