Case Title: Harmon v. Laney

Citation: 393 S.W.2d 273

Docket Number: 5-3538

State: arkansas

Court: Arkansas Supreme Court

Date: 1965-05-31T00:00:00Z

Document:
393 S.W.2d 273 (1965) Earl B. HARMON et a I., Appellants, v. Bill LANEY, Commissioner of Labor, et al., Appellees. No. 5-3538. Supreme Court of Arkansas. May 31, 1965. Rehearing Denied September 20, 1965. *274 McMath, Leatherman, Woods & Youngdahl, Little Rock, for appellants. Luke Arnett and Arthur G. Frankel, Jr., Little Rock, for appellees. JOHNSON, Justice. This is an unemployment compensation case. The appellants are employees of the International Shoe Company. In the summer of 1963, the shoe company ceased operation of their factories for a two week plant-wide vacation shutdown. Appellants had not worked for the company long enough to be entitled to a vacation. During this two week period, appellants performed no work and received no vacation pay or other remuneration from their employer. Appellants initiated or continued claims for benefits under the Arkansas Employment Security Act. From the record it appears that appellants met every qualification of the law required for entitlement of benefits. Ark.Stat.Ann. §§ 81-1103 and 81-1105 (Supp.1963). There was no indication that these appellants voluntarily and without good cause left their work so as to be disqualified under the provisions of the Act Ark.Stat.Ann. § 81-1106 (Supp. 1963). Upon hearing, benefits were denied by the Employment Security Division, Appeal Tribunal, Board of Review and the Circuit Court. From such denial comes this appeal. For reversal appellants contend that they are entitled to benefits based upon the established law and urge a reconsideration of the principles enunciated in a prior decision. The sole basis given for the denial of these claims was the case of Thornbrough v. Schlenker, 228 Ark. 1012, 311 S.W.2d 753 (1958). In that case this court after reviewing cases from other jurisdictions and the annotation in 30 A.L.R.2d 366, said: This opinion concludes with the following language: The same annotation relied upon by this court for the "distinction" found to exist in the Schlenker case, supra, had this to say: Appellants concede the historic fact that under our free enterprise system the right to close a manufacturing plant is a basic prerogative of management. N. L. R. B. v. New Madrid Mfg. Co., 215 F.2d 908 (8th Cir.). A leading authority on labor relations, Elkouri, How Arbitration Works (Rev. Ed.1960), has this to say on pages 338-339: "One of the prerogatives of management [is] to schedule vacations at such time as best meets the needs of the business." With these fundamental prerogatives of management thus established, it is our view that a contractual expression of those rights as is implicit in the dictum of the Schlenker opinion is manifestly superfluous. To give weight as a basis for a "distinction" to a contract clause which purports to grant to management that which management already possesses is to create an artificial criterion. From the record in the case at bar it becomes obvious that if appellants and others similarly situated are to confidently meet the test implicit in Schlenker they must insist upon a labor contract which denies the employer the right to close. Such a contract of course would be against public policy and contrary to the economic system of this country. On the whole case appellees urge, and Schlenker seems to hold, that entitlement to compensation during vacation shutdowns should be governed exclusively by the particular wording of the employment contract. This is in direct contravention to § 81-1118 of the Employment Security Act: "Any agreement by an individual to waive, release, or commute his rights to benefits or any other rights under this act shall be void." See Sallee Bros. v. Thompson, 208 Ark. 727, 187 S.W.2d 956. Upon reconsideration of Schlenker we find the opinion and its resultant ramifications to be untenable. The first paragraph of the Arkansas Employment Security Act is, in part, as follows: This law is remedial in nature and must be liberally construed in order to accomplish its beneficent purposes. Prince Poultry Co. v. Stevens, 235 Ark. 1034, 363 S.W.2d 929; Holland v. Malvern Sand & Gravel Co., 237 Ark. 635, 374 S.W.2d 822. The Employment Security Division has long been recognized as a primary supplier of temporary labor. Contemplation of permanent employment is not and has never been a prerequisite for qualification for entitlement for benefits, or for job placement, under the Arkansas Employment Security Act. "Playing with phrases like `vacation without pay' or `leave of absence' stems from want of better terms to avoid the words `laid-off.' * * * That is to say, the act should be liberally construed so as to insure a subsistence bridge for those who have been separated from employment under conditions whereby they are ready, willing and able to work, but cannot conscientiously secure it during the period of separation." Dahman v. Commercial Shearing & Stamping Co., 170 N.E.2d 302 (Ohio App., 1960). Strict constructions which result in defeat of the intended purposes of the Act will not be sanctioned by this court. Accordingly, this case is reversed and the cause remanded for further proceedings consistent with this opinion. McFADDIN, WARD and ROBINSON, JJ., dissent. McFADDIN, Justice (dissenting). Although there are numerous reasons for this dissent, I will urge only two points: (1) the present holding creates judicial uncertainty; and (2) the present holding is wrong. Judicial Uncertainty. This case is an attack on the Opinion of this Court in Thornbrough v. Schlenker, 228 Ark. 1012, 311 S.W.2d 753. That Opinion was delivered on April 7, 1958 by a unanimous Court; and now, after seven years, the present Majority is saying: "* * * we find the opinion and its resultant ramifications to be untenable." Bear in mind that in 1958 this Court announced, in a unanimous Opinion, a yardstick whereby all concernedthe Commissioner of Labor, the labor unions, the employers, and the employeeswould know how to proceed. We said: The test of voluntary unemployment as opposed to involuntary unemployment during the period of a plant vacation was simply and succinctly stated. If what we said in Thornbrough v. Schlenker was in error, the Arkansas Legislature could have changed *277 it by legislative enactment. Since 1958 there have been four regular sessions of the Arkansas Legislature1959, 1961, 1963, and 1965and there has been no legislative enactment to overcome the Opinion. If there was to be a change, it should have been by legislative enactment rather than by judicial decision, because a legislative enactment is prospective, whereas a judicial decision is retroactive. In Carter Oil Co. v. Weil, 209 Ark. 653, 192 S.W.2d 215, this distinction was stated. If the Majority of the Court desires to re examine the correctness of our language in Thornbrough v. Schlenker, the Court could now issue a caveat that in all transactions arising after this date we will be free to re-examine the correctness of our language in Thornbrough v. Schlenker. This caveat method has been used in several cases since the usury cases[1] and has been a notice to the public. It is fair. But the present holding, in changing the rule announced in Thornbrough v. Schlenker, is retroactive and creates uncertainty as to the stability of judicial holdings. If the Arkansas Supreme Court is to change its holdings whenever the same question is again presented, our holdings will have become as uncertain as those of some other courts which have a tendency to re-examine every question whenever there is a change of personnel on the court. The Bench and Bar, and the public generally, have contracted in reliance on the holding in Thornbrough v. Schlenker. How will anyone know that the rule will not be changed again when the question is next presented to this Court? The present holding creates judicial uncertainty. The Present Holding Is Wrong. The basic question is: "When is a worker involuntarily unemployed?" It is only when he is involuntarily unemployed that he can qualify for unemployment compensation benefits. Involuntary unemployment means unemployment without his own volition. When he works under a contract that provides that the plant may be shut down for a two weeks vacationwhether with or without payhe cannot be heard to say that during that two weeks period he was involuntarily unemployed, since he had agreed to such vacation period. Under the National Labor Relations Act, when a union becomes the bargaining agent for the employees at a plant it is the bargaining agent for all employees, not just those who belong to the union. In Thornbrough v. Schlenker there was no provision in the contract for a plant wide vacation period; but in the contract here involved there is a definite provision for a plant wide vacation[2] period. The contract is dated November 27, 1962 (several years after the Schlenker Opinion) and is a document of some thirty typewritten pages. Section 13 of the contract concerns the matter of vacation,[2] and provides: Thus we have a contract which provides exactly when the plant should be shut down for summer vacation. How can anyone say that he was "involuntarily unemployed" during such vacation period when he was working under a contract that specified the dates for the summer vacation? These men were certainly "voluntarily unemployed" during the annual vacation period covered by this contract; and no amount of judicial legerdemain can change that fact. The contract here involved was negotiated in 1962. If the union had wanted to provide that any man who did not get vacation pay would be considered involuntarily unemployed, the contract had only to so state in one sentence; and yet there is no such provision in the contract here involved. Since our decision in Thornbrough v. Schlenker the question here presented has been before the Supreme Court of Mississippi in the case of Mississippi State Employment Sec. Com'n v. Jackson (decided January 11, 1960), 116 So. 2d 830. The language of the Supreme Court of Mississippi is so clear that I quote it and adopt it as my own: *279 When one considers that the Mississippi case, and all the other cases which the Mississippi opinion cites have the same rule that was announced by us in Thornbrough v. Schlenker, it is hard to see how the Majority of the Arkansas Court can now say that such rule is "untenable." The Majority Opinion quotes from Ark. Stat.Ann. § 81-1118 (Repl.1960): "Any agreement by an individual to waive, release, or commute his rights to benefits or other rights under this act shall be void." This quotation leaves the impression that by the employment contract in this case the workers are waiving or releasing their rights to draw unemployment compensation. I think such conclusion misses the entire point. Certainly a worker cannot "waive" the benefits of the Unemployment Compensation Act, but when he becomes employed he is not unemployed; and when a worker is employed he is not entitled to the benefits of the Unemployment Compensation Act. These appellants in this case are employed under a contract which gives them paid holidays as therein specified and which provides that when the plant is shut down they are voluntarily unemployed. While they are under such contract they are certainly not "involuntarily unemployed." That is the test for their right to receive unemployment benefits. For the reasons herein stated, I dissent. WARD, Justice. My purpose in dissenting is to attempt to bring some sort of order out of obvious confusion and to formulate a simple, workable rule to apply when the issue here involved arises. I fully realize this attempt may be fruitless. I am not in complete agreement with the majority opinion or with the Schlenker case. The majority opinion in effect holds that an employee cannot, under any kind of contract or arrangement, agree to take a vacation without pay (and be unable to draw E.S.D. benefits) for a short period of time even though (under the contract) it would be to his financial advantage to do so. Such a conclusion, in my opinion, is illogical, unsound, unreasonable, and inequitable. I do not agree entirely with the Schlenker case, because, in my opinion, it does not sufficiently protect the employee from being the victim of an inequitable contract. I readily agree that it would be a violation of Ark.Stat.Ann. § 81-1118(a) to allow an employee to agree (for example) to a four month vacation without pay, and then for this Court to hold he could not draw E.S.D. benefits. The rule, in a case of this nature, which embodies my views and which easily could be applied to any factual situation, is this: Let the Employment Security Division (through its administrative agencies) decide (subject to approval by the courts) whether the employee (in any labor-management contract) has bartered away any of his unemployment benefit rights. If it be determined that he has done so, then he is involuntarily unemployedotherwise, he is voluntarily unemployed. [1] See Hare v. Gen. Contr. Purchase Corp., 220 Ark. 601, 249 S.W.2d 973; Crisco v. Murdock Acceptance Corp., 222 Ark. 127, 258 S.W.2d 551; and see also Clubb v. State, 230 Ark. 688, 326 S.W.2d 816. [2] The contract stated that if any person had worked for as long as one year he would get one week vacation with pay; if he had worked not less than five years he would get two weeks vacation with pay; and if he had worked longer he would get three weeks vacation with pay.