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Employment Development Department
Employment Development Department

Trade Dispute TD 5

Basic Principles

A. General

This reference provides guidance for those Department personnel involved in the first and/or second level fact finding and decision making process in trade disputes.

First level fact finding and decision making is the responsibility of the Area and Central Office Trade Dispute Specialists. The Field Office Trade Dispute Specialists may also be called upon for assistance. Additionally, our Legal Office is consulted on the more complex trade disputes.

In first level fact finding, the facts on the trade dispute are obtained by contacting the employer and union involved. The facts and the overall decision on the eligibility of the various categories of claimants are then issued to the field offices in the Trade Dispute Notice.

The primary purposes of this centralization of the fact finding and decision making process are to minimize Department contacts with the employer and union and to ensure consistency in the decisions issued.

In second level fact finding and decision making, the field office claims interviewer conducts the fact finding with the claimant (the determination interview) and issues the decision on the individual claimant, following the guidelines in the Trade Dispute Notice.

This reference provides guidance for both levels of the fact finding and decision making process; however, there are certain subjects which are of importance primarily to those individuals involved in the first level fact finding and decision making process. Such areas as deciding whether or not there is a trade dispute in existence within the meaning of Section 1262 and deciding whether or not a trade dispute has ended are entirely the responsibility of the Area and Central Office Trade Dispute Specialists. These specialists would also be expected to have a more in-depth knowledge of the other Federal and State laws, e.g., National Labor Relations Act, Agricultural Labor Relations Act, etc. The federal preemption argument discussed in TD 320 is a position sometimes taken by attorneys representing the union on appealed cases. The Area Trade Dispute Specialist or our Legal Office would normally present the Department’s position on this type of issue.

Those who are not involved in first level fact finding and decision making, however, should have an awareness of the subject matter so they may be able to logically follow the guidelines provided in the Trade Dispute Notice on the more routine type of questions from claimants, unions, and employers on individual claims actions.

B. Legal Provisions

CUIC Section 1262 states:

"An individual is not eligible for unemployment compensation benefits, and no such benefit shall be payable to him, if he left his work because of a trade dispute. Such individual shall remain ineligible for the period during which he continues out of work by reason of the fact that the trade dispute is still in active progress in the establishment in which he was employed."

Accordingly, Section 1262 provides that a claimant is ineligible for benefits under the following conditions:

Unlike the provisions of Section 1256, which provides that a claimant may establish good cause for voluntarily quitting a job, there are no good cause provisions in Section 1262. If a claimant is found to have voluntarily left the job due to a trade dispute, the claimant is ineligible for benefits.

CUIC Section 1262.5 states:

"Whenever the department learns that trade a dispute is in progress, the department shall promptly conduct an investigation and make investigation findings as to the nature, location, labor organization and employers involved, and other relevant facts concerning the trade dispute as it deems necessary. The department shall provide its findings to its field offices in locations affected by the trade dispute, and shall, upon request, make its findings available to any employer, employers’ association or labor organization involved in the trade dispute. The department’s investigation findings shall be based upon the information then available to it and shall not be a determination as to the eligibility of any claimant for benefits under Section 1262."

Accordingly, CUIC Section 1262.5 provides the Department shall:

C. Definition of a Trade Dispute

The term "trade dispute" is not defined in the UI Code. In PB 24, the Board provided the following definition as contained in the Norris-Laguardia Act:

"The term "labor dispute" includes any controversy concerning terms or conditions of employment, or concerning the association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of employment, regardless of whether or not the disputants stand in the proximate relation of employer or employee."

The Board, in PB 24, also stated:

"The term "labor dispute" is a broad one and may be properly applied to any controversy which is reasonably related to employment and to the purpose of collective bargaining (Benefit Decisions Nos. 5527 and 5719). It is broader than "strike" or "lockout" (Benefit Decision 4838), and the existence of a trade dispute is not dependent upon the stoppage of work . . . ."

Accordingly, the following factors must be present for the Department to declare the existence of a trade dispute:

The presence of pickets and/or a walkout does not necessarily indicate there is a trade dispute. It is not uncommon for unions to establish "informational" picket lines. An "informational" picket line is established for the purpose of advising the public the employer does not have a union contract or is selling goods produced by a struck or nonunion employer. There are no negotiations between the union and the employer concerning terms and conditions of work. The union has not presented demands to the employer. An "informational" picket line, by itself, would be an insufficient basis to conclude there is a trade dispute. Accordingly, if a claimant refuses to cross an "informational" picket line, the claimant’s leaving of his/her job would be resolved under the voluntary quit provisions of Section 1256.

D. Most Recent Work

Unlike Section 1256 which limits a disqualification only to a separation from the claimant’s most recent work prior to the filing of a claim, a disqualification under Section 1262 may be assessed even though the trade dispute employer is not the claimant’s most recent employer.

Section 1262 may be applied to any work the claimant left because of a trade dispute if the claimant continues to be out of work because of the trade dispute. E.g., claimant leaves a job because of a trade dispute and later obtains stopgap temporary work which lasts four days and is laid off due to lack of work. He then files a claim for benefits. Although the temporary job was his most recent work, the claimant would be subject to disqualification under Section 1262 for leaving the prior job due to a trade dispute. It is possible to purge a trade dispute disqualification with bona fide subsequent work; however, in this case, the temporary work was stopgap and therefore did not serve to purge the disqualification. The purging of trade dispute disqualifications is discussed in TD 370.

E. Department’s Neutral Position

The Department will not intervene in a trade dispute, nor in any way try to settle the dispute, or make any decision as to who is at fault. No decision of the Department as to whether a certain claimant is eligible or disqualified will be predicated on the merits of the trade dispute.

The California Supreme Court touched on this matter in the Grace case, stating:

"It is not the function of the Commission (Department) to evaluate the merits of a controversy between an employer and his employees; if a trade dispute exists and the employee leaves his work because of it, he may not receive benefits even though his employer is in the wrong . . . ."

F. Theory of Agency

This discussion involves the effect of action taken by union officials which affect the eligibility for benefits of the individual members under the theory of agency. In this situation, the members of the union who are represented by their union official are bound by the actions of the union official. In some instances, the individual members of the union may not be aware of the union official’s action.

In BD 4615, the business agent of the claimants’ union was acting as their representative when he led the employer to believe the claimants would not work during the trade dispute. The employer had asked the union business agent if the members of the bakery drivers’ union would be willing to deliver bread produced by a bakery which was involved in a trade dispute with a union of the same national organization as the claimants’ union. The claimants’ business agent said the union members would not.

The Board held the claimants disqualified under Section 1262. The Board said:

"The preponderance of the evidence herein shows that the claimants’ failure to work . . . was the result of their acceding to the position asserted for them by their business agent. According to the evidence, he was empowered to act for them in dealings with their employer in matters concerning labor relations. The condition under which the employer desired the claimants herein to work . . . was a labor relation problem and a matter the agent was authorized to speak on for them with the employer. In the instant case, he clearly was acting in a responsible capacity on their behalf and as their representative when he, for all practical purposes, led the employer to believe that the claimants would not perform any work during the progress of a trade dispute . . .

The evidence herein further shows that the employer had arranged to provide work for the claimants prior to their next regular working day but did not do so when it became apparent that the claimants would not perform it. The product produced by the employer . . . was of a highly perishable nature and it would have been absurd to require the employer to manufacture its products to subject the claimants to a work test. Furthermore, the law does not require an idle act."

The McKinley court case is another prime example of the theory of agency. In this case, the employer association was negotiating a master contract with the union. During the negotiations, the employer representative informed the union official that strike action against one employer would be considered a strike against all employers in the association, i.e., if the union struck one employer, the other association employers would lock out the members of the union. Subsequently, one employer was struck and all other employers shut down within a few days. See TD 60 for further discussion of the McKinley case.

The court held that all members of the union were subject to disqualification under Section 1262. Although the individual members of the union may not have been aware that the union official had been forewarned that a strike against one would be considered a strike against all, they were, nevertheless, bound by the notice to the union official. The court held that once the warning was given to the union official, it was reasonably foreseeable that all of the union members directly involved would become unemployed when they decided to initiate strike action against the one employer.