M. CONLEY COMPANY, APPELLANT, v. ANDERSON ET AL., APPELLEES.
__________________
SYLLABUS OF THE COURT
The hiring of permanent replacement workers coupled with notice to striking
workers that they have been replaced or that their positions have been
permanently filled severs the employee relationship for purposes of R.C.
4141.29(D)(1)(a) and removes the disqualification to receive
unemployment compensation benefits. (Baugh v. United Tel. Co. (1978),
54 Ohio St.2d 419, 8 O.O.3d 427, 377 N.E.2d 766, followed.)
__________________
MOYER, C.J.
{¶ 1} This appeal asks us to consider at what point the threat of, and
actual hiring of, permanent replacement workers converts a labor dispute into a
lockout for purposes of R.C. 4141.29(D)(1)(a). Appellant raises three interrelated
propositions of law that we discuss together.
I
SUPREME COURT OF OHIO
{¶ 2} In the early summer of 2002, the General Truck Drivers and
Helpers Union Local 92 represented approximately 44 workers at the M. Conley
Company. Nearing the expiration of its collective-bargaining agreement with M.
Conley, the union and the employer engaged in a series of unsuccessful
negotiations for a new contract. On the evening of June 30, 2002, the day before
the agreement expired, the union members rejected the company’s final proposals
and voted to begin a strike the next day. Negotiations continued.
{¶ 3} During the first three weeks of the strike, the union received
several letters from the company’s agent and counsel, Craig T. Conley. Two
letters, dated July 8 and July 19, are important to the disposition of the issue
presented. A third letter, sent August 6, confirmed the July 19 letter. The first
letter informed the strikers that “in order to continue and preserve our operations
and business, please be advised that we are in the process of hiring permanent
replacement drivers and warehouse workers (with the intention of retaining those
new employees post-strike).” In the second letter, the company stated, “[I]t is our
intention to retain those [permanent replacement] workers post-strike * * *. [W]e
never intended to discharge all or most of those employees in order to ‘make
room’ on the payroll for strikers who may, at some indefinite future date,
suddenly decide to return to work. Further, * * * we have terminated and/or
consolidated certain deliveries, which means that one or more previously existing
driving positions have been eliminated.”
{¶ 4} The August 6 letter confirmed that “all strikers have been
permanently replaced; i.e., there currently are no employment positions open.”
{¶ 5} In early August, striking workers applied for unemployment
compensation benefits. A hearing officer of the Ohio Department of Job and
Family Services determined that the workers were not entitled to unemployment
benefits from July 1 through July 19, 2002, because they were unemployed due to
a labor dispute other than a lockout. The hearing officer found that after July 19,
2002, when the M. Conley Company hired permanent replacement workers, the
striking workers were no longer unemployed because of a labor dispute other than
a lockout and were entitled to unemployment compensation.
{¶ 6} The M. Conley Company appealed that decision to the
Unemployment Compensation Review Commission, which declined review. The
court of common pleas and appellate court subsequently affirmed the ruling of the
hearing officer. This case is before us on a discretionary appeal.
II
{¶ 7} R.C. 4141.29(D) provides:
{¶ 8} “[No] individual may serve a waiting period or be paid benefits * *
*:
{¶ 9} “(1) For any week with respect to which the director finds that:
{¶ 10} “(a) The individual’s unemployment was due to a labor dispute
other than a lockout * * * for so long as the individual’s unemployment is due to
such labor dispute.”
{¶ 11} We have previously analyzed this language. In Baugh v. United
Tel. Co. (1978), 54 Ohio St.2d 419, 422, 8 O.O.3d 427, 377 N.E.2d 766, we held
that “the words ‘due to’ mean ‘caused by.’ They do not mean merely ‘occurring
during the course of.’ Thus, the element of causation is indispensable. Hence, the
vital question is not whether the unemployment occurred in the course of the
labor dispute, but whether the unemployment was caused by the labor dispute.”
Further, we held that “the General Assembly did not intend that the statutory
disqualification from unemployment compensation benefits contained in R.C.
4141.29(D)(1)(a) be applicable if, during the course of a bona fide labor dispute,
the employer terminated the employee status and thereby caused the
unemployment.” Id. at 424, 8 O.O.3d 427, 377 N.E.2d 766.
{¶ 12} In Baugh, workers went on strike in January. After the union
rejected the employer’s last proposal in May, the employer informed the workers
that it would begin hiring permanent replacement workers effective June 1. The
striking workers refused to return to work, and the employer began to hire
permanent replacements. Subsequently, the company sent a second letter to each
striking worker, informing them that their positions had been filled. We held that
the hiring of permanent replacement workers terminated the striking workers’
employee status and was the proximate cause of the strikers’ unemployment,
entitling them to unemployment compensation. Id. at 425, 8 O.O.3d 427, 377
N.E.2d 766. The issue presented for appeal is similar to the issue we decided in
Baugh.
III
{¶ 13} Appellant relies on Natl. Labor Relations Bd. v. Mackay Radio &
Tel. Co. (1938), 304 U.S. 333, 58 S.Ct. 904, 82 L.Ed. 1381, for the proposition
that the hiring of replacement workers does not itself terminate the employment
relationship. The cause of action in Mackay arose under the National Labor
Relations Act1 and relates to unfair labor practices. Unlike the Mackay court, we
are not asked to determine the striking workers’ status under federal law in the
context of an alleged unfair labor practice, but rather under Ohio law in the
context of unemployment compensation.
{¶ 14} Appellant also cites two Ohio court of appeals cases for the
proposition that hiring replacement workers does not by itself entitle striking
workers to unemployment compensation. We do not disagree with that
conclusion, but in both cited cases, striking workers did not receive notice of their
replacement. “[T]estimony reveals that the striking employees were not advised
that they had been terminated or discharged nor were they told that they would
not have a job if they offered to return to work.” Hi-State Beverage Co. v. Ohio
Bur. of Emp. Servs. (1991), 77 Ohio App.3d 633, 641, 603 N.E.2d 274.
“Employees were never informed that they had been replaced; they did not
receive a second letter informing them that they had been replaced as did the
employees in Baugh [54 Ohio St.2d 419, 8 O.O.3d 427, 377 N.E.2d 766].”
Moriarity v. Elyria United Methodist Home (1993), 86 Ohio App.3d 502, 506,
621 N.E.2d 576. Here, the employer gave clear notice in its July 19 letter that the
employees had been replaced: “[I]t is our intention to keep [the replacement]
workers post-strike. * * * [W]e never intended to discharge all or most of those
employees in order to ‘make room’ on the payroll for strikers.” The cited cases
are factually distinguishable from the case at bar.
IV
{¶ 15} In affirming the eligibility of the striking workers for
unemployment benefits, the court of appeals relied upon our holding in Bays v.
Shenango Co. (1990), 53 Ohio St.3d 132, 559 N.E.2d 740. At issue in Bays was
whether the employees’ failure to report for work was a strike or a lockout. In
Bays we adopted a “status quo” test to determine which party, the union or the
employer, was responsible for the work stoppage. At the final negotiation session
between the union and the employer, the union offered to keep working under the
existing contract for another year while negotiations continued. The employer
countered that the employees could continue to work only under the employer’s
new terms. When the employees rejected that offer and failed to come to work
the next day, the employer blamed the work stoppage on the union, claiming that
it was a strike. The union argued that the work stoppage was the employer’s
fault, and the union workers had been locked out.
{¶ 16} We adopted the status quo test to determine which party had first
altered the working relationship. That test “ ‘is reduced to the following: Have the
employees offered to continue working for a reasonable time under the preexisting
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 “lockout” and the disqualification
of unemployment compensation benefits in the case of a “stoppage of work
because of a labor dispute” does not apply.’ ” Bays, 53 Ohio St.3d at 134, 559
N.E.2d 740, quoting Erie Forge & Steel Corp. v. Unemp. Comp. Bd. of Review
(1960), 400 Pa. 440, 444-445, 163 A.2d 91.
{¶ 17} The Bays status quo test is to be used when there is a dispute over
the actual cause of the work stoppage and to identify which party was responsible
for that work stoppage. Ohio appellate courts have generally followed that
holding. See Anderson v. Ohio Bur. of Emp. Serv. (Nov. 16, 1999), Franklin App.
No. 99AP-207, 1999 WL 1034214.
{¶ 18} The court of appeals misapplied our holding in Bays to the case at
bar.2 Here, there is no doubt that Local 92 was responsible for the original work
stoppage. The workers voted to strike and made it known to the general public
that they were on strike. There is no status quo to measure. Rather, the court of
appeals should have applied our holding in Baugh.
{¶ 19} The present case is nearly identical to Baugh. Local union 92
initiated a strike. In an effort to force the striking workers to accept its terms, the
company threatened to hire permanent replacement workers and subsequently
followed through on that threat. Finally, on July 19, 2002, the company sent
notice to the striking workers that their jobs had been permanently filled.
Applying the law of Baugh to these facts, we conclude that the employees may
not be denied the benefits provided by R.C. Chapter 4141 for the period following
July 19, 2002.
{¶ 20} Appellant avers that the striking workers should be required to
reapply for their jobs before we can determine that their position has been
permanently filled and they are entitled to unemployment compensation. We will
not require striking workers who receive written notice that they have been
permanently replaced to reapply in person.
V
{¶ 21} We reaffirm our holding in Baugh and hold that the hiring of
permanent replacement workers coupled with notice to striking workers that they
have been replaced or that their positions have been permanently filled severs the
employee relationship for purposes of R.C. 4141.29(D)(1)(a) and removes the
disqualification to receive unemployment compensation benefits.
{¶ 22} Although we do not adopt the rationale in its opinion, the judgment
of the court of appeals is affirmed.
Judgment affirmed.
RESNICK, PFEIFER, O’CONNOR and LANZINGER, JJ., concur.
LUNDBERG STRATTON and O’DONNELL, JJ., concur separately.
__________________
LUNDBERG STRATTON, J., concurring.
{¶ 23} I concur in the decision reached in this case because of our
precedent established in Baugh v. United Tel. Co. (1978), 54 Ohio St.2d 419, 8
O.O.3d 427, 377 N.E.2d 766. Baugh was decided in 1978 and established a
definition in a labor dispute of the phrase “due to.” Id. at 422, 8 O.O.3d 427, 377
N.E.2d 766. The conclusion in Baugh was that an employer could create
eligibility for unemployment compensation by permanently ending the striking
workers’ ability to return. Id. at syllabus.
{¶ 24} The M. Conley Company argues that such a position unfairly alters
the status quo and eventually removes the financial penalties of a strike, creating
an unequal playing field by subsidizing strikers with unemployment
compensation at the employer’s cost. Such an argument certainly has merit.
However, Baugh, which we follow today, established the legal interpretation for
R.C. 4141.29(D)(17)(a) in 1978. The legislature is free to amend or clarify this
statute at any time if the legislature disagrees with our interpretation, yet it has not
done so. Any change sought by employers should be directed to the legislature,
not this court. Therefore, while acknowledging the merits of the employer’s
position, I do not believe that it is this court’s role to dictate unemployment
policy. Therefore, I concur in the majority’s opinion.
O’DONNELL, J., concurs in the foregoing opinion.
__________________