UNEMPLOYMENT COMPENSATION BENEFIT ‑- ELIGIBILITY OF RECIPIENTS OF BENEFITS UNDER SUPPLEMENTAL UNEMPLOYMENT BENEFIT PLANS.
(1) Benefits paid under the Supplemental Unemployment Benefit Plans executed by the General Motors Corporation and the Ford Motor Company and UAW-CIO will not disqualify the recipient from receiving unemployment compensation under the provisions of the Employment Security Act.
(2) The employer is not liable to pay contributions to the Employment Security Department on the moneys he pays into the trust and established by the General Motors Corporation and the Ford Motor Company UAW-CIO Supplemental Unemployment Benefit Plans.
- - - - - - - - - - - - -
March 2, 1956
Honorable Peter R. Giovine
Employment Security Department
P.O. Box 367
Olympia, Washington Cite as: AGO 55-57 No. 216
By letter previously acknowledged, you have requested our opinion on the question of eligibility for unemployment compensation benefits of those individuals receiving benefits under the Supplemental Unemployment Benefit Plans negotiated between the Ford Motor Company and General Motors Corporation and the United Auto Workers ‑ Congress of Industrial Organizations (separate contracts). The specific questions are:
(1) Will supplemental benefits paid to an unemployed worker from trust funds created by Supplemental Unemployment Benefit Plans between the Ford Motor Company, General Motors and the [[Orig. Op. Page 2]] UAW-CIO effect a disqualification for, or a reduction of, benefits due under the Washington Employment Security Act (Title 50 RCW)?
(2) Is the employer liable to pay contributions under the Employment Security Act upon funds provided by the employer to the trustee for the payment of supplemental unemployment benefits pursuant to the contract named in the preceding question?
We conclude that both questions must be answered in the negative.
A discussion of the eligibility requirements of the Employment Security Act of this state and the Supplemental Unemployment Benefit Plans is necessary properly to analyze this problem.
Our examination of the Ford and General Motors Plans reveals no significant differences. Thus, further reference to the Plans shall be in the singular.
The Washington State Employment Security Act benefit eligibility requirements which are pertinent to your inquiry are set forth below.
RCW 50.20.010 provides:
"An unemployed individual shall be eligible to receive * * * benefits * * *." (Emphasis supplied)
An unemployed individual is defined in RCW 50.04.310 as follows:
"An individual shall be deemed to be 'unemployed' in any week during which he performs no services and with respect to which no remuneration is payable to him, * * *" (Emphasis supplied)
RCW 50.04.320 provides:
"* * * 'Remuneration' means all compensation paid for personal services, including commissions and bonuses * * *"
[[Orig. Op. Page 3]]
The term "personal services" is not defined by statute, but the Washington state supreme court inSkrivanich v. Davis, 29 Wn. (2d) 150, at page 161, approved the following definition of services which was adopted by the supreme court of Utah inCreameries of America v. Industrial Commission, 98 Utah 571, 102 P. (2d) 300:
"'In ordinary usage the term "services" has a rather broad and general meaning. It includes generally any act performed for the benefit of another under some arrangement or agreement whereby such act was to have been performed. The general definition of "service" as given in Webster's New International Dictionary is "performance of labor for the benefit of another"; "Act or instance of helping, or benefiting." The term "personal service" indicates that the "act" done for the benefit of another is donepersonally by a particular individual.'"
Thus, for the purposes of this opinion, an individual to be eligible for state unemployment compensation benefits in any week must perform no services "and with respect to which no remuneration is payable to him."
The Supplemental Unemployment Benefit Plan prescribes rigid eligibility requirements. To be eligible for supplemental unemployment benefits.
(1) an applicant must be "on layoff from the company";
(2) the layoff must have occurred as a result of reduction in force or temporary layoff, including layoff because of a discontinuance of a plant or operation;
(3) the layoff must not be for disciplinary reasons nor have occurred because of a labor dispute of any description, or due to applicant's own fault, or to war, sabotage, or act of God;
(4) the applicant must have registered at and reported to an employment office maintained by the applicable state system and he must not have failed or refused to accept employment deemed suitable under such state system;
(5) the applicant must have received a state system unemployment benefit not currently under protest by the company;
[[Orig. Op. Page 4]]
(6) the applicant cannot be employed by the company or otherwise for compensation or remuneration, as defined under the law of the applicable state system in an amount equal to or in excess of the amount which disqualifies him for a state system unemployment benefit.
(7) the individual cannot refuse to accept suitable employment when offered, either at the same plant or at another plant in the same labor market area, as defined by the state employment security department, with certain exceptions referring to his particular skilled trade.
Other eligibility conditions set forth in the contract are not deemed pertinent to this question.
The Supplemental Unemployment Benefit Plan provides for benefits to eligible unemployed workers as a supplement to state unemployment compensation. Provision is made for a trustee to be custodian of the fund, which is composed of contributions at the rate of five cents per hour for which the employee has received pay from the employer. The employer is the sole contributor to the trust fund and the trustee independently administers the fund. The moneys in the fund shall never revert to the employer and the employee has no vested right, his right thereto being dependent on the occurrence of a future uncertain event.
It must be noted that the Plan is supplemental to unemployment compensation benefits to insure the worker of approximately 65% of his regular weekly wage, in the event he is laid off, by combining the benefits of the supplemental plan with those of the existing state unemployment compensation benefits.
The eligibility provisions of the state systemand of the supplemental plan require that the applicant be unemployed. He performs no services for the employer and the employer-employee status must be terminated. Payment by the trustee is conditioned upon the fact that the applicant is not working. Clearly the Plan contemplates a complete severance of the employer-employee relationship, rather than some type of borderline condition after layoff. The payment of supplemental benefits is made to the unemployed worker by the trustee, not by his former employer. Obviously the worker performs no services for the trustee. The definition of remuneration is "all compensation paid for personal services." Therefore, it cannot be said that remuneration is paid to him [[Orig. Op. Page 5]] for services performed. The trust funds are not allocable to any particular period or any person and could be paid to any individual or none.
We must be cognizant of the basic purpose of the employment security program as expressed in RCW 50.01.010 where, in referring to economic insecurity due to unemployment, the Washington state legislature set forth this statement of policy:
"* * * Social security requires protection against this greatest hazard of our economic life. This can be provided only by application of the insurance principle of sharing the risks, and by the systematic accumulation of funds during periods of employment to provide benefits for periods of unemployment, thus maintaining purchasing powers and limiting the serious social consequences of relief assistance * * * and that this act shall be liberally construed for the purpose of reducing involuntary unemployment and the suffering caused thereby to the minimum."
We believe that the provisions of the Supplemental Unemployment Benefit Plan support the above stated purpose of the employment security program.
In summary, we base our opinion with respect to your first question on the following: First, under the supplemental plan the individual must be unemployed to receive benefits. There is no employer-employee relationship. Second, the Supplemental Benefit Plan is a supplement, not a substitute for unemployment compensation. Third, the payments are made by the trustee, not by the employing unit, and fourth, no service is performed for the trustee. In fact, the Plan is no different than a private insurance policy by the terms of which a signatory to the contract becomes eligible for certain benefits upon the future concurrent existence of conditions which may or may not arise.
For the above reasons, it is our opinion that receipt of supplemental unemployment benefits under the Plan will not effect a disqualification for, or a reduction of, unemployment compensation benefits payable to a claimant who is otherwise eligible under the Employment Security Act.
[[Orig. Op. Page 6]]
In answer to your second question, we wish to advise you that the employer is not liable to pay contributions upon moneys which he pays into the trust fund for the reasons set forth in our analysis of question number one. Contributions are based on wages and wages "for the purpose of payment of contributions * * * means the first three thousand dollars of remuneration paid by one employer during any calendar year to an individual in its employment * * *" (RCW 50.04.320). (Emphasis supplied)
We have determined that supplemental benefits under the plan are not remuneration. Therefore, they cannot be wages for the purpose of payment of contributions. Neither can the payments by the employer to the trustee be considered "wages" as the worker has no vested right, title or interest in such payments. Thus, your second question must also be answered in the negative.
Of considerable interest is the fact that the Attorneys General of Michigan, New Jersey, New York, Massachusetts, Pennsylvania and California have construed comparable statutes and have published official opinions on this question, each of which concludes that supplementation is permissible. In Delaware, based on similar statutes, the Unemployment Compensation Commission counsel has issued an opinion to the same effect, and the Attorney General of the State of Connecticut, in an official opinion, has reached a like conclusion.
We have referred to the statutory definition of "an unemployed individual" which includes the term "remuneration." In at least four of the above states, the statutory definitions of those terms are fundamentally the same and were decisive factors in the opinions issued.
We hope that the foregoing will be of assistance to you.
Very truly yours,
PAUL J. MURPHY
Assistant Attorney General