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November 24, 1997


Appealed From No. B-357229-A. State Agency, Unemployment Compensation Board of Review.

Before: Honorable Doris A. Smith, Judge, Honorable Rochelle S. Friedman, Judge, Honorable Charles P. Mirarchi, Jr., Senior Judge. Opinion BY Judge Smith.

The opinion of the court was delivered by: Smith


FILED: November 24, 1997

Beverly Enterprises, Inc. (Beverly) petitions for review of the order of the Unemployment Compensation Board of Review (Board) that affirmed the order of the Referee who granted Claimant Sharon Dragovich and other former Beverly employees (collectively, Claimants) unemployment compensation benefits. In its petition, Beverly states that the Board erred by concluding that Claimants were not ineligible for benefits due to their willful misconduct and by determining that a lockout, rather than a strike, caused the work stoppage at fifteen of Beverly's nursing home facilities in Pennsylvania. Beverly also argues that the matter sub judice is preempted by federal law. The Board's order is affirmed based upon the following reasoning.


Claimants worked at nursing homes operated by Beverly throughout Pennsylvania. For each nursing home, Beverly had a separate collective bargaining agreement (CBA) with one of the three local unions that represented the bargaining unit employees, and all of these CBAs expired on November 30, 1995, with no new agreements reached despite negotiations. Beverly sought a written extension of the expired CBAs, but the unions refused; nonetheless, the unions and Beverly agreed to operate under the status quo while negotiations continued. A major issue in the negotiations was a demand by Claimants for one master labor management agreement instead of a separate contract for each facility.

On December 7, 1995, Beverly informed each of its facilities that it would not adhere to certain terms of the expired CBAs, including, among other things, provisions allowing for the deduction of union dues from employees' paychecks and making arbitration a part of Beverly's internal grievance procedure. The unions protested Beverly's unilateral changes and filed complaints with the National Labor Relations Board (NLRB) and with Beverly, alleging unfair labor practices in violation of federal law; these claims were pending when the Referee issued the decision in the case.

An impasse in negotiations developed in subsequent months, and, on March 14, 1996, the unions informed Beverly in writing that a work stoppage would commence on March 29, 1996. The next day, Beverly warned its union-member employees that they would be replaced if a strike occurred; Beverly also placed advertisements in newspapers for permanent replacement workers. On March 27, 1996, the unions offered a concession in their negotiating position and withdrew their demand for one master labor management agreement to cover all twenty of Beverly's facilities; Beverly refused the offer.

Following Beverly's refusal, the unions notified Beverly in writing that the planned stoppage would not begin until April 1, 1996 and that it would last three days. Beverly responded that the unions had not given sufficient notice of a strike under federal law and that any strike would therefore be illegal. Most union-member employees at fifteen of Beverly's facilities did not report to work on April 1, 1996, and picket lines were established at these nursing homes. Beverly filled most of the vacant positions with approximately 350 replacement workers, all of whom were hired as regular employees with the understanding that they would not be displaced by bargaining unit employees following the Conclusion of the work stoppage.

On April 4, 1996, the union workers attempted to return to work unconditionally. Beverly informed most of them that they had been replaced and that work no longer existed for them there, although they would be formally retained on employee rolls and would be placed on a preferential hiring list and notified when positions became available. Claimants, all former Beverly employees displaced by replacement workers during the week ending April 6, 1996, filed for unemployment compensation benefits, and Beverly contested their eligibility. The Referee determined that Claimants were eligible for benefits, finding that they had not engaged in willful misconduct and that the work stoppage resulted from a lockout and not a strike. The Board affirmed the referee. This petition for review followed. *fn1


Beverly first contends that the Board erred by concluding that Section 402(e) of the Unemployment Compensation Law (Law) *fn2 did not apply to this case and that Claimants were not ineligible for benefits due to willful misconduct. In Canonsburg General Hosp. v. Unemployment Compensation Board of Review, 156 Pa. Commw. 533, 628 A.2d 503 (Pa. Commw. 1993), aff'd per curiam, 540 Pa. 531, 658 A.2d 790 (1995), this Court considered unemployment compensation claims under facts similar to those in the case sub judice. The Court held there that "where an employer hires permanent replacement employees [to fill striking workers' jobs], absent any evidence in the record and pertinent findings thereon that continuing work was available to the striking workers, the case must be considered as one where the employment relationship has been severed." Id., 628 A.2d at 510 (emphasis in original).

Thereafter, in Scozio Enterprises, Inc. v. Unemployment Compensation Board of Review, 691 A.2d 1042, 1046 (Pa. Commw. 1997), this Court concluded that "Canonsburg General Hosp. requires as a matter of law that the strikers be regarded as having been terminated" when such facts are present and that the cases are properly analyzed under Section 402(e) of the Law. Whether a claimant was discharged is a question of law, the resolution of which is dependent on the facts found by the Board. Pennsylvania Liquor Control Board v. ...

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