Marquette Cement Manufacturing Co. v. Younkins

Henderson, C. J., delivered the opinion of the Court. This appeal is from an order reversing a decision of the Board of Appeals of the Maryland Department of Employment Se ¹¹⁸ curity. The Board had held that vacation payments made to the appellees by their employer, Marquette, constituted wages, and hence that they were not entitled to unemployment benefits for the two weeks in issue. The facts have been stipulated and may be briefly stated.

The plant was closed from February 11, 1962, to March 18, 1962, and the 216 cement production employees, including the appellees, did not work. The shutdown was due to a decline in sales and a lack of storage facilities, and the necessity of reducing inventories. In the applicable labor-management contract, executed by the Company and the appellees’ union, it was provided that “the management shall designate the vacation period and the number of men on vacation at one time.” A supplemental agreement dealt with vacations to be given generally, and it covered the case where “it becomes necessary to shut down the operation of a plant, due to business conditions.” Each of the appellees was entitled, by reason of seniority and hourly rate of pay, to three weeks of vacation, and in accordance with the terms of the contract and supplemental agreement, the work weeks ending February 17, 1962, and February 24, 1962, were designated by the company as their vacation periods. Payments were duly made for those periods, but the appellees filed claims for unemployment benefits as well.

Code (1957), Art. 95 A, sec. 20, under the sub-title “Definitions”, provides in part: “As used in this Article, unless the context clearly requires otherwise: * * * “(1) ‘Unemployment’. An individual shall be deemed ‘unemployed’ in any week during which he performs no services and with respect to which no wages are payable to him * * *. “(n) Wages means all remuneration for personal services * * *; provided that the term ‘wages’ shall not include: * * * “(10) Vacation pay earned or accumulated to the credit of the individual, paid or payable at the time of layoff or separation from employment.” 1 ¹¹⁹ It is agreed by both sides that the clause is applicable in the instant case. The Department of Employment Security adopted a regulation in 1961 covering vacation pay, in which it sought to minimize the effect of section (n)(10) by providing that vacation pay should not constitute wages if “paid at a time when the employment relationship is actually severed or at a time when the individual, in fact, is not employed by the employer