Smith v. Albion

Taylor, J.

Claimants appeal as of right the circuit court order reversing the decision of the Michigan Employment Security Commission Board of Review. Claimants also challenge the order granting change of venue and denying their motion to dismiss or motion for summary disposition. Respondent asserts on appeal that this entire matter is preempted by federal law, § 301 of the Labor-Management Relations Act, 29 USC 185. We affirm.

At issue in this appeal is whether claimants’ vacation pay disqualified them for unemployment benefits during respondent’s two-week shutdown. The underlying facts of this case are undisputed. Claimants are members of the United Auto Workers employed by Hayes Albion. For the period relevant to this appeal, claimants were covered by a collective bargaining agreement with Hayes Albion that took effect May 20, 1985. This collective bargaining agreement provided in pertinent part:

90.0 Vacation Allowance
All employees who are covered by this Agreement who will be on the seniority list as of June 1, 1985 or December 31, 1985 and each June 1st or December 31st of each subsequent calendar year during the term of this Agreement shall be entitled to a vacation or pay in lieu of vacation based on the previous year’s gross earnings, excluding vacation pay of the previous year, in accordance with the following schedule:
*85Years of Seniority % of Pay Vacation
One but less than three 4% 2 weeks
Three but less than five 5% 2 weeks
Five but less than ten 6% 3 weeks
Ten but less than fifteen 7% 3 weeks
Fifteen but less than twenty 8% 4 weeks
Twenty or more 9% 4 weeks
a. The spouse of an employee who dies will receive the vacation payment due the employee at the time of the employee’s death.
b. Employees who have five or more years of seniority as of the current vacation date will be allowed to receive pay for the amount of vacation to which the employee is entitled. Vacation pay for such employees will be available on February 15th.
c. Employees retiring after 1/1/86 will receive payment of all vacation pay due as of their retirement date.

In short, ¶ 90.0 provides that employees are entitled to vacation or pay in lieu of vacation based on the previous year’s gross earnings. The number of weeks of vacation depends on the employee’s years of seniority. This subsection also provides that vacation pay will be available on February 15 of each year.

The agreement further provides:

91.0 Scheduled Vacation Week
Vacation pay will be available at the end of the week immediately preceding a scheduled vacation, except as outlined in 90.0 above, or employees required to work during the Company’s scheduled vacation may have the option of receiving their check at a later date of their choice. Any employee who prefers a definite date for his vacation or part of his vacation shall notify the Company in writing, giving the time he prefers for his vacation prior to June 15. This request will be approved by *86the employee’s Supervisor. Final determination will be made by the Personnel Department. The Company may, however, schedule all vacations during a time the plant is shut down. Notice of such scheduling shall be posted prior to June 15. Vacations are to be taken in the calendar year in which the employee qualifies and shall not be cumulative from year to year except that if the employee’s approved vacation is cancelled at Company request, it may extend into the next calendar year.

Pursuant to ¶ 91.0, respondent has the right to schedule all vacations during the time the plant is shut down and notice of the shutdown will be posted before June 15 of each year.

Hayes Albion scheduled a two-week plant shutdown for June 30, 1986, through July 11, 1986, and posted notices of this shutdown on June 9, 1986, pursuant to the requirements of the collective bargaining agreement. The notice indicated that earned vacation time and pay would be allocated to the shutdown period, and that the allocation of the vacation time may render the employees ineligible for unemployment benefits. Several Hayes Albion employees filed claims for unemployment benefits for this two-week period, which claims were either denied or never received, and eventually the parties agreed to consolidate all the claims in the present case.

After a hearing before a referee, in which the referee found that claimants were not entitled to unemployment benefits because the collective bargaining agreement gave respondent the right to allocate vacation pay to a specific period, this matter was appealed to the board. The board found that, because the claimants under the collective bargaining agreement retained the right to elect to receive pay in lieu of vacation, the com*87pensation they received on February 15, 1986, and in June 1986, were bonuses that would not result in their ineligibility for unemployment benefits during the period of the shutdown.

The Michigan Employment Security Commission (mesc) was added as a party appellee by stipulation on February 21, 1992. Both respondent and the mesc filed an application for rehearing, which the board denied in a two-to-one decision. The board determined that

[t]he test for distinguishing vacation pay from bonuses is whether the employer had the contractual authority to designate a period of layoff for the allocation of vacation pay. Where the employee possesses the option to take payment in lieu of vacation, the employer’s allocation of payments will be treated as a bonus. . . . The determining factor is not whether the employer has the sole discretion as to when the vacation will be taken, but rather, whether the employer has the sole discretion to determine that vacations will be taken instead of payment in lieu of vacation. [Emphasis in original.]

The dissenting member of the board opined that, although the employees had the option to take payment in lieu of vacation pursuant to ¶ 90.0 of their contract, that option was extinguished when the employer scheduled a shutdown and declared that period to be a period of vacation pursuant to ¶ 91.0 of their contract. In essence, the dissent concluded that, because the contract in the instant case did not designate the period for the payment, the employer could, and did, properly designate the shutdown as the vacation period. Thus, the payments made in February and June 1986 became remuneration for the shutdown period in accordance with MCL 421.48(2); MSA 17.552(2).

*88Respondent appealed the board’s decision to the circuit court, but erroneously filed its appeal in Clinton County rather than Calhoun County. To correct this, respondent filed a motion to change venue, and claimants filed a motion to dismiss or for summary disposition for lack of jurisdiction. The Clinton Circuit Court granted respondent’s motion to change venue and denied claimants’ motion to dismiss, thus transferring the case to Calhoun County.

The Calhoun Circuit Court conducted a hearing regarding respondent’s appeal from the board’s decision, finding that footnote 8 in Brown v LTV Aerospace Corp, 394 Mich 702, 710; 232 NW2d 656 (1975), accurately stated the law in this area:

[I]f the employee possesses the option to take payment in lieu of vacations, then the employer’s allocation of funds will be treated as a bonus and the employee is eligible for receipt of unemployment compensation benefits. However, if the employer retains sole discretion, then allocation by the employer will be treated as disqualifying vacation pay if the other requirements of [MCL 421.48; MSA 17.552] are met.

Applying this law, the court found that the contract language contained in ¶ 91.0 provided the authority to the employer contemplated in the Brown case. Accordingly, because the contract authorized respondent to allocate vacation payments to the shutdown period, the court reversed the decision of the board.

As an initial matter, claimants argue that the trial court lacked jurisdiction because the appeal of the board’s decision was filed in the Clinton Circuit Court and the change of venue was ordered after the thirty-day jurisdiction period, contrary to MCL 421.38; MSA 17.540. We disagree.

*89MCL 421.38; MSA 17.540 is a venue statute, not a jurisdictional statute. Before its amendment in 1975, § 38 expressly dealt with jurisdiction. Peplinski v Employment Security Comm, 359 Mich 665, 668; 103 NW2d 454 (1960). However, the Peplinski Court expressed its displeasure with the review procedures under § 38 and suggested that corrective legislation would be appropriate to avoid the harsh result of dismissal due to filing in the wrong court. Id. at 669; Brown, supra at 719. In 1975, the Legislature amended the statute, removing the phrase "shall have power to review” and replacing it with "may review.” Our dissenting colleague’s position that this amendment merely made "minor grammatical changes” is inconsistent with the rules of statutory construction.

A change in a statutory phrase is presumed to reflect a change in the meaning. People v Pigula, 202 Mich App 87, 90; 507 NW2d 810 (1993); In re Childress Trust, 194 Mich App 319, 326; 486 NW2d 141 (1992). We presume that the Legislature acts with knowledge of appellate court statutory interpretations. Gordon Sel-Way, Inc v Spence Bros, Inc, 438 Mich 488, 505; 475 NW2d 704 (1991). Given the Peplinski Court’s focus on the phrase "power to review,” which it held to be language of jurisdiction, the Legislature’s deletion of thát phrase in the 1975 amendment indicates its intent to remove the jurisdictional aspect of § 38 relating to filing in the wrong court. We further note here that the dissent’s reliance on Gunderson v Rose Hill Realty, 136 Mich App 559; 357 NW2d 718 (1984), is misplaced. The dissent cites Gunderson for the holding that "the language of § 38 was jurisdictional in nature.” This is incorrect because the holding in Gunderson relates only to the time limits provided for in § 38. The Court held, unremarkably, that failure to file within the allowed *90time is jurisdictional. The Gunderson determination does not address the implications of the place of filing. It is that issue this case addresses and, thus, Gunderson is inapposite.

Accordingly, we conclude that the Legislature, mindful of the Peplinski Court’s suggestion, amended §38 to correct the perceived harshness by eliminating the words of jurisdiction from the section. Claimants’ contention that the trial court lacked jurisdiction is without merit, and § 38 should no longer be construed as a jurisdictional statute.

The substantive issue to be addressed on appeal is whether the February 15, 1986, and June 1986 payments constituted bonuses, or whether the payments were properly allocated to the shutdown period and, thus, constituted vacation pay, making claimants ineligible for unemployment benefits. Resolution of this issue requires careful examination of § 48 of the Michigan Employment Security Act, MCL 421.1 et seq.; MSA 17.501 et seq.

MCL 421.48(2); MSA 17.552(2) provides in pertinent part:

[Ajmounts paid to the claimant ... for a vacation . . . shall be deemed remuneration ... for the period designated by the contract or ... by the employing unit.

In this case, ¶ 90.0 of the collective bargaining agreement outlines the method of calculation and eligibility for vacation pay, but does not address the employer’s control over when vacation time will be scheduled. Paragraph 91.0, however, does address the employer’s control over scheduling vacation time, stating that the company may schedule all vacations during a time the plant is shut down, assuming proper notice is given. Con*91trary to claimants’ position, the fact that the vacation time and vacation pay are in separate paragraphs of the contract does not preclude respondent from designating the specific period to which the pay is allocated. Section 48(2) does not require that time and pay provisions be in the same paragraph for an employer to invoke the authority the statute gives it. Accordingly, we agree with the circuit court’s conclusion that the board’s decision was contrary to law. Both the plain meaning of § 48 and our prior Supreme Court case interpreting it support the circuit court’s decision. MCL 421.38(1); MSA 17.540(1); Brown, supra.

Finally, we reject respondent’s assertion that claimants’ action is preempted by § 301 of the Labor-Management Relations Act, 29 USC 185. Pursuant to Betty v Brooks & Perkins, 446 Mich 270, 279-280; 521 NW2d 518 (1994), we conclude that this matter is not preempted inasmuch as resolution of the claim does not require an interpretation of the collective bargaining agreement. Id. Further, we note that this state has a long history of deciding the eligibility of employees to collect unemployment benefits in conjunction with their collective bargaining agreements. See, e.g., Brown, supra; Renown Stove Co v Unemployment Compensation Comm, 328 Mich 436; 44 NW2d 1 (1950); Hubbard v Unemployment Compensation Comm, 328 Mich 444; 44 NW2d 4 (1950). These cases are, of course, consistent with Betty, supra. Therefore, we hold that § 301 does not preempt claimants’ state-law claims, and the mesc and our state courts had jurisdiction to determine the issues presented.

Affirmed.

Markey, J., concurred.