Sears, Roebuck & Co. v. Stewart

PATROSSO, J. pro tem.* Defendant, the Director of the Department of Employment of the State of California, appeals from a judgment in favor of the plaintiff in an action for refund of assessments made by the defendant against the plaintiff for unemployment compensation benefits paid by the appellant to 11 former employees of the plaintiff.

The facts are undisputed and the question presented is purely one of law which may be thus stated: Were the former employees of the plaintiff in question covered by and entitled to benefits under the plaintiff’s voluntary plan providing unemployment compensation disability benefits for its employees by reason of disability sustained by them at a time following their discharge or resignation from plaintiff’s employ?

At the time of their discharge or resignation each of these employees was entitled to and received from the plaintiff an amount representing accrued vacation pay and/or service pay.1 Following such resignation or discharge but during a period of time commencing with the day after the day of such discharge or resignation and continuing for the number of days for which his vacation pay or service pay, alone or in combination, was paid, each of such former employees incurred disability within the meaning of the Unemployment Insurance Code.

Pursuant to the provisions of sections 3251-3271 of the Unemployment Insurance Code, hereinafter referred to as the Code, the plaintiff, with the approval of the Director of the Department of Employment, adopted a voluntary plan for the payment of disability benefits to its employees. This plan as it existed during the period with which we are here [795]concerned contained, among other things, the following provisions :

“D. Disability Benefits : Any employee while covered under this plan who becomes disabled by any physical or mental illness or injury, except as hereinafter excluded, so as to prevent him from performing his regular or customary work, shall be paid benefits for the period of such disability by this plan as set forth in the following schedule, subject to limitations and provisions hereinafter stated”:

“G. Individual Termination : The participation of any employee under this plan shall terminate: 2. Any employee who ceases to be employed because of a leave of absence or layoff, without pay which extends for a period of two weeks or more; of [sic] because of resignation, dismissal, being pensioned or retired, shall cease to be covered by this plan at the end of such two weeks or upon termination of the employer-employee relationship by reason of resignation, dismissal, being pensioned or retired.”2