This is a compensation case involving striking employees. The judgment appealed from set aside an order of the Industrial Commission awarding unemployment compensation. The commission deputy's initial determination held the employment was terminated on September 10, 1958, and the striking employees were eligible for unemployment benefits after that week. The appellate tribunal affirmed the commission deputy's initial determination on the ground the employer's action in permanently replacing the employees and its notification that it would no longer bargain with the union, of which the employees were members, constituted a discharge of the employees, their unemployment after the week 37 of 1958 (September 10, 1958) was not due to the strike and they were not disqualified from receiving unemployment benefits by sec. 108.04(10), Stats., after that week. The decision of the appellate tribunal was affirmed by the Industrial Commission.
The facts are not substantially in dispute. The defendants were production employees in the plaintiff's creamery and on June 22, 1958, left their jobs pursuant to a strike called by their union, General Drivers Helpers Union, Local 662, when it failed to negotiate a new contract. The day before the strike the employer posted a notice on the bulletin board of its intention to operate the plant regardless of any action which the union might take and urged all of its employees to continue work and stated the present wage and work schedules would be maintained. The notice further stated employees not reporting for work would be considered on strike and would be replaced and the employer reserved the right to agree with any replacement that his seniority and job tenure would be superior to any employee out on strike.
Out of the total of 39 production employees, 25 went on strike and 14 remained on the job. The employer immediately began hiring new employees. Negotiations between the employer and the union continued after the commencement of the strike until August 27, 1958. On September 10th the attorney for the employer wrote the following letter to the union:
"William A. Cameron "Howard W. Cameron
"September 10, 1958
"General Drivers Helpers Union, No. 662 "326 1/2 Bellinger Street "Eau Claire, Wisconsin "Re: Rice Lake Creamery Company
"Gentlemen:
"It has been apparent for some time that Local #662 does not represent a majority of the employees in the bargaining unit eligible to vote in any representation election. As you are aware, a substantial portion of our employees have continued to work notwithstanding the strike, and a substantial number of new employees have been hired on a permanent basis to replace the striking employees. Under the circumstances, we consider it grossly unfair to have a union, repudiated by the overwhelming majority of our employees, actually bargain for and represent these employees.
"You are informed, therefore, that, as of this date, the company will decline to recognize and bargain with Local #662 as the representative of the company's employees unless and until adequate proof is submitted that a majority of the eligible employees really want Local #662 to be their bargaining representative.
"Very truly yours, "Rice Lake Creamery Company "By /s/ Wm. A. Cameron
"WAC: me "cc to Rice Lake Creamery "cc to W.E.R.B."
During the course of contract negotiations in late August, one of the complainants, the union steward, was informed by the employer's attorney that while his job had been eliminated, the claimant, after the strike had terminated, could apply for another job but the claimant was not fired or laid off and he could apply to the plant if he wanted to work.
On October 9th, one of the trustees for the employees' pension trust, who was also the attorney for the employer, by letter informed the striking employees who were participants in the trust, that the pension trust agreement provided in the event of termination of employment the trustees were required to transfer the policies of insurance to the participant. The letter continued that the participant had left the employ of the creamery on June 22d and was, therefore, entitled to receive the insurance policies issued to him under the terms of the agreement, and the trustees were not authorized to make any additional premium payments on the policies. The employees thereupon claimed their policies and executed releases, discharging the trustees.
On December 2d, the union steward and several of the defendants came to the employer's establishment and advised the bookkeeper the strikers were willing to go back as a group. They were informed they should make an application to an official of the employer who was in charge of the matter. The following day, the attorney for the employer addressed a letter to the union steward asking whether the December 2d application meant the strike was terminated and whether the picket lines would be removed. The letter continued:
"Question 2. Is this an offer by each of the individual former employees to return to work, or did you mean that they would return to work only if all of them were reemployed?
"From what has been told to me relative to yesterday's conversation, I would understand that you were acting only as spokesman for the group. If any of the former employees wish to make application, would you kindly have them do so, either to Harry Gerland or Irvin Gerland, and their application will be given consideration when and if jobs for which they are qualified are available."
Under date of December 19th, the union steward, on behalf of all the strikers, suggested to the employer, by a letter prepared by the union, that it seek the advice of the union as to whether the strike had been terminated and further stated, whether the union would continue picketing was a matter for the union to decide. The letter continued:
". . . all of the employees, individually and collectively, who are currently on strike, have applied to return to work. This application was made unconditionally and its unconditional offer still stands."
As far as the record shows, neither the union steward nor any of the striking employees applied for work after the receipt of the employer's letter of December 3d. The union steward testified he would not have returned to work on December 2d unless all of the strikers were taken back and that the December 2d offer to return to work was on an all-or-none basis.
The record discloses 19 of the striking employees are claimants in this action.
HALLOWS, J.
In Marathon Electric Mfg. Corp. v. Industrial Comm. (1955), 269 Wis. 394, 69 N.W.2d 573, 70 N.W.2d 576, this court held striking employees discharged during a strike were not ineligible to receive unemployment benefits by reason of sec. 108.04(10), Stats., stating, at page 407:
"108.04 ELIGIBILITY FOR BENEFITS. . . .
"(10) Labor dispute. An employee who has left (or partially or totally lost) his employment with an employing unit because of a strike or other bona fide labor dispute shall not be eligible for benefits from such (or any previous) employer's account for any week in which such strike or other bona fide labor dispute is in active progress in the establishment in which he is or was employed."
". . . when the legislature used the phrase `lost . . . employment with an employer because of a strike or other bona fide labor dispute' in sec. 108.04(10), Stats., it did not have in contemplation a situation where the relationship of employer and employee was completely terminated, but rather one in which the employee was performing no work for the employer. In other words, what was intended was not the loss of the status of an employee relationship but rather the loss of work."
In the course of the opinion, we stated, at page 408:
"The employer receives the full benefit of the protection of this subsection during the progress of the labor dispute so long as it does not take affirmative action to end the employee status of the employee. If it does elect to terminate such status during the progress of the labor dispute the reason for the affording of such protection disappears."
This construction of the statute was reaffirmed in Marathon Electric Mfg. Corp. v. Industrial Comm. (1958), 4 Wis.2d 162, 89 N.W.2d 785, and Fredricks v. Industrial Comm. (1958), 4 Wis.2d 519, 91 N.W.2d 93.
The question presented in this case is whether the employer has taken such affirmative action to end the employee status of the defendants during the progress of the strike as would amount to an election to terminate completely such status for the purpose of applying the Unemployment Compensation Act. If the employer has done so on the facts of this case, then the ineligibility to receive unemployment benefits provided by sec. 108.04(10), Stats., does not apply to the defendants because their loss of employment was not due to the strike but to the action of the employer in discharging or terminating the employee status of the defendants which continued after the commencement of the strike.
The appellate tribunal found the employer's action in permanently replacing the employees and its notification it would no longer bargain with the union constituted a discharge. We hold that replacing striking employees during the progress of a strike with permanent employees is not in and of itself, as a matter of law, a termination of the employment status or a discharge of the striking employees. Something more on the part of the employer is required. No statutory authority exists in the Unemployment Compensation Act that employees on strike replaced by others on any basis are discharged. Such a result is necessary in the absence of a specific discharge because it is impossible to determine with any certainty until the economic strike is over the identity of those strikers who will offer to return to work and which of those who offer will not be accepted by the employer. Employment status under the Unemployment Compensation Act is not defined in terms of the specific work which is being done by an employee, but rather, in terms of a status or relationship. See Marathon Electric Mfg. Corp. v. Industrial Comm., supra. If the replacing of a striker by a new employee was an automatic discharge of the striking employee, then in this case and in most cases, no one date could be normally determinative of the discharge of all strikers. Here, the record shows replacements were made immediately after the commencement of the strike and continued to December 2, 1958. Furthermore, if replacement were considered a discharge during the strike, the employer would be forced to finance the strike to the extent such discharged employees received unemployment benefits and this would be in contravention to the neutrality purpose of the act.
The case of Knight-Morley Corp. v. Employment Security Comm. (1958), 352 Mich. 331, 89 N.W.2d 541, cited by the appellants, is not a replacement but a discharge case. There, the employer informed the employees if they went out on strike they were fired and replacements would be hired. The next day a letter was sent by the employer to all striking employees stating unless they returned to work on October 5th the employer would consider they had quit their jobs and would replace them. On that date, the employer pulled from the timecard rack their employment cards, the striking employees' names were removed from the company's payroll, and the group life insurance policies and their hospital and surgical insurance plans were canceled. The employer undertook to hire replacements as rapidly as he could secure them. A public announcement in the newspaper was made by the employer, stating the striking employees were no longer employees of the company and those employees seeking to return to work after the given date would be refused employment. Thereafter, the employer took the position in union negotiations that such negotiations would cover only the employees then on the job and not those on strike. These facts are quite different from the instant case. Neither do we consider Rainfair, Inc., v. Cobb (1958), 229 Ark. 37, 312 S.W.2d 906, Ayers v. Nichols (1955), 244 Minn. 375, 70 N.W.2d 296, nor Greene v. Department of Industrial Relations (1955), 38 Ala. App. 199, 83 So.2d 360, as holding an employer who permanently replaces his striking employees thereby elects to terminate their employee status. While there is some language in those cases indicating such a principle, the cases do not hold the proposition that replacement per se terminates the employee status of a striking employee during the strike for unemployment compensation purposes.
This is an economic strike and admittedly the employees have a right to strike, but likewise the employer has a right to attempt to keep his business going by hiring replacements. Nor is it an unfair labor practice to replace striking employees with others in an effort to carry on business. The employer did not under the National Labor Relations Act lose the right to protect and continue his business by hiring replacements and such employer is not bound to discharge the replacements upon the election of the striking employees to resume their employment in order to create places for them. Likewise, the employer can assure those who accept employment during the strike that if they desire, their places will be permanent. National L. R. Board v. Mackay Radio Telegraph Co. (1938), 304 U.S. 333, 58 Sup. Ct. 904, 82 L.Ed. 1381. The rule is stated in Textile Workers Union of America v. Arista Mills Co. (4th Cir. 1951). 193 F.2d 529, 534, as follows:
"The law is well settled that, in case of an economic strike, the employer has a right to continue his business by employing new men for the jobs left by the strikers and is not bound to discharge them and take strikers in their places when the strike is ended."
See also Great Southern Trucking Co. v. National L. R. Board (4th Cir. 1942), 127 F.2d 180; Pacific Gamble Robinson Co. v. National L. R. Board (6th Cir. 1950), 186 F.2d 106.
In the case of replacement of striking employees with other workers when there is no affirmative action on the part of the employer to discharge any particular striker, it would seem that discharge or termination of the employee status of the strikers for the purpose of unemployment compensation should not and cannot be determined until the active progress of the dispute had ended. Then those striking employees offering to return to work, but not accepted by the employer, become eligible for unemployment benefits on the theory that at that time they are discharged, their employee status terminated and, consequently, their unemployment from actual work or service is then no longer attributable to the strike.
This brings us to the issue of whether the letter of September 10, 1958, and its transmittal to the union constituted affirmative action amounting to a discharge terminating the employer-employee relationship during the course of the strike. The circuit court held there was no credible evidence to support the finding of discharge. We are of the opinion the determination of the Industrial Commission was a conclusion of law not binding on this court and, if the determination is considered to be one of fact, it is not supported by the evidence.
In Tesch v. Industrial Comm. (1930), 200 Wis. 616, 621, 229 N.W. 194, the court stated the rule, as suggested in Weyauwega v. Industrial Comm. (1923), 180 Wis. 168, 192 N.W. 452, as follows:
"`Whether a finding is an ultimate fact or conclusion of law depends upon whether it is reached by natural reasoning or by the application of fixed rules of law.' That is, where the ultimate conclusion can be arrived at only by applying a rule of law, the result so reached embodies a conclusion of law and is not a finding of fact."
Citing Tesch, Mr. Justice CURRIE in Gant v. Industrial Comm. (1953), 263 Wis. 64, 69, 56 N.W.2d 525, stated, on behalf of the court, "the adjudication of whether an employer and employee relationship existed is the `ultimate conclusion as to liability' and therefore constitutes a conclusion of law even though it may have been labeled a finding of fact by the commission."
The evidence requires a conclusion of law that the letter of September 10th was not a discharge within the meaning of the Unemployment Compensation Act; and it does not support a finding of fact of discharge. Ordinarily a discharge of an employee is an unequivocal unilateral act of the employer, leaving no shred of doubt of his intention. Such were the facts in the two Marathon Cases, but not here; and resort must be had to the conduct of the employer and the employees prior and subsequent to September 10, 1958, to determine whether the employee status as such was terminated within the meaning of sec. 108.04(10), Stats.
The conduct of the employee is material in this respect. In Meyer v. Florida Industrial Comm. (Fla. 1959), 117 So.2d 216, the employer told the employee she was discharged because she joined a strike, but she thereafter refused to consider herself permanently discharged and pursued a claim for reinstatement. The court held there was no discharge and the employee was not entitled to unemployment compensation since her actions were inconsistent with a termination of the employment status.
Here, the employees' action in waiting until December 2d to make an application for unemployment benefits based on an alleged discharge of September 10th is significant. The evidence, however, is best considered in chronological order. The announcement to replace the strikers in order to keep the employer's establishment and business going does not necessarily mean the employer is at some future time going to discharge all the strikers as contended by the employees, but was a notice the employer was going to try to keep its business operating. Replacement is not the equivalent of discharge during an economic strike nor an unfair labor practice under the National Labor Relations Act. The letter of September 10th was explained by the employer's attorney, Mr. Cameron, as being addressed to the union, not the employees, as it dealt solely with the relationship of the employer and the union in regard to the right of the union to continue as a bargaining representative. The last negotiation with the union was on August 27th. He acknowledged the strikers were still employees by stating, "it in fact does not mean that they were not employees. They were striking employees on September 10th."
A copy of the letter was sent to the Wisconsin employment relations board. The question of the union's status as a bargaining representative has not been determined and that issue is not before this court and should not be determined by any implication of this case. The letter of September 10th must be construed in the context of the strike as concerning only the relationship of the employer and the union and the union status as a bargaining representative. It was sent to the union and the Wisconsin employment relations board, not the employees. This apparently was the understanding of the union at that time. The record contains no evidence the union notified the striking employees they were discharged. No claimant testified he thought or considered himself discharged on September 10th. The striking employees did not file an application for unemployment benefits until after the union steward and other claimants applied to return to work on December 2d on an all-or-none basis.
It is true, in the employer's letter of December 3d the term "former employees" was used. This, the employer admits, was technically incorrect. Obviously, the union and the claimants took the same position. They did not recognize the letter of September 10th as a discharge and in the responsive letter of December 20th, prepared by the union and sent by the steward, the offer was "to return to work by all striking employees" and reiterated that "all of the employees, individually and collectively, who were currently on strike, have applied to return to work." This is an inconsistent position. If the claimants were striking employees offering to return to work on an all-or-none basis, they were not discharged on September 10th as they now claim. The employer, in his return of December 6th to the claim of the union steward for unemployment benefits, answered that the applicant had left employment on June 22d because of a labor dispute.
It is contended the trustees' letter of October 9, 1958, to the strikers who were participants in the pension trust, supports the construction that they were discharged on September 10th. This letter referred to the addressees leaving the employ of the creamery on June 22, 1958, the day of the strike. It also stated the pension trust agreement provided that in the event of termination of employment, the trustees were obligated to execute the necessary papers to transfer the insurance policies to the participants. The pension plan is not in the record and we do not know the definition of the term "termination of employment" as used in the plan. From the letter, it would mean termination of service or work, not necessarily status for the purpose of the pension plan. The reference to June 22d would require such an inference and forbids an interpretation that a discharge took place on September 10th.
We can come to only one conclusion, namely, the employer did not intend by the letter of September 10th to discharge and the letter did not discharge the striking employees within the meaning of the Unemployment Compensation Act.
By the Court. — Judgment affirmed.