BEFORE THE
STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION

In the matter of the unemployment benefit claims of

ROBERT W. THOMAS, et al., Employes

Involving the account of

NORDSON CORPORATION, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 81-20446 EG


Amended initial determinations held that the employes had vacation pay which was to be allocated to the week ending January 3, 1981 (week 1), but chose instead to take voluntary leaves of absence for that period. The amended initial determinations denied benefits for week 1 of 1981 and required certain employes within this group to repay unemployment benefits received for such week. The employes timely appealed and hearing was held on May 18, 1981. The appeal tribunal decision issued on July 31, 1981, reversed the amended initial determinations and allowed benefits. The employer timely petitioned for review by the Commission.

Based upon the evidence and applicable law, the Commission makes the following:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

EMPLOYER'S REQUEST FOR TRANSCRIPT. The employer has objected to the Commission's use of the hearing examiner's synopsis of testimony and has requested that a transcript be prepared by the department. Section 108.09 (5)(d) of the statutes provides:

"(d) A written synopsis of the testimony and other evidence taken at a hearing, prepared by the appeal tribunal or by an attorney employed by the department, shall be used by the commission in its review of an appeal tribunal decision unless a satisfactory showing is made by any party that the synopsis is not sufficiently complete and accurate to fairly reflect the relevant and material testimony and other evidence taken, except that the commission may direct the preparation of a transcript in any case."

The only specific example of the synopsis' alleged inadequacy presented by the employer shows, at most, that the examiner did not include the testimony of one employe regarding his motivation for claiming benefits for the week in issue. The Commission considers the parties' motivations irrelevant. In vacation pay cases, the Commission is equally unimpressed by arguments that an employer's allocation of vacation pay "deprives" an employe of unemployment compensation and arguments that an employe's claim is an attempt to "pick up same extra money." As additional support for its contention that the synopsis is inadequate, the employer offers another example: that the synopsis does not include certain unspecified but "arguably relevant and material" testimony by Mr. Will Volk which appears at page 77 of a transcript prepared by an employe of the law firm representing the employer. Assuming that the employer's transcript is entirely accurate, the employer's contention regarding the testimony on page 77 of that transcript is not sufficiently specific to constitute a satisfactory showing that the examiner's synopsis is so inadequate that the Commission should direct the preparation of a transcript or (more reasonably) seek a stipulation between the parties for the use of the transcript submitted by the employer. The cited page contains testimony by Mr. Volk on at least two different subjects. The Commission will not speculate as to which testimony is regarded as "arguably relevant and material" by the employer.

The Commission finds that a satisfactory showing has not been made that the synopsis is insufficient within the meaning of section 108.09 (5)(d) of the statutes and the Commission denies the employer's request that a transcript be prepared for use by the Commission in its review.

EMPLOYE'S OBJECTION TO AMENDMENT OF INITIAL DETERMINATIONS. Initial determinations allowing benefits for the week here in issue were issued on February 3, 1981. The employer timely appealed by a letter received by the department on February 16, 1981. The employer withdrew its appeal by a letter received by the department on February 25, 1981 on the assurance of a department representative that the initial determinations would be amended. On March 16, 1981, the department issued such amended initial determinations, denying benefits. The employes contended that the issuance of amended initial determinations was improper. They cited section 108.09 (2)(c) of the statutes, which provides:

"(c) A department deputy may set aside or amend a determination at any time on the basis of subsequent information or to correct a technical or clerical mistake, unless a party has filed a timely request for hearing as to the determination."

Section 108.09 (3)(a) of the statutes provides in pertinent part: "Unless the request for a hearing is withdrawn..."  The statutes clearly contemplate that a party may withdraw his request for hearing. Once it is withdrawn, section 108.09 (2)(c) of the statutes no longer bars the amendment of the initial determination. The Commission considers that this is a reasonable and practical construction of the cited statutes. Further, there has been no denial of due process. All employes affected by the amended initial determinations have had the opportunity to appeal and to petition for review of the appeal tribunal decision, if they acted in a timely manner. Those employes who did so and are now involved in this review can hardly claim any disadvantage.

The Commission finds that the issuance of amended initial determinations, under the circumstances here present, was proper.

MERITS. The employes listed in Appendix I worked in the employer's Doboy Packaging Machinery Division. The International Association of Machinists (hereinafter, the Union) acts as the sole collective bargaining agent for the employes.

The collective bargaining agreement between the employer and the union contained the following provisions:

"40. Vacation shall accrue after the first year each six (6) months and employe will be credited with vacation for that amount. For the purpose of determining amount of accrual, employe's anniversary date shall be used . . ."

"43. Vacations will be worked out so as not to interfere with the efficiency of the business. . ."

"44. 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."

The employer decided to shut the plant down from December 24, 1980 through January 3, 1981. Representatives of the union were notified of the forthcoming plant shutdown in April of 1980. On May 21, 1980, the employer posted a notice for all employes concerning the plant shutdown. The notice stated:

"Doboy Packaging Machinery will be closed for vacation beginning with the end of the second shift on Tuesday, December 23 and ending with the start of the third shift on Sunday, January 4, 1981.

This shutdown includes three paid holidays as specified in the agreement between the company and the I.A.M. The balance of the shutdown, five normal working days, will be scheduled as vacation, or alternatively, employes may request a leave of absence without pay for these days."

All these employes could have reserved sufficient vacation to cover the plant shutdown. However, they requested permission to take all or most of their vacations at times other than the plant shutdown. Some employes took all or part or their vacation before the shutdown. Others took time off after the shutdown. The employer allowed the employes to take time off at the times they desired and apparently, paid them their vacation pay at such times.

The employer asked those employes who desired to take vacations at times other than the plant shutdown to fill out forms requesting a leave of absence for the period of the plant shutdown. Some employes protested signing the forms; others refused to sign.

The employes' last day of work prior to the shutdown was on or about December 23, 1980 (week 52). Thereafter, the employes appeared at their public employment office and filed claims for unemployment benefits for week 1 of 1981, the calendar week ending January 3, 1981.

VOLUNTARY LEAVE OF ABSENCE. The employer contended that the employes are ineligible for unemployment benefits for week 1 of 1981 because they were on voluntary leaves of absence, within the meaning of section 108.04 (1)(b)2. of the statutes, which provides:

"(b) An employe shall be ineligible for benefits from an employer's account:

(2) While he is on a voluntary leave of absence granted for a definite period, until such period has ended or until the employe has returned to work, whichever occurs first."

It has been held that this section is applicable when three conditions are met: (1) the leave is voluntary; (2) the leave is for a definite period; (3) the employe has not returned to work or the leave has not ended. Blankenheim v. DILHR and UW, Dane County Circuit Court Case 163-331 (March 29, 1979).  The Commission considers that the statute may also be interpreted as including an additional, preliminary condition: that the period of absence is in fact a leave; that is, that permission to be absent has been granted to the employe by the employer. Although an absence without such permission would, if work was otherwise available, also disqualify an employe from receiving benefits, such disqualification is not based on the cited section.

Section 108.04 (1)(b)2. is inapplicable because the employes' absence during the week in issue was not voluntary. It was the employer's choice to shut the plant down during the period which included the week here in issue. It was not established that any of these employes voluntarily requested an unpaid leave of absence for week 1 of 1981. Those employes who signed leave request forms did not do so voluntarily. Although the ratification of the collective bargaining agreement may be regarded as a voluntary act imputable to all employes represented by the union, so that all are subject to its provisions for labor relations purposes, the Commission is not persuaded that paragraph 44, quoted above, can render voluntary, for purposes of U.C. eligibility a period of unemployment which is in fact not voluntary.

The Commission finds that the absences of the 42 employes here involved during week 1 of 1981 were not voluntary.

ALLOCATION OF VACATION PAY. An employer may allocate an employe's vacation pay as wages for a week designated by the employer as vacation time if the employer has retained its common-law right to designate vacation time, has done so and has met the requirements of section 108.05 (4)(b) of the statute. If the vacation pay so allocated exceeds the employe's applicable weekly benefit rate for the week in issue, the employe is ineligible for benefits for such week.

The provision in paragraph 44 of the collective bargaining agreement, that "the management may make provisions for the plant to shut down for a period, not to exceed two weeks, for vacation purposes" clearly reserves the employer's inherent or common-law right of absolute discretion to designate vacation time, subject to the agreed two-week limitation which was not exceeded.

Initially, each employe had due notice that the employer intended to designate week 1 of 1981 as vacation time. It is reasonable to infer, on this record, that each employe knew the amount of vacation pay to which he or she was entitled for a week of vacation time, that vacation pay in that amount was payable during or on the payday preceding week 1 of 1981 to any employe who so desired and that there was no attempt by the employer to allocate more than 40 hours of vacation pay to such week. Under these circumstances, the requirements for an effective allocation of vacation pay to week 1 of 1981 would have been satisfied as to all 42 employes but for the employer's actions during the period between its May 21, 1980 notice and the beginning of the shutdown on December 24, 1980. During that period, the employer permitted 23 of the 42 employer to take time off and receive vacation pay. The employer as well as the employes characterized such time off as "vacation." The result was that these 23 employer did not have sufficient vacation remaining to cover the shutdown period which included week 1 of 1981. The other 19 employer did have sufficient vacation remaining to cover such period.

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 week 1 of 1981 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 employer 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 Commission therefore finds that the 19 employer in this position had a week of vacation pay which was effectively allocated as wages for week 1 of 1981, pursuant to section 108.05 (4)(b) of the statutes, and that such wages exceeded their weekly benefit rate for such week. They were therefore not eligible for, nor were they entitled to receive, unemployment benefits for week 1 of 1981, within the meaning of section 108.03 (1) of the statutes and, pursuant to section 108.22 (8)(a) of the statutes, they are required to repay to the Unemployment Reserve Fund the benefits they received for such week. The 19 employer in this position and the amounts they are required to repay are listed in Appendix II.

The employer's allocation of vacation pay to week 1 of 1981 was ineffective as to the other 23 employes listed in Appendix I 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 thin their vacation pay and acknowledging that such prior weeks were "vacation," rescinded its original designation of vacation time as to these employer. 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.

The Commission therefore finds that these 23 employer did not have vacation pay which was effectively allocated, pursuant to section 108.05 (4)(b) of the statutes, as wages for week 1 of 1981, that they are eligible for unemployment benefits for such week and that they are not required to repay any benefits received for such week.

DECISION

The appeal tribunal decision is affirmed in part and reversed in part. Accordingly, the 19 employes listed in Appendix II are ineligible for benefits for week 1 of 1981 and must repay to the Unemployment Reserve Fund the amounts listed in Appendix II. As to those 19 employer, a benefit year does not start with week 1 of 1981 and the monetary computations (Forms UC-30) which were issued on the dates listed in Appendix II, are hereby set aside. The remaining 23 employer listed in Appendix I are eligible for benefits for week 1 of 1981 and are not required to repay any benefits received for such week.

Dated and mailed August 18, 1982
200-030  PC 732   PC 715  AA 126.4  UW 910

/s/ David A. Pearson, Chairman

/s/ Virginia B. Hart, Commissioner

/s/ Pamela I. Anderson, Commissioner

 

COMMENT:  Section 108.05 (4)(b) of the statutes relates only to the allocation, for U.C. purposes, of vacation pay; the designation of vacation time, on the other hand, is a matter of agreement or contract between the employer and employe. Employers have a common-law right of absolute discretion to designate vacation time and where an agreement or contract exists, the issue is not whether it grants to the employer a right to designate vacation time but rather the extent to which the employer has relinquished such right.

An employer who wishes to allocate an employe's vacation pay to a week or weeks in which the employe would otherwise be unemployed and eligible for benefits must show that he has complied with the requirements of the statute. Those requirements are:

Due Notice. The Commission will not attempt to precisely define due notice under the statute. The Commission considers that it is, at a minimum, a communication which informs the employe prior to the beginning of the week in issue, that the employer is designating such week as the employe's vacation time.

Definite Allocation. By the close of the week in issue, the employer must inform the employe of the amount of vacation pay allocated to such week.

Payable. The vacation pay allocated to a given week must, by the close of such week, have been paid to the employe or made unconditionally payable to him on the regular payday for such week.

Reasonable Weekly Rate. Where the employer has designated more than one week as the employe's vacation time, the amount j of vacation pay allocated to each of such weeks by the employer must be computed in compliance with subsections 108.05 (4)(b)1. Or 2.

An employe who opposes the employer's allocation of vacation pay on the basis that the vacation time was improperly designated must show that he had a right to a different vacation time. The mere fact that vacation time is scheduled does not establish that the employe has an absolute right to such vacation time or that the employer has relinquished the right to designate a different time. The resolution of that issue depends on the provisions of any existing agreement or contract between the employer and employe and, where ambiguity exists, the past practice of the parties.

The Commission further considers that if the employer has permitted the employe to take time off from work as chosen by the employe and has paid him his vacation pay, or otherwise acknowledged 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 employes in April that it intends to shut down during two weeks in July and designates such two weeks as vacation time to which vacation pay will be allocated, but then permits an employe 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 employe'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.

Questions have arisen as to the correct treatment of an employe's originally-scheduled week of vacation time where a layoff occurs prior to such scheduled vacation time and the employer validly designates a week during such layoff as vacation time and allocates vacation pay to such week of layoff in compliance with the requirements of the statute. The Commission considers that if the employer requires the employe to be off work and unpaid during the originally scheduled vacation time, the employe is involuntarily unemployed and eligible for benefits. On the other hand, if the employe insists on taking his originally-scheduled vacation time off from work which is available to him, he is voluntarily unemployed and ineligible for benefits.

cc: 
Jerry Klasen
DoBoy Packaging Machinery

Dan DeFoe, Business Representative
Machinists Labor Temple

Timothy J. Pabst
Felhaber, Larson, Fenlon & Vogt


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