Smittle v. Gatson
Annotate this Case
September 1995 Term
_____________
No. 22912
_____________
CECIL SMITTLE, CARL YENTSER,
DONALD L. HENRY, JAMES E. HOFFMAN,
JAMES M. BIRCH, JOHN KELLER, JOHNNIE L. SMITH,
JOSEPH W. DAWSON, ROBERT W. ASTON AND THOMAS E. GUMP,
Petitioners Below, Petitioners
v.
CATHY S. GATSON, CLERK OF THE CIRCUIT COURT
OF KANAWHA COUNTY; THE BOARD OF REVIEW
OF THE WEST VIRGINIA DEPARTMENT OF EMPLOYMENT
SECURITY; AND CONTRACTORS SUPPLY, INC.,
Respondents Below, Respondents
__________________________________________________________________
Certiorari from the Circuit Court of Kanawha County
Honorable Charles E. King, Jr., Judge
Civil Action No. 92-AA-38
REVERSED
__________________________________________________________________
Submitted: September 12, 1995
Filed: December 8, 1995
Timothy F. Cogan, Esq. James F. Companion, Esq.
Cassidy, Myers, Cogan Yolanda G. Lambert, Esq.
and Voegelin, LC Schrader, Byrd, Companion & Gurley
Wheeling, West Virginia Wheeling, West Virginia
Attorneys for the Petitioners Attorneys for Contractors Supply, Inc.
CHIEF JUSTICE McHUGH delivered the Opinion of the Court.
JUSTICE RECHT, deeming himself disqualified, did not participate.
JUSTICE ALBRIGHT did not participate.
SYLLABUS BY THE COURT
1. "W. Va. Code, 21A-6-3(4) (1984), disqualifies employees from
receiving unemployment compensation benefits if they are involved in 'a work stoppage
incident to a labor dispute,' unless they can satisfy one of three statutory exceptions: (1) the
employees are 'required to accept wages, hours or conditions of employment substantially
less favorable than those prevailing for similar work in the locality'; (2) the employees 'are
denied the right of collective bargaining under generally prevailing conditions'; or (3) 'an
employer shuts down his plant or operation or dismisses his employees in order to force
wage reduction, changes in hours or working conditions.'" Syl. pt. 1, Roberts v. Gatson, 182
W. Va. 764, 392 S.E.2d 204 (1990).
2. "Unemployment compensation statutes, being remedial in nature, should
be liberally construed to achieve the benign purposes intended to the full extent thereof."
Syllabus, Mercer County Bd. of Education, 186 W. Va. 251, 412 S.E.2d 249 (1991).
3. "The findings of fact of the Board of Review of the West Virginia
Department of Employment Security are entitled to substantial deference unless a reviewing
court believes the findings are clearly wrong. If the question on review is one purely of law,
no deference is given and the standard of judicial review by the court is
de novo
." Syl. pt.
3, Adkins v. Gatson, 192 W. Va. 561, 453 S.E.2d 395 (1994).
4. W. Va. Code, 21A-6-3(4) [1990] allows the payment of unemployment
benefits when "an employer shuts down his plant or operation or dismisses his employees in order to force wage reduction, changes in hours or working conditions." In order to
qualify for benefits under the employer shutdown exception of W. Va. Code, 21A-6-3(4)
[1990], an employee must show, first, that the employer acted to shut down the work site,
and second, that the shutdown was "to force" a change detrimental to the employee.
5. "W.Va. Code, 21A-6-3(4) was not intended to disqualify workers who
were locked out during contract negotiations if they are willing to work on a day-to-day
basis." Syl. pt. 2, Lee-Norse Co. v. Rutledge, 170 W. Va. 162, 291 S.E.2d 477 (1982).
6. The determination of when an employer is trying "to force wage
reduction" or other changes in benefits under W. Va. Code, 21-6-3(4) [1990], is made by
comparing the employer's proposed change(s) to the status quo as shown by the expiring
contract. If the employer's proposed change(s) would result in detrimental terms for the
employee, then the employer is considered to be seeking "to force wage reduction, changes
in hours or working conditions."
7. Under W. Va. Code, 21A-6-3(4) [1990], employees are entitled to
unemployment benefits when an employer rejects continuing the expiring contract for a
reasonable time "to force wage reduction, change in hours or working conditions."
McHugh, Chief Justice:
This unemployment security appeal concerns the denial of benefits to certain
employeesSee footnote 1 of Contractors Supply, Inc. ("Contractors") based on a finding that "a stoppage
of work . . . exists because of a labor dispute" and that none of the statutory exceptions
applies.See footnote 2 The employees maintain that they are entitled to benefits because Contractors
locked them out by refusing to operate under the expiring contract in an attempt to force a
wage reduction. After the Circuit Court of Kanawha County upheld the decision of the
Board of Review of the West Virginia Department of Employment Security denying benefits,
the employees appealed to this Court. Because W. Va. Code, 21A-6-3(4) [1990] permits
the award of unemployment benefits when an "employer shuts down his plant or operation
or dismisses his employees in order to force [a] wage reduction," we find the employees are
entitled to benefits and reverse the decision of the circuit court.
I.
Facts and Background
The employees are represented by United Brotherhood of Teamsters, Local
697, and between May 1, 1989 and March 31, 1992, a collective bargaining agreement
specified the terms and conditions of their employment. Before the expiration of the 1989-
92 agreement, attempts by the employees and Contractors to reach an agreement were
unsuccessful, and on April 1, 1992, work at Contractors' ready-mix concrete unit stopped.
Both parties maintain that the other is responsible for the stoppage. The employees,
emphasizing their willingness to continue working under the expiring agreement,
characterize the stoppage as a lockout. The employer, claiming that wage reductions are
necessary because the employees' union granted wage concessions to a competitor,
characterizes the stoppage as a strike.
Upon evidence presented at two hearings, the Board of Review found
Contractors' wage package was "substantially equal to or better than the wages and fringe
benefits which were paid by the employer's primary competitors, some of which also had
collective bargaining agreements with the union." Although one local company's employees
did receive wages and fringe benefits substantially higher than those offered by Contractors,
the Board weighed that evidence against the evidence that the employees of other local
employers "earn no more than or less than the claimants here." The Board also found that
the employees presented no evidence in support of their claim that they were "denied the right of collective bargaining under generally prevailing conditions." Based on these
determinations, the Board denied the employees benefits.
Although the petitioners, who were not represented by counsel until their
appeal to the circuit court, did not specifically argue before the Board that a employer
shutdown caused the work stoppage, they presented evidence showing their offer to continue
working under the expiring contract, the employer's refusal to allow work to continue under
the expiring contract and the employer's counter-offer of reduced wages. Contractors agrees
and stated in its brief that "Contractors does not dispute that its employees were willing to
work under the old contract until a new agreement was reached, but the old contract was the
problem." During the hearings before the Board of Review, the employer agreed that in the
company's offer, "the hourly wage was less" than the expiring contract. However, the Board
of Review concluded that no evidence was presented on the employer shutdown issue, and
the Board's denial of benefits was upheld by the circuit court, which found the work stoppage
to be a strike and did not specifically address the employer shutdown issue.
II.
Discussion
The parties agree that W. Va. Code, 21A-6-3(4) [1990] controls the
determination of unemployment benefits in this case. W. Va. Code, 21A-6-3(4) [1990]
states, in pertinent part:
For a week in which his total or partial unemployment is
due to a stoppage of work which exists because of a labor
dispute at the factory, establishment or other premises at which
he was last employed, unless the commissioner is satisfied that he (1) was not participating, financing, or directly interested in
such dispute, and (2) did not belong to a grade or class of
workers who were participating, financing or directly interested
in the labor dispute which resulted in the stoppage of work. No
disqualification under this subdivision shall be imposed if the
employees are required to accept wages, hours or conditions of
employment substantially less favorable than those prevailing
for similar work in the locality, or if employees are denied the
right of collective bargaining under generally prevailing
conditions, or if any employer shuts down his plant or operation
or dismisses his employees in order to force wage reduction,
changes in hours or working conditions.
Roberts v. Gatson, 182 W. Va. 764, 392 S.E.2d 204 (1990), our most recent
examination of W. Va. Code, 21A-6-3(4), began by examining disqualification provisions
and the three exceptions thereto, which provide for the payment of benefits in certain
circumstances. Syl. pt. 1 of Roberts v. Gatson states:
W. Va. Code, 21A-6-3(4) (1984), disqualifies employees
from receiving unemployment compensation benefits if they are
involved in 'a work stoppage incident to a labor dispute,' unless
they can satisfy one of three statutory exceptions: (1) the
employees are 'required to accept wages, hours or conditions of
employment substantially less favorable than those prevailing
for similar work in the locality'; (2) the employees 'are denied
the right of collective bargaining under generally prevailing
conditions'; or (3) 'an employer shuts down his plant or
operation or dismisses his employees in order to force wage
reduction, changes in hours or working conditions.'
For ease of reference in this case, we will refer to the first exception noted in W. Va. Code,
21A-6-3(4) [1990] as the "less than prevailing wages" exception; the second, as the "denial
of the right of collective bargaining" exception; and, the third, as the "employer shutdown" exception.See footnote 3 The focus in Roberts v. Gatson was on the less than prevailing wages and the
denial of the right of collective bargaining exceptions. Except for noting the statute provided
a third exception, namely the employer shutdown exception, Roberts v. Gatson did not deal
with the employer shutdown exception.
The controversy in this case is whether any of the statutory exceptions apply.
The employees, asserting that all the exceptions apply, allege the following: (1) The terms
offered by Contractors were substantially less favorable than those prevailing for similar
work in the area (the less than prevailing wages exception); (2) The employees were denied
the right of collective bargaining because Contractors refused to bargain timely and to allow
the employees to inspect the company books (the denial of the right of collective bargaining
exception); and (3) Contractors shut down its ready-mix contract unit in order to force a
wage reduction when the employees offered to continue to work under the expiring contract
(the employer shutdown exception). Contractors denies the employees' allegations and
maintains that the employees' union entered a contract with a competitor, which lowered the
local industry's wages and which Contractors is ready to accept for its wage package.
In resolving controversies concerning the interpretation of the unemployment
compensation statutes, we have traditionally considered their remedial nature and have
applied a liberal construction. Our traditional approach was stated in Syl. pt. 6, Davis v. Hix, 140 W. Va. 398, 84 S.E.2d 404 (1954), which provides: "Unemployment compensation
statutes, being remedial in nature, should be liberally construed to achieve the benign
purposes intended to the full extent thereof." Accord syl. pt. 2, Davis v. Gatson, ___ W. Va.
___, ___ S.E.2d ___ (No. 22859 Nov. 17, 1995); Adkins v. Gatson, 192 W. Va. 561, 564,
453 S.E.2d 395, 398 (1994); Davenport v. Gatson, 192 W. Va. 117, 119 n.8, 451 S.E.2d 57,
59 n.8 (1994); syl. pt. 1, Lee-Norse Co. v. Rutledge, 170 W. Va. 162, 291 S.E.2d 477
(1982); syllabus, Gordon v. Rutledge, 175 W. Va. 683, 337 S.E.2d 920 (1985)(per curiam);
syllabus., Pennington v. Cole, 175 W. Va. 562, 336 S.E.2d 210 (1985); Belt v. Cole, 172 W.
Va. 383, 385, 305 S.E.2d 340, 342 (1983). Our liberal construction reflects the purpose of
our State's unemployment compensation laws, which as stated in W. Va. Code, 21A-1-1
[1978] "is to provide reasonable and effective means for the promotion of social and
economic security by reducing as far as practicable the hazards of unemployment[,]" so as
to:
(1) Provide a measure of security to the families of
unemployed persons.
(2) Guard against the menace to health, morals and
welfare arising from unemployment.
(3) Maintain as great purchasing power as possible, with
a view to sustaining the economic system during periods of
economic depression.
(4) Stimulate stability of employment as a requisite of
social and economic security.
(5) Allay and prevent the debilitating consequences of
poor relief assistance.
See Davis v. Gatson, supra, ___ W. Va. at ___, ___ S.E.2d at ___ , Slip op. at 17; Gibson
v. Rutledge, 171 W. Va. 164, 167-68, 298 S.E.2d 137, 141 (1982); Lee-Norse Co. v.
Rutledge, 170 W. Va. at 166, 291 S.E.2d at 481. See also Hill v. Board of Review, 166 W.
Va. 648, 651, 276 S.E.2d 805, 807 (1981).
Because of this liberal construction, the disqualification provisions of the
unemployment statutes must be narrowly construed. Peery v. Rutledge, 177 W. Va. 548,
551, 355 S.E.2d 41, 45 (1987); Gordon v. Rutledge, 175 W. Va. at 685, 337 S.E.2d at 922;
Bennett v. Hix, 139 W. Va. 75, 84, 79 S.E.2d 114, 119 (1953).
It is well-settled in this jurisdiction that the Board of Review's findings of fact
will only be set aside if they are clearly wrong. However, the Board's conclusions of law are
fully reviewable by this Court.
The findings of fact of the Board of Review of the West
Virginia Department of Employment Security are entitled to
substantial deference unless a reviewing court believes the
findings are clearly wrong. If the question on review is one
purely of law, no deference is given and the standard of judicial
review by the court is
de novo
.
Syl. pt. 3, Adkins v. Gatson, 192 W. Va. 561, 453 S.E.2d 395 (1994). See syl. pt. 1, Davis
v. Gatson, supra; syllabus, Courtney v. Rutledge, 177 W. Va. 232, 351 S.E.2d 419 (1986);
syl. pt. 2, Perfin v. Cole, 174 W. Va. 417, 327 S.E.2d 396 (1985); syl. pt. 1, Kisamore v.
Rutledge, 166 W. Va. 675, 276 S.E.2d 821 (1981). See also W. Va. Code, 21A-7-21 [1943]
("In a judicial proceeding to review a decision of the board, the findings of fact of the board shall have like weight to that accorded to the findings of fact of a trial chancellor or judge
in equity procedure.")
Against the background of the liberal construction of the unemployment
compensation statute as a whole and the narrow construction of the statute's disqualification
provisions, we apply these standards of review to the employees' arguments that they are
entitled to benefits because they fall within the statutory exceptions of W. Va. Code, 21A-6-
3(4).
A.
The Employer Shutdown Exception
of W. Va. Code, 21A-6-3(4)
Initially we address the third or employer shutdown exception because this
exception was emphasized in the employees' appeal. The employees allege that they qualify
for benefits under the employer shutdown exception because their offer to continue working
under the terms of the expiring contract during negotiations was rejected by Contractors.
Because Contractors agrees that it rejected the employees' offer to continue working under
the expiring contract during negotiations, we review de novo the circuit court's determination
that the employer shutdown exception does not apply to this uncontested fact pattern. See
syl. pt. 3, Adkins v. Gatson, supra pp. 7-8, for a discussion of our standard of review.
In Lee-Norse, 170 W. Va. at 163-65, 291 S.E.2d at 478-79, we discussed
whether a work stoppage caused by an employer, which locked its gates because of
"uncertainty about whether a strike was coming" was "caused by" or "'because of' a labor
dispute." In Lee-Norse, the focus was not on the statutory exceptions but on the cause of the work stoppage because "[t]here was no strike, and the union members had offered to work."
Lee-Norse, 170 W. Va. at 163, 291 S.E.2d at 478. Based on our finding that the work
stoppage in Lee-Norse was caused by the economic conditions, rather than a labor dispute,
we held that the employees were not disqualified from benefits. Although Lee-Norse did not
focus on the employer shutdown exception of W. Va. Code, 21A-6-3(4) [1990], it noted the
following quotation was the "most frequently cited definition of lockout":
'"A strike is [a] cessation of work by employees in an
effort to get for the employees more desirable terms. A lockout
is a cessation of the furnishing of work to employees in an effort
to get for the employer more desirable terms." Iron Molders'
Union v. Allis-Chalmers Co., 7 Cir., 166 F. 45, 20 L.R.A., N.S.,
315.'
(Citations omitted.) (Emphasis added.) Lee-Norse, 170 W. Va. at 164 n.3, 291 S.E.2d at 479
n.3, quoting, syl. pt. 1, Magner v. Kinney, 141 Neb. 122, 2 N.W.2d 689 (1942).
The Lee-Norse definition of a lockout is reflected in the employer shutdown
exception of W. Va. Code, 21A-6-3(4), which allows the payment of employment benefits
when "an employer shuts down his plant or operation or dismisses his employees in order
to force wage reduction, changes in hours or working conditions." In order to qualify for
benefits under the employer shutdown exception of W. Va. Code, 21A-6-3(4) [1990], an
employee must show, first, that the employer acted to shut down the work site, and second,
that the shutdown was "to force" a change detrimental to the employee. To show that the
employer acted to shut down the work site, the employee must show that the employer did
something that deprived the employee of the opportunity to work. For example, did the employer act to shut down his plant, operation or to dismiss his employees? To show that
the employer's action was "to force" a change in benefits detrimental to the employee, the
employee must show how the employer's proposed changes were detrimental to the
employee. The employer shutdown exception becomes operational when an employer
deprives an employee of work unless he/she agrees to less favorable benefits.
Some guidance for determining when an employer deprives an employee of
work (the first part of the employer shutdown exception) is found in Lee-Norse, which
provides that a lockout occurs when the employees' offer to work on a "day-to-day basis"
is rejected by the employer. Syl. pt. 2, Lee-Norse states: "W. Va. Code, 21A-6-3(4) was not
intended to disqualify workers who were locked out during contract negotiations if they were
willing to work on a day-to-day basis." Although an employer shutdown may be shown by
such employer's acts as locking of the gates, closing the plant, refusing to admit workers, an
employer shutdown also occurs when the employer reject the employees' offer to work on
a day-to-day basis.
Once an employer's act of shutting down is shown, the focus shifts to whether
the employer was seeking "to force" a reduction in benefits (part two of the employer
shutdown exception). In order to determine the party responsible for the work stoppage,
some jurisdictions apply a status quo test holding the party seeking to change the current
working conditions responsible for the stoppage. That is the party, who refuses to continue
the working conditions as prescribed by the previous agreement for a reasonable time, is
considered responsible for the work stoppage. Thus, when an employer rejects the employees' good faith offer to maintain the status quo for a reasonable period, the employees
are eligible to receive unemployment benefits, but when the employees refuse to work in
order to receive additional benefits, they are responsible for the work stoppage and therefore,
ineligible for unemployment benefits. Pennsylvania first applied the status quo test in Erie
Forge & Steel Corp. v. Unemployment Compensation Bd. of Review, 400 Pa. 440, 163 A.2d 91 (1960) (generally called Vrotney after one of the appellants therein).See footnote 4 In Vrotney, the
Pennsylvania Supreme Court stated the test of responsibility for a work stoppage as follows:
Have the employees offered to continue working for a
reasonable time under the pre-existing terms and conditions of
employment so as to avert a work stoppage pending the final
settlement of the contract negotiations; and has the employer
agreed to permit work to continue for a reasonable time under
the pre-existing terms and conditions of employment pending
further negotiations? If the employer refuses to so extend the
expiring contract and maintain the status quo, then the resulting
work stoppage constitutes a "lock-out" and disqualification for
unemployment compensation benefits in the case of a "stoppage
of work because of a labor dispute" does not apply.
Vrotney, 400 Pa. 444-45, 163 A.2d at 93-94. When the work stoppage assumes the form of
a strike, the employees must show that they offered to continue working or that such an offer
would have been useless. Philco Corp. v. Unemployment Compensation Bd. of Review, 430 Pa. 101, 242 A.2d 454 (1968)(union made no offer to continue working and voted to strike
in advance of the contract's expiration). In Pennsylvania, the court examines the actions of
the parties but refuses to consider the subjective motivations for the parties' actions thereby,
bringing "clarity and relative predictability" for the determination of unemployment benefits
during a work stoppage. Local 730 v. Unemployment Compensation Bd. of Review, 505 Pa.
480, 489-90, 480 A.2d 1000, 1005 (1984), quoting, Unemployment Compensation Bd. of
Review v. Sun Oil Co., 476 Pa. 589, 595, 383 A.2d 519, 522 (1978). In Lee Nat. Corp. v.
Unemployment Compensation Bd. of Review, 206 Pa. Super. 96, 105, 211 A.2d 124, 128
(1965), the Pennsylvania court refused to consider factors such as an employer's profitability
or economic difficulties in determining if the stoppage was a strike or lockout.
The ease of administration and relative predictability of the status quo test lead
Ohio to adopt the test. See Bays v. Shenango Co., 53 Ohio St.3d 132, 559 N.E.2d 740
(1990); Eastalco Aluminum Co. v. Bd. of Appeals, 314 Md. 460, ___, 551 A.2d 121, 126
(1988)(awarding benefits during a lockout based on the company's unilateral act refusing to
allow employees "to continue working at the status quo during negotiations was the primary
cause of the employees' unemployment"); Alexander v. Employment Appeal Bd., 420 N.W.2d 812 (Iowa 1988)(finding the employees are not disqualified from benefits if work
stoppage is due to an employer lockout, because the legislature intended an understanding
similar to the holding in Erie Forge & Steel Corp.) See also Sandoval v. Indus. Com'n., 110
Colo. 108, 130 P.2d 930 (1942) (looking to which party sought to change the status quo in
order to determine if the employees engaged in a strike); but see Abbott v. Industrial Claim Appeals Office of State of Colo., 796 P.2d 60, 61 (Colo App.), cert. denied,(Colo.
1990)(employer not required to adhere to terms of expired contract for reasonable time in
order to avoid liability for unemployment benefits).
Both Pennsylvania and Ohio, before they adopted the status quo test, had used
other tests to determine when a lockout had occurred.See footnote 5 In adopting the status quo test, these
jurisdictions emphasized that "[s]ince the purpose of our unemployment compensation
system is to compensate an individual when work has been denied him through no fault of
his own, logically the test of whether a work stoppage resulted from a strike or a lock-out
requires us to determine which side, union or management, first refused to continue
operation under the status quo after the contract had technically expired, but while
negotiations were continuing." Bays v. Shenango Co., supra, 53 Ohio St.3d at ___, 559 N.E.2d at 743, quoting, Philco Corp. v. Unemp. Comp. Bd. of Review, supra, 430 Pa. at 102,
242 A.2d at 455.
Although the language of our unemployment statute is unique,See footnote 6 the approaches
taken by other jurisdictions are helpful in determining what measure should be applied to
determine when there has been a "wage reduction, changes in hours or working conditions."
W. Va. Code, 21A-6-3(4) [1990]. The status quo test of Pennsylvania and Ohio directs the
use of the expiring contract as the measure to determine if the employer's offer reduced
wages or made changes in hours or working conditions. The other tests require a more
subjective analysis to determine if the employer's reduction or changes were reasonable in
a particular economic climate, or who caused the changes, or who was the final actor. None
of these subjective tests offers the ease of administration of using the expiring contract as the
measure to determine when reductions or changes have occurred.
The structure and language of W. Va. Code, 21A-6-3(4) [1990] lead to the
conclusion that the Legislature intended the expiring contract to be the measure for
examining employer promoted changes under the employer shutdown exception. The Code
specifies three separate exceptions that allow for the payment of unemployment benefits,
namely the less than prevailing wages exception, the denial of collective bargaining exception and the employer shutdown exception. See supra pp. 3-4 for complete text of W.
Va. Code, 21A-6-3(4) [1990]. The first or less than prevailing wages exception occurs when
"the employees are required to accept wages, hours or conditions of employment
substantially less favorable than those prevailing." The less than prevailing wages exception
requires the use of the "prevailing" work conditions as the standard to measure if the
employment offered is "substantially less favorable." When the offered employment is
"substantially less favorable" than the "prevailing" work conditions, W. Va. Code, 21A-6-
3(4) [1990] authorizes the payment of benefits. If the same measure of "prevailing" work
conditions is used to determine when an the employer's offer under the employer shutdown
exception is "to force [a] wage reduction," the less than prevailing wages exception would
effectively subsume the employer shutdown exception, thereby rendering the employer
shutdown exception superfluous.
By outlining three exceptions to the disqualification provision, the Legislature
must have intended three separate and distinct fact patterns to allow an employee to qualify
for unemployment benefits. In order to have separate and distinct exceptions, the Legislature
must have intended that the determination of a "wage reduction, changes in hours or working
conditions" of the employer shutdown exception not be judged by the general prevailing
wage standard of the less than prevailing wages exception, but be judged by the specific
standard of the expiring contract.
Based on the structure and language of W. Va. Code, 21A-6-3(4) [1990], we
find that the proper measure for considering an employer's offer in the employer shutdown exception is the parties' expiring contract. This objective standard, which carries out the
structure and language of the unemployment benefits statute, is relatively easy to apply and
allows the State to remain neutral in a labor dispute. Thus in a labor dispute, the employer
shutdown exception of W. Va. Code, 21A-6-3(4) [1990], applies when an employer rejects
continuing the expiring contract for a reasonable time "to force wage reduction, changes in
hours or working conditions."See footnote 7 The determination of when an employer is trying "to force
wage reduction" or other changes in benefits under W. Va. Code, 21-6-3(4) [1990], is made
by comparing the employer's proposed change(s) to the status quo as shown by the expiring
contract. If the employer's proposed change(s) would result in detrimental terms for the
employee, then the employer is considered to be seeking "to force wage reduction, changes
in hours or working conditions."
In the present case, the parties agree that the employees offered to work under
the existing contract during negotiations.See footnote 8 The parties also agree that Contractors' offer was
a reduction in wages. These facts show the employees qualify for unemployment benefits under the employer shutdown exception of W. Va. Code, 21A-6-3(4) [1990]. Under W. Va.
Code, 21A-6-3(4) [1990], employees are entitled to unemployment benefits when an
employer rejects continuing the expiring contract for a reasonable time "to force wage
reduction, changes in hours or working conditions." Although the Board of Review did not
address the employer shutdown exception issue (employees were not represented by counsel
before the Board), it found "[c]ertain of the wages and fringe benefits offered by the
employer as of April 1, 1992, were lower than what had existed in the prior agreement
between the employer and the union." This finding along with the parties' agreement that
the employees had offered to continue working under the expiring contract show that the
employees qualify for unemployment benefits under the employer shutdown exception found
in W. Va. Code, 21A-6-3(4) [1990]. Under the status quo test adopted herein, we need not
address Contractor's argument that the impasse was created by the union's contract with a
competitor.See footnote 9 The subjective motives of the employer are not at issue; rather, the measuring is done by simply comparing the expiring contract to the employer's offer once a shutdown
by the employer is shown.
B.
The Less Than Prevailing Wages Exception of
W. Va. Code, 21A-6-3(4)
The employees also allege that they qualify for benefits under the less than
prevailing wages or first exception of W. Va. Code, 21A-6-3(4) [1990] because Contractors
offered wages, hours or working conditions that were "substantially less favorable than those
prevailing for similar work in the locality." The employees argue that the prevailing wages
should be based on the wages paid by a company that shut down twenty days after the start
of the strike rather than the wages of a company still in business. The employees also argue
that the higher wages of a company based in Weirton should have been given greater weight.
Contractors maintains that the Board of Review correctly used their primary competitor's
wages, hours and working conditions to determine if Contractors' offer was substantially less
favorable than those prevailing for similar work. Contractors alleges that when the Weirton
based company worked in the area, their wages were reduced to the local level.
The determination of whether Contractors' offer was "substantially less
favorable than those prevailing for similar work" is a question of fact, and the factual
findings of the Board of Review "are entitled to substantial deference unless a reviewing
court believes the findings are clearly wrong. Syllabus Point 1, in part, Kisamore v. Rutledge, 166 W. Va. 675, 276 S.E.2d 821 (1981)." Adkins v. Gatson, 192 W. Va. at 565,
453 S.E.2d at 399. See syl. pt. 3, Adkins v. Gatson, supra, p. 8, for a discussion of our
standard of review.
In this case, the Board of Review compared Contractors' last offer before the
collective bargaining agreement expired with the local prevailing wages as required by
Roberts v. Gatson, supra.
The company's last offer before the work stoppage is the
relevant starting point for determining if the employees are
required to accept wages, hours, and conditions of employment
substantially less favorable than those prevailing for similar
work in the locality under W. Va. Code 21A-6-3(4) (1984).
Syl. pt. 6, Roberts v. Gatson.
Where there are other similar places of employment in
the locality, their wages, hours, and conditions of employment
must be compared to determine if the employer's last offer is
substantially less favorable than prevailing conditions in the
locality.
Syl. pt. 7, Roberts v. Gatson.
The Board of Review found Contractors' primary competitor had wages, hours
and conditions of employment "equal to or less favorable than those which had been offered
to the claimants herein." The record indicates that Contractors' offered the same hourly
wages as those paid by Contractors' primary competitor. Contractors' offer included a $61
per week pension fund contribution, as compared with the competitor's contribution of $25
per week. Contractors' offer included six paid holidays as compared with the competitor's
three paid holidays. The work requirements for pension contributions and holiday pay of Contractors' offer were more favorable than those of the competitor. Contractors' offer
began overtime after an eight-hour day, but the competitor's overtime began after a forty-
hour week. The competitor did have an incentive plan which the employees' maintain greatly
increased the wages. Contractors denied that the incentive plan resulted in increased pay.See footnote 10
The Board also considered the wages and fringe benefits of the employees of
Weirton Construction Company based on a finding that Weirton worked in the same area as
Contractors. The Board found that Weirton's wages "are in some cases better than those
offered to the claimants here." The Board found that the prevailing wage was not determined
by the "highest that were put into evidence;" rather, the Board placed more emphasis on the
wages of Contractors' primary competitor and concluded that Contractors' last offer was not
"substantially less favorable. (Emphasis added.)" W. Va. Code, 21A-6-3(4) [1990].See footnote 11 Based
on our examination of the record, we find that Board of Review's factual findings concerning Contractors' last offer are not clearly wrong and therefore, we agree that the less than
prevailing wages exception of the statute does not apply in this case.
C.
The Denial of Collective Bargaining
Exception of W. Va. Code, 21A-6-3(4)
The employees also allege that they are entitled to unemployment benefits
because they were denied the right of collective bargaining, the second exception found in
W. Va. Code, 21A-6-3(4) [1990]. See supra pp. 3-4 for Code text. Generally, the denial of
collective bargaining exception presents a mixed question of fact and law. Although
deference is given the Board of Review's factual findings, we review de novo mixed
questions of fact and law. See syl. pt. 3, Adkins v. Gatson, supra, pp. 7-8, for a discussion
of our standard of review. Because the record in this case shows that the Board of Review
determined that "no evidence" was presented on the denial of collective bargaining
exception, we have reviewed the record to determine if this factual finding was clearly
wrong.
On appeal, the employees allege Contractors' president did not respond to their
January 1992 letter "reminding him that the contract was about to expire." The employees
also allege that "management refused to open its books to the employees, despite the
company's demand for concessions."
In response, Contractors notes that nine bargaining sessions were held, two
with a federal mediator and therefore, the complaints about the January 1992 letter "are
hollow since the parties did meet prior to the expiration of the contract and afterwards." Contractors alleges that the employees' right to inspect its company's books is not at issue
because Contractors never claimed an inability to pay rather "it is not willing to be obligated
to pay an amount grossly in excess of what its competitor negotiated with the same Union.
(Emphasis original.)" According to Contractors, the employees failed to bring this issue to
the National Labor Relations Board, even though the employees filed three unfair labor
charges, all of which were rejected as without merit by the National Labor Relations Board.
Roberts v. Gatson, supra, 182 W. Va. at 767-771, 392 S.E.2d at 207-212,
discusses some general guidelines for determining when the right to collective bargaining had
been denied. Syl. pt. 2, Roberts v. Gatson states:
A refusal to engage in the collective bargaining process
or to negotiate on those mandatory subjects that traditionally
form the basis of the collective bargaining agreement so
frustrates the process as to constitute a denial of the right of
collective bargaining under W. Va. Code, 21A-6-3(4) (1984).
Although we agree that a refusal "to bargain collectively with the representatives of his
employees" would be a denial of the right to collective bargaining (Roberts v. Gatson, 182
W. Va. at 767, 392 S.E.2d at 207), nothing in this record shows such a refusal.See footnote 12 Because
the record shows that Contractors did negotiate with its employees before the contract
expired, the letter incident standing alone was not a denial of the right to bargain collectively.
Although when a company maintains "it could not afford to give its employees pay raises"
and refuses to allow an inspection of its books, "'a finding of a failure to bargain in good faith'" could be supported (Roberts v. Gatson, 182 W. Va. at 770, 392 S.E.2d at 210, quoting,
N.L.R.B. v. Truitt Mfg. Co., 351 U.S. 149, 153, 76 S. Ct. 753, 756, 100 L. Ed. 1027, 1032
(1956)), Contractors did not allege an inability to pay. Syl. p. 4, Roberts v. Gatson states:
In order to constitute a denial of the right of collective
bargaining under W. Va. Code, 21A-6-3(4) (1984), the failure
to furnish requested information must be shown to relate to a
mandatory subject or collective bargaining. Moreover, the
information requested must be so essential that the collective
bargaining process will be frustrated without it. Finally, it is
appropriate to consider whether the employer has a bona fide
reason for the failure to disclose.
Given that Contractors' reason for refusing the information was that it did not wish to pay
more than "what its competitor negotiated with the same Union," we find that the
information requested was not "so essential that the collective bargaining process . . . [was]
frustrated without it." Syl. pt. 4, in part, Roberts v. Gatson.
The Board of Review found the "parties bargained for a new contract but were
not able to reach one." In Roberts v. Gatson, 182 W. Va. at 771, 392 S.E.2d at 211, we said
that "[u]nder our unemployment compensation statute, the test is not whether the employer
may have committed an unfair labor practice, but whether his actions amounted to the denial
of the right of collective bargaining." Based on our review of the record, we find that the
Board of Review was not clearly wrong in finding "[n]o evidence was offered to show that
the claimants had been denied the right of collective bargaining," and therefore, we agree that
the denial of the collective bargaining exception of the statute does not apply in this case.
III.
Conclusion
Although we agree with the Board of Review and the circuit court that the
employees are not entitled to unemployment benefits under the less than prevailing wages
or denial of collective bargaining exceptions of W. Va. Code, 21A-6-3(4) [1990], we find
that the employees are entitled to unemployment benefits under the employer shutdown
exception. Our finding of entitlement is based on the record as developed below showing
that Contractors rejected the employees' offer to continue to work under the expiring contract
during negotiations, and thus, Contractors, in effect, "shut down his plant. . . in order to force
wage reduction, changes in hours or working conditions." W. Va. Code, 21A-6-3(4) [1990].
For the above stated reasons, the decision of the Circuit Court of Kanawha
County is reversed, and benefits are granted to each of these petitioners who are otherwise
eligible under the unemployment benefits statute.
Reversed.
Footnote: 1
Because Mr. Smittle was the first named petitioner in the Board of Review's
proceeding, his name remains as a petitioner even though he was granted benefits based on
a determination that he and several other original petitioners were laid off because of a lack
of business before the expiration of the collective bargaining agreement.Footnote: 2
This appeal comes to this Court on a writ of certiorari. W. Va. Code, 21A-7-27
[1970] states: "The appeal from the decision of the circuit [court] of Kanawha county may
be taken to the supreme court of appeals if a proper petition for certiorari is filed within sixty
days of the date of the final decision of the circuit court of Kanawha county. The cases shall
go from the circuit court of Kanawha county only on writ of certiorari and need be heard
only at the session of the supreme court."Footnote: 3
Because in drafting W. Va. Code, 21A-6-3(4) [1990], the Legislature used specific
language to describe when an exception to the disqualification provision occurs, we labeled
the exceptions according to the statutory language rather than resorting to general labor law
terms, such as lockout.Footnote: 4
The Pa. Stat. Ann. tit 43 § 802 [1981] provides, in pertinent part:
An employee shall be ineligible for compensation for any
week--
***
(d) In which his unemployment is due to a stoppage of work,
which exists because of a labor dispute (other than a lock-out)
at the factory, establishment or other premises at which he is or
was last employed. . . . Footnote: 5
See Hogan v. Unemployment Compensation Bd. of Review, 169 Pa. Super. 554, 83 A.2d 386 (1951), using "final cause test," which looks to the final act that caused the work
stoppage; Zanesville Rapid Transit, Inc. v. Bailey, 168 Ohio St. 351, 155 N.E.2d 202 (1958),
using "reasonableness standard" to find that given the financial circumstances, an employer's
reduced wage offer did not constitute a lockout. Other jurisdictions have used other tests.
See Sunstar Foods, Inc. v. Uhlendorf, 310 N.W.2d 80 (Minn. 1981)(a 21-26% reduction in
wages is so unreasonable as to constitute a lockout); McKinley v. Cal. Employment
Stabilization Com'n. 34 Cal. 2d 239, 209 P.2d 602 (1949), applying the "volitional test" to
determine if the unemployment claimants were unemployed through some voluntary conduct
on their part; Assif v. Ad., Unemployment Compensation Act, 137 Conn 393, 77 A.2d 772
(1951), examining the employer's new terms to determine if the employees could not
reasonably be expected to continue to work.Footnote: 6
Twenty-six states, the District of Columbia and the Virgin Islands have a lockout
exception which allows employees who are locked out to receive unemployment benefits.
These states include: Arkansas, California, Colorado, Connecticut, Delaware, Florida,
Georgia, Illinois, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Mississippi,
Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas,
Utah, Vermont, West Virginia and Wisconsin. U.S. Dept. of Labor, Employment and
Training Administration, Unemployment Insurance Service, Comparison of State
Unemployment Insurance Laws, Disqualification Table 405, column (7), January 1993
Comparison.Footnote: 7
The determination of a "reasonable time" to continue working under the expiring
contract is a factual question that must be made on a case-by-case basis. Examples of some
of the facts that might be considered during such a determination include: status of the
negotiations, presence of pending cases, market conditions, changes in the parties' posture
or any other relevant facts. Footnote: 8
Because the parties agree that the employees' offer was to continue to work under the
existing contract during negotiations and the employer, although rejecting the offer, did not
argue that the negotiation period was unreasonable, we need not address whether the offered
period of work was reasonable in this case. See supra note 7, for a discussion of some of the
facts that might be considered to determine if the period of work under the expiring contract
was "reasonable."Footnote: 9
Contractors invites us to consider the subjective actions of the employees' union in
another negotiation, namely the union's contract with Contractors' principal competitor, A-1
Concrete. According to Contractors, their competitor had a contract, entered into by the
same union and signed on May 9, 1991, requiring A-1 to pay its employees $4.00 to $5.00
less per hour than the 1989-92 Contractors' contract. Contractors maintains that the A-1
contract allows A-1 "to undercut our costs by at least $6.00 (sic) a yard." Contractors
maintains that it is willing to have its employees work under the wages of the A-1 contract.
Contractors also alleges that the A-1 contract forced another local ready-mix concrete
company, Premier, to stop operations on April 20, 1992.
The subjective argument of Contractor shows the difficulty of a subjective analysis
of an employer's reasons. Contractors seeks to have an evaluation of other contracts and
other companies in order to justify its actions. A subjective evaluation such as the one
sought by Contractors is complex and factually difficult to apply. We decline to apply
subjective evaluations given the specific language of W. Va. Code, 21A-6-3(4) [1990]. Footnote: 10
In an effort to support their allegation that the competitor's incentive plan resulted
in substantially higher wages, the employees attempted to introduce payroll stubs with the
employee's name obliterated. The Board gave no weight to the payroll stubs because no one
present could testify to their authenticity or any factual matter that they supposedly proved.
Contractors was thus denied the opportunity to cross examine anyone regarding these
matters. Given the lack of information concerning these payroll stubs, we find no error in
the Board's refusal to consider them.Footnote: 11
The size of the geographic area considered in determining a locality's prevailing
wage is a factual question and therefore, unique to a particular case. In this case, we defer
the Board of Review's decision to admit evidence on wages from a broad area and then, to
give greater weight to the evidence on wages from the immediate area.Footnote: 12
Our review of the hearings before the Board of Review, shows that the parties
engaged in extensive bargaining, even though that bargaining failed to produce a contract.
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