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Butler v. Bakelite Co.

Decided: April 4, 1960.

JOHN WILLIAM BUTLER, PLAINTIFF, AND STATE OF NEW JERSEY, DIVISION OF EMPLOYMENT SECURITY, DEPARTMENT OF LABOR AND INDUSTRY, INTERVENOR-APPELLANT,
v.
BAKELITE COMPANY, DIVISION OF UNION CARBIDE CORP., AND METROPOLITAN LIFE INSURANCE COMPANY, DEFENDANTS-RESPONDENTS



For affirmance -- Chief Justice Weintraub, and Justices Burling, Jacobs, Francis, Proctor, Hall and Schettino. For reversal -- None. The opinion of the court was delivered by Hall, J.

Hall

[32 NJ Page 157] This appeal is concerned with whether benefits concededly due plaintiff, a former employee of defendant

Bakelite Company, by reason of non-work-connected disability occurring during unemployment following his layoff for lack of work, should be paid under the unemployment compensation law (N.J.S.A. 43:21-4(f)) by the intervenor Division of Employment Security, or pursuant to the temporary disability benefits statute (N.J.S.A. 43:21-25 et seq.) by defendant Metropolitan Life Insurance Company, Bakelite's private plan insurance carrier for such benefits. The controversy is what would be called "a jurisdictional dispute" in the labor field. The Division, in an administrative proceeding, found the insurer to be the one to pay. The Appellate Division reached the opposite conclusion. 56 N.J. Super. 405 (1959). We granted certification on the Division's petition. 30 N.J. 604 (1959).

The problem arises because Butler was entitled to a two weeks vacation with pay at the time of the layoff, but had not received it. He was paid two weeks wages instead, pursuant to a provision of the plant collective bargaining agreement, which read: "When an employee who has attained initial vacation eligibility is terminated, he is entitled to any Current Year Vacation that has not been taken." The question is whether that payment, in fact or in law, continued Butler "in employment" (see N.J.S.A. 43:21-27(b)) for the additional two weeks period. If it did, the money is owed him by Metropolitan as temporary disability benefits; if it did not, the obligation arises under the unemployment compensation law and the Division is the debtor.

We see no foundation for the Division's contention that, as matter of fact, the quoted provision of the union contract by its terms conclusively established the continuance of a laid-off employee in the employment relation until the expiration of the period which the vacation pay would represent as wages. The rather inartistic language used certainly does not say that in so many words, and giving due allowance to obvious lay draftsmanship (see Kennedy v. Westinghouse Electric Corporation, 16 N.J. 280, 287 (1954)),

we fail to see how it can reasonably be concluded that such was the intention. It specifies entitlement to the money equivalent of an earned vacation whenever an employee "is terminated." Termination, a word in itself connoting finality, is defined elsewhere in the instrument to mean "quit, discharge, layoff, retirement, death or removal from the payroll because of disability." From the nature of the designated events taken as a group, there is nothing to indicate but that definitive separation from the employment relation at the moment of the event was, in fact, contemplated. Nor does any sound factual reason appear why the employer would desire the status to continue or why we should fictionally say that it did. This is not a case where a method of treatment adopted by an employer would have the effect, if not struck down, of denying all benefits to a present or former employee otherwise entitled. Cf. Campbell Soup Co. v. Board of Review, Division of Employment Security, 20 N.J. Super. 80 (App. Div. 1952).

The evidence before the Division and the finding of its hearing officer were to the effect that Butler's layoff was a permanent separation from his job. There is nothing in the record to indicate that it was only temporary, with some fixed, or even prospective, date of return. A layoff in such circumstances amounted to a discharge without the connotation of unsatisfactory work or conduct. Assuming he may have had some contractual right to preference in reemployment, i.e., the creation of new employment relationship, if additional work later required additions to the reduced force, in the meantime he owed no obligation to Bakelite to work or report for work. He was not being continued in readiness to render service at some future time. Cf. Paramus Bathing Beach v. Division of Employment Security, Department of Labor and Industry, 31 N.J. Super. 128, 133 (App. Div. 1954). Quite apart from the matter of whether a collective bargaining agreement, if it actually did provide for the continuation of the employment relation beyond a final cessation of work, would be binding on the

employer's temporary disability insurer or could ever affect a statutory obligation, which we need not here consider, we are convinced this agreement did not do so. It is clear to us the employment relation between Bakelite and Butler in fact ended the day he was laid off. The vacation pay was nothing more than a payment of money to make up for the vacation earned but not taken. Another provision of the union contract aptly so refers to it as "accrued vacation pay which may be payable [at layoff] under the company vacation plan." All of this is factually inconsistent with a thought that it extended the employment relationship.

The case, therefore, boils down to a determination of whether the statutes involved, by virtue of their underlying purposes, definitions and terms, require a different conclusion as matter of law. It should be observed that we consider the statutory provisions and not the provisions of the contract between Bakelite and Metropolitan insuring the former's obligations under the temporary disability benefits law, since the latter cannot be more restrictive than the law itself with respect to eligibility requirements for benefits (N.J.S.A. 43:21-32(b)) and there is nothing to indicate that the policy here is more liberal.

For present purposes, it may be noted that employee welfare legislation in New Jersey commenced with the workmen's compensation act providing benefits for work-connected disability regardless of fault. The next step was the unemployment compensation law (R.S. 43:21-1 et seq.), enacted to lighten the burden of economic insecurity on the worker due to involuntary unemployment caused without fault on his part. R.S. 43:21-2. A condition of eligibility for benefits is that the unemployed individual be able to and available for work (unless his employer has placed him on involuntary vacation without pay for a specified ...


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