STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)

DAVID A HOLM, Employee

ARCHITECTURAL DOOR DIV, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 03400537AP


An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.

The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission makes the following:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The employee currently works for the named employer. He works an eight-hour day, earning $13.50 per hour, for a total of $108.00 per day.

In week 52 of 2002, the plant was in a "shutdown" status on Monday, December 23. December 24 and 25, 2002, were holidays, and the employee received pay in the amount of $108.00 per day for each of those days. The employee was laid off on December 26 and 27, and earned no wages. In week 1 of 2003, the plant was in a "shutdown" status on Monday, December 30. December 31 and January 1, 2003, were holidays, and the employee received pay in the amount of $108.00 per day for each of those days. The employee was laid off on January 2 and 3, 2003, and earned no wages.

The "shutdown" status on December 23 and 30 was governed by the labor contract between the employee's union and the employer. That contract provides:

When vacation vouchers are distributed during the first week of January, the Company will notify employees of a maximum of five (5) individual shutdown days for the upcoming contract year which may be scheduled throughout the contract year at the Company's discretion. Employees will be required to use vacation days for scheduled shutdown days. If less than five (5) days are scheduled for shutdown, the remaining days may be scheduled one (1) day at a time with two (2) working days notice.

The employer provided the union with notice on January 16, 2002, that Monday, December 23 and Monday, December 30, 2002, would be shutdown days under the terms of the contract. A notice to that effect was posted in the plant.

The employee opted to take all of his vacation days by November of 2002. Consequently, he had no vacation pay available to cover the shutdown days on December 23 and December 30, 2002. The employee had worked for this employer since 1994, and had experienced shutdown days not covered by vacation pay in the past. Because those shutdown days were usually only one day at a time, he had never before applied for unemployment insurance benefits to cover a shutdown day for which he was not paid.

When the employee filed his claim for benefits, he reported that he did not receive vacation pay in week 52 of 2002 and week 1 of 2003. This report was correct insofar as he was not actually paid wages on those two dates.

The issue to be decided is whether the employee received vacation pay in weeks 52 of 2002 and 1 of 2003 that should be treated as wages for benefit purposes for that week.

Wisconsin Statutes § 108.05(4)(b) provides as follows:

An employee's vacation pay shall, for purposes of eligibility for benefits for partial unemployment under sub. (3), be treated as wages for a given week only if it has by the close of that week become definitely allocated and payable to the employee for that week and the employee has had due notice thereof, and only if such pay until fully assigned is allocated:

1. At not less than the employee's approximate full weekly wage rate; or
2. Pursuant to any other reasonable basis of allocation, including any basis commonly used in computing the vacation rights of employees.

An employer has absolute discretion in establishing the time for vacation. This right may be limited by agreement. See Darling v. Industrial Comm., 4 Wis. 2d 345, 360 (1958); Cutler-Hammer, Inc. v. Industrial Comm., 13 Wis. 2d 618, 633 (1960).

In Darling, the employer designated weeks of a layoff as a vacation period and allocated workers' vacation pay to that period. The employer contended the workers were ineligible during the layoff because the vacation pay was wages. The collective bargaining agreement provided that vacation would be set at a convenient time by the company, but the wishes of the individual employee would be considered as much as possible. The employer's practice was to honor the wishes of the employee. The court found that under the agreement the selection of vacation time by the individual employee controlled unless the time conflicted with the company's convenience, and that there was no such conflict. The agreement did not permit the employer to arbitrary select vacation time for the individual employees without regard to their wishes. Darling at 361.

In Cutler-Hammer, the employer sought to designate the first two weeks of a layoff as vacation time. The agreement provided that the employer would designate when a worker would take vacation, with due consideration to both the wishes of the individual and the efficient operation of each department. The employer assigned vacation considering the wishes of the individual, but also the needs of a department, so that vacation did not always meet the worker's wishes. The employer's practice in the case of a layoff had been to reallocate the vacation time of a worker to the layoff period. The court found that the employer had reserved the right to change originally assigned vacation periods where its efficient operation was jeopardized, and that the layoff was such a situation. Cutler-Hammer at 633-634.

In Danielson v. Industrial Comm., 4 Wis. 2d 367 (1958), the employer and the agreement were the same as in Darling, although the events at issue occurred two years later. The employer announced that vacation pay would be allocated to a week during a plant shutdown in July of 1956. The court found the employer had a right to do so under the contract. Thus, individuals who had not previously received vacation pay for time off work were not entitled to have vacation pay allocated to other weeks. The court went on to state:

In the case of plaintiff Danielson the appeal tribunal did not make the finding whether the employer granted or denied plaintiff's request that a week of leave of absence from April 30 to May 7 be treated as vacation. The appeal tribunal did find, however, that about two weeks prior to the end of April, Danielson had requested the leave and requested that he receive his vacation pay at that time and that those requests were granted. Even though the appeal tribunal found that Danielson then knew that the company had indicated that weeks 28 and 29 would be vacation period, we consider that the evidence required a finding that Danielson's week of leave in early May did constitute a vacation week. This is true because he timely requested vacation pay and the company paid it to him at that time. Accordingly, his claim for benefits for week 28 should not have been denied.

Danielson at 379.

In Hendrix, et al v. Caterpillar Tractor Company, UI Dec. Hearing No. 80-A-66182MG (LIRC July 8, 1982), the employees were laid off and received with their last pay check a lump sum payment consisting of vacation, vacation bonus, paid absence allowance and attendance bonus. The employer contested their eligibility asserting that each element of the lump sum payment constituted their vacation pay or termination pay allocated to the weeks at issue. The employees agreed that the employer could designate as vacation pay that which was accrued under the contract, but argued it could not designate as vacation pay that to which the employees would not be entitled until later months. The commission stated:

The collective bargaining agreement does not expressly prohibit the employer from paying a laid off employee at the time of his lay-off, for all his unused vacation time computed to the time of such layoff. It is equally true that the collective bargaining agreement does not expressly authorize the employer to do so. However, the commission considers that employers have a common law right of absolute discretion to designate the vacation times of their employees except to the extent the employer is shown to have relinquished such right. If the employer's designation of vacation time is not prohibited by the collective bargaining agreement and the employer does comply with the mechanical requirements of the statute, the vacation pay at issue is treated as wages for the weeks for which the employer has allocated it.

In Hendrix, the commission found that the employer had not relinquished its right to designate vacation time. However, in the Comment section of the commission's decision the commission set forth some general statements, including the following:

The commission further considers that if the employer has permitted this employee to take time off from work as chosen by the employee and has paid him his vacation pay, or otherwise acknowledges that such time off constituted vacation time, an irrevocable allocation-in-fact has occurred regardless of any prior or subsequent attempt by the employer to allocate such vacation pay to a different time. For example, where an employer informs its employees in April that it intends to shutdown during two weeks in July and designates such two weeks as vacation time to which vacation pay will be allocated, but then permits an employee to take a week off in May and pays him his vacation pay at such time, the employer has rescinded its original designation as to one week of that employee's vacation time and the Commission will not recognize any allocation of the corresponding amount of vacation pay to any week other than such week in May.

The commission put its general statement into practice in Thomas, et al v. Nordson Corporation, UI Dec. Hearing No. 81-20446EG (LIRC Aug. 18, 1982). In Thomas, the collective bargaining agreement provided that vacations would be "worked out so as not to interfere with the efficiency of the business." The agreement further provided:

The management may make provisions for the plant to shut down for a period, not to exceed two weeks, for vacation purposes. Employes who have vacation time remaining at the time of the plant shutdown and who desire to take their vacation at a later date will request a personal leave of absence, in writing, and the company will grant such leave of absence.

All of the workers in Thomas could have reserved sufficient vacation time to cover the shutdown period. One group of workers took their vacation after the shutdown. Another group of workers took all their vacation before the shutdown. The employer allowed the workers to take time off at times they desired and, apparently, paid their vacation pay at such times. The commission found the employer could allocate vacation pay to the shutdown period for the former group, but not for the latter, reasoning as follows:

The Commission considers that, for U.C purposes, an employer's original designation of vacation time and attempted allocation of vacation pay thereto is ineffective if the employer has expressly or by its actions rescinded the original designation of vacation time.

Here, the employer's allocation of vacation pay to [the week of the shutdown] was effective as to those employes who had, at the time the shutdown began, sufficient unused vacation to cover the period of the shutdown. In designating the period of shutdown as vacation time, the employer acted within its inherent common law right and did not violate the sole contractual limitation on that right. There was nothing improper or inequitable in requiring the employes to take their vacation at the time of the shutdown. Unemployment compensation is intended to assist those workers who are not working through no fault of their own and unpaid through no fault of their own. While it was the employer's choice to shut down the plant, those employes who had sufficient vacation remaining to cover the period of the shutdown chose to forego the receipt of pay (apart from their holiday pay) for that period.

*                     *                     *

The employer's allocation of vacation pay to [the week of the shutdown] was ineffective as to the other [workers] who did not have sufficient vacation remaining at the time of the shutdown to cover the period of shutdown.

The employer, by acquiescing to these employes taking their vacation in weeks prior to the shutdown, contemporaneously paying them their vacation pay and acknowledging that such prior weeks were "vacation," rescinded its original designation of vacation time as to these employes. The result, in the Commission's view, is that irrevocable allocations-in-fact occurred in the prior weeks, precluding the allocation of their vacation pay to the shutdown period.

In the present case, the commission finds that in the collective bargaining agreement the employer did reserve its common law right to designate vacation time. However, when it allowed the employee to take vacation time prior to the shutdown, and paid him vacation pay for such time, which left the employee without sufficient vacation to cover the shutdown period, an irrevocable allocation- in-fact occurred and the employer could not allocate the employee's vacation pay to the shutdown period.

The commission therefore finds that in week 52 of 2002, and week 1 of 2003, the employee did not receive vacation pay that was definitely payable, allocated or fully assigned to those weeks within the meaning of Wis. Stat. § 108.05(4)(b).

The commission further finds that in week 52 of 2002, and week 1 of 2003, the employee received holiday pay in the amount of $108.00 in each week within the meaning of Wis. Stat. § 108.05(4)(a).

DECISION

The decision of the administrative law judge is reversed. Accordingly, the employee is eligible for partial benefits in week 52 of 2002 and week 1 of 2003, if he is otherwise qualified.

Dated and mailed September 26, 2003
holmdav . urr : 132 : 1 :    UW 910  UW 995 

/s/ David B. Falstad, Chairman

/s/ James T. Flynn, Commissioner

/s/ Robert Glaser, Commissioner


NOTE: The commission did not consult with the ALJ regarding witness credibility or demeanor. The commission's reversal of the ALJ's decision is as a matter of law.


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uploaded 2003/09/30