Opinion ID: 1306054
Heading Depth: 1
Heading Rank: 6

Heading: employee telephone service

Text: C&P grants its employees a discount telephone service through which non-management employees receive a 50 percent discount on local residential service and equipment. In addition, management, 30-year employees, and pensioners receive free local service and a reasonable amount of free toll calls. The cost of providing these benefits was disallowed by the Commission in its final order of March 4, 1981. The Commission found that it was unreasonable to force C&P's rate payers to pay the telephone bills of C&P employees. The cost of this benefit is one more appropriately borne by C&P shareholders. Final Order, March 4, 1981 at 19. The standard applied by the Commission to determine whether the provision of concession service imposed an unreasonable burden upon C&P's ratepayers was established in Bluefield Gas Co., Case No. 9460 (W.Va.Pub.Ser.Comm'n September 7, 1979). In the Bluefield case the Commission held that such discounts are reasonable and not discriminatory when there is a showing that the disallowance of such rates would not decrease the company's expenses, but rather would simply reappear in the form of higher wages or other benefits necessary to hire and retain employees. Bluefield Gas Co., supra at 2. At the hearing on this issue C&P presented testimony indicating that if the Commission disallowed the employee concession service, C&P would have to provide a cash payment to its employees in lieu of the service. Further testimony indicated that the benefit provided non-management employees is viewed as a condition of employment and as such is part of the collective bargaining agreement between C&P and the Communications Workers of America (CWA), although it was admitted that concession service was not specifically referred to in the agreement between C&P and the CWA. Commission staff contended that this testimony did not demonstrate that C&P would have to pay higher wages if concession service were eliminated and thus did not meet the Bluefield standard. The Commission agreed, stating in its final order: Other than the conclusory statements presented by C&P's witness, we find no evidence in this record convincing us that failure to provide concession service would lead to increased wage demands by C&P's employees. Final Order, March 4, 1981 at 19. In its petition for reconsideration C&P tendered the affidavit of William J. Lane in an attempt to provide the evidence the Commission found lacking in the record. The affidavit of Mr. Lane stated: I presently am, and have been for the past two years, President of Local 2001, Communications Workers of America, bargaining agent for nonmanagement employees of The Chesapeake and Potomac Telephone Company of West Virginia. The concession telephone service which C&P has furnished its employees for more than a half century is regarded by the CWA's more than 4,000 members and, I am advised by union counsel, is, as a matter of law, a term and condition of employment at C&P within applicable Federal labor law. The concession telephone service which C&P furnishes its employees is a non-wage benefit comparable to other fringe benefits provided by C&P and is, accordingly, an integral part of the total compensation paid by C&P to its employees. The loss of concession service would thus amount to an actual reduction in total compensation paid and would, consequently, cause a demand to be made at the bargaining table for an increase in wages which would be, on a net, takehome basis (after taxes), roughly equivalent to the value of the concession service. The Commission rejected the evidence presented in the affidavit as too speculative to be taken into consideration for rate making purposes. In explanation of its decision the Commission stated: We based our March 4 decision on this issue on our belief that concession service for C&P's employees is sufficiently similar to telephone service provided other customers so as to invoke the legal prohibiition [ sic ] against rate discrimination found in West Virginia Code, Section 24-3-2. While the issue is one of judgment and one on which commissions in other states differ, we believe that concession service, even though it has been provided for a long-period of time, cannot withstand legal scrutiny (at least for ratemaking purposes) because the service is not a bargained for benefit and is not part of the union/management labor agreement. (Footnotes omitted.) Order, July 2, 1981 at 5. C&P contends its employee telephone service is not discriminatory within the meaning of W.Va.Code § 24-3-2, that the decision of the Commission is contrary to the evidence, and that the Commission's decision misinterprets the nature of collective bargaining agreements. We agree. In Farley v. Zapata Coal Corp., W.Va., 281 S.E.2d 238 (1981), we recognized that fringe benefits are part and parcel of the compensation an employee receives for his services. We stated in Farley : [Fringe] benefits are not gratuities which employers benevolently bestow upon their employees. Rather they are integral components of a compensation package bargained for and agreed upon by the parties. One expects that both employers and employees strive for a fair exchange in the employment market place. A factor the employee undoubtedly considers when gauging the fairness of an employment offer is the value of benefits the employer offers in addition to take home pay. Conversely, the employer also takes into account the cost of fringe benefits when determining the salary or hourly wage rate it will offer its prospective employees. Obviously if fringe benefits ... were absent from the compensation package, wages would be higher. 281 S.E.2d at 242. C&P has provided concession telephone service to its employees for more than fifty years. It is obviously a factor which C&P employees consider when gauging the fairness of C&P's compensation proposals. To hold that the service is not contemplated as a part of the employment agreement between C&P and its employees is simply unrealistic, and misapprehends the nature of collective bargaining agreements. Such agreements cannot, in all instances, be limited to their written terms. In the words of one observor: There are too many people, too many problems, too many unforeseeable contingencies to make the words of the contract the exclusive source of rights and duties. One cannot reduce all the rules governing a community like an industrial plant to fifteen or even fifty pages. Cox, Reflections Upon Labor Arbitration, 72 Harv.L.Rev. 1482, 1498 (1959). This principle was recognized by the United States Supreme Court in United Steelworkers of America v. Warrier & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960), wherein the Court cited with approval the above language and held that the practices of the industry and the shop [are] equally a part of the collective bargaining agreement although not expressed in it. 363 U.S. at 582, 80 S.Ct. at 1352. We therefore hold that the provision of free or discount telephone service by a utility to its employees, which practice has been ongoing for a substantial period of time, and which the evidence shows is considered by both management and employee representatives as a concession in lieu of compensation, should be considered by the Public Service Commission in a rate making proceeding as part of the employment agreement. In this case the undisputed evidence before the Commission indicated that the concession service C&P provides its employees is a part of the employment agreement, and that if the service were withdrawn, a corresponding increase in wages would be demanded. The evidence also indicates that the service is supervised in such a manner to prevent abuse by C&P employees. This evidence is sufficient to meet the reasonableness standard established by the Commission in Bluefield Gas Co., supra. The Commission's finding to the contrary is not supported by the record evidence, and therefore must be reversed. Furthermore, because the concession service is a term and condition of employment with C&P, it is not prohibited by W.Va. Code § 24-3-2 (1980 Replacement Vol.), which provides: No public utility subject to the provisions of this chapter shall, directly or indirectly, by any special rate, rebate, drawback or other device or method, charge, demand, collect or receive from any person, firm or corporation, a greater or less compensation, for any service rendered or to be rendered, than it charges, demands, collects, or receives from any other person, firm or corporation for doing a like and contemporaneous service under the same or substantially similar circumstances and conditions. It shall be unlawful for any public utility subject to the provisions of this chapter to make or give any undue or unreasonable preference or advantage to any particular person, company, firm, corporation, or locality, or any particular character or traffic or service, in any respect whatsoever, or to subject any particular person, firm, corporation, company or locality, or any particular character of traffic or service, to any undue or unreasonable prejudice or disadvantage in any respect whatsoever. This section has no application to a proceeding when the service provided is not rendered under the same or substantially similar circumstances and conditions rendered other customers. Hooverson Heights Public Service District v. Public Service Commission, W.Va., 270 S.E.2d 442 (1980). The service C&P provides its employees is a term and condition of employment with C&P, and thus the circumstances and conditions under which the service is rendered are entirely dissimilar than the circumstances and conditions under which telephone service is rendered to regular C&P customers. [2] That the Legislature did not intend to prohibit employee discounts under W.Va. Code § 24-3-2 is evidenced by the language of W.Va.Code § 24-3-4 (1980 Replacement Vol.), which provides, in pertinent part: Nothing in this Chapter shall be construed ... to prevent telephone ... companies from exchanging with one another and with common carriers the privileges of passes or franks for the officers, agents, employees, and their families of such companies and common carriers. This section clearly contemplates that granting service on special terms to a utility's employees is permissible. Otherwise the permission given to utilities to agree to honor the privileges of passes or franks given employees of other utilities would be illogical. The West Virginia Commission expressed this view in a 1960 case involving C&P. In that case the Commission read the two statutes in pari materia and concluded that the concession service was not discriminatory. The Commission stated: We do not believe it was the intention of the legislature that a telephone utility and other utilities could enter into contracts with one another and with common carriers for the exchange of service for the officers, agents, employees and their families of such companies, without extending the same contractual privileges to such utilities regarding their own employees. Re Chesapeake and Potomac Telephone Co. of West Virginia, Case No. 5103, 36 PUR 3d 417, 425 (1960). We agree with this reasoning and therefore conclude that concession telephone service provided by a utility to its employees as a term and condition of employment is not discriminatory within the provisions of W.Va.Code § 24-3-2. The Commission's decision to the contrary misinterprets the scope of the statute and therefore must be reversed. For the foregoing reasons the order of the Public Service Commission issued on July 2, 1981 that affirmed the final order of March 4, 1981 is reversed in part and the case is remanded for the entry of an order consistent with this opinion. Reversed in part; remanded.