We’ve worked long and hard in this State to fix the workers’ compensation system that was such a deterrent to businesses moving in or staying here in West Virginia. I don’t hear nearly as much from my clients about that system anymore. Now, I believe we have another system that needs some attention if we are, as the saying goes, really open for business.

The general rule, and one that most employers count on until their lawyer brings them the bad news or they found out after contesting such claims, is that striking employees are normally not entitled to unemployment compensation benefits. Employers understand that if the company bargains in bad faith and does not really try to reach an agreement, or if the company locks out workers to try and force concessions upon them, the workers are going to receive unemployment benefits during the strike or lockout and that economic shot in the arm will enable them to continue their struggle far longer than if they were not receiving these benefits. In effect, those employers will be subsidizing the strike against them through their payments to the unemployment compensation fund. 

What many employers can’t understand, however, is the relative ease with which striking employees can relieve themselves of the general disqualification from receipt of these benefits. What these employers and I have a hard time with – and what has ultimately cost the jobs of many workers, either by plant closing or relocation – is awarding benefits to striking employees on the theory that (i) those employees are forced to accept wages and benefits below local standards without consideration of the competitive position of the company in its industry, or (ii) the strike has not created a “work stoppage” when the company is able to carry on its operations in full or in part, even at considerable hardship and/or expense. 

In the first situation, workers can obtain unemployment compensation benefits if they can show they are being forced to accept wages and other terms and conditions of employment substantially less favorable than those prevailing for similar work in the locality. Often, the union will simply parade out a number of collective bargaining agreements from the largest and highest paying companies in the local area where there might be similar type work and argue that if the workers on strike were not offered comparable wages and benefits in their contract negotiations, they should receive unemployment benefits. The term “substantially less favorable” somehow gets lost in the application of this provision. An employer can counter to show that its offer was above what some other companies with similar type jobs in the area pay and argue that the “area standard” is below its own wage and benefit level. 

However, what if its major competitor(s) is outside the local area and pays considerably less than the struck employer?  In a case with which I am familiar, the main competitors for a local business were in Virginia, a right-to-work state, and paid far less in wages and benefits than the local company even before the strike. The local business did not ask for concessions but only asked the workers to reduce their demands so as not to further expand the competitive advantage of the Virginia companies. They refused, went on strike to enforce their demands for ever increasing wages and benefits, and received unemployment benefits because their wages were not as high as the larger plants in the area, even though there were other plants with lower wage and benefit structures operating under union contracts in the area. The wages of the Virginia plants were irrelevant since they were outside the “local area.” Now the company was faced with a dilemma; either match the highest paying labor contracts in the area, regardless of the company’s competitive position in its industry, or risk a strike where strikers would receive benefits underwritten by the company’s own payments to the state’s unemployment compensation fund. Of course, the union was fully aware of the employer’s predicament and, in turn, could up its demands at the negotiating table, knowing that if the employees went on strike, the strikers would receive supplemental income that would greatly lessen the economic impact of the strike on them. The company realized that its chances of remaining a competitive force in its industry were dim under such a dilemma and simply decided it did not need to do business in West Virginia anymore. It not only closed the plant, but two other in-state plants as well. Fortunately, because it was part of a larger corporate group, this company had a choice and chose to shift its business to other plants outside of West Virginia in order to survive. A small local business in the same situation would have no real option; it could only bleed to death over time or close up now.

In the second situation, the myth about no “work stoppage” existing when an employer is able to continue its business in the face of a strike presents an equally untenable choice. If the employer maintains its business during the strike to keep its customers, it risks having the strike funded by the State thereby prolonging the employees’ ability to stay on the picket line. If it doesn’t try to maintain operations, it risks the permanent loss of business from which it may never recover. 

In another case, an employer worked its management people and a few temporary workers 12 to 14 hours shifts for more than a month during a strike to make sure that all orders were shipped and none of its customers took their business elsewhere. The company wasn’t pressing concessions across-the-board during contract negotiations; the dispute centered on how much of the huge increase in health insurance premiums would be picked up by the company. The union, of course, wanted the company to pay it all and the company looked for some relief even though it would have to pay substantially more under any proposal. Typical strike and typical situation where workers are generally disqualified, right? Wrong! Lo and behold, because management worked so hard to keep product moving to its customers so as not to interrupt their businesses, the strikers received unemployment compensation benefits. The next contract, the union made even bigger demands and went on strike when the employer refused them. However, armed with their experience from the last strike, management this time simply walked away and let the plant go until the workers got ready to come back to work. Unfortunately, many orders did not get filled and customers looked for new suppliers who did not have unions or the risk of strikes. Many of those customers did not come back and many of the ones that did found new sources of supply as the next labor contract neared its end. Although a successor agreement was negotiated without a strike, it was too late; all the business was gone and was not coming back. The company tried bankruptcy but was never able to recover.

What happened in these situations was that the State stepped in to relieve striking workers of the consequences of their strike for the short haul but those same workers ultimately lost their jobs permanently because of the environment that permitted such results. I wish, then, that the legislature would look at the big picture here and make the following changes to the unemployment compensation system relating to strikes:

1. Include with the “substantially less favorable than those prevailing for similar work in the locality” measure an alternate consideration of wages and benefits paid by direct competitors outside the local area. Employers in West Virginia cannot long survive if they are penalized by State subsidized strikes where they match what the out-of-state competition is paying even though that may be lower than what non-competing plants and businesses in the area pay. I’m not asking that strikers be disqualified if the struck employer doesn’t even match the competition, but if it does the strikers should not look for benefits under this theory. Otherwise, that employer can only hope the union will reduce its demands to match the competition, something that generally evokes the, “That’s your problem” response at the bargaining table.
    
2. Don’t penalize a business that successfully keeps its operations going in the face of a strike by awarding benefits to strikers. If the employer is unfair, in that it bargains in bad faith and, in effect, forces the workers to strike, or if it locks them out to force concessions, workers are going to get unemployment benefits by way of other provisions in the law. But if those workers are being unfair, asking the employer to pay above what the competition is paying, or making otherwise unreasonable demands, why should they get benefits if the company tries to maintain its business during their strike? By maintaining its operations, the company is hoping those customers will still be there after the strike and their business will provide jobs for the striking employees. If the struck company can’t fill orders or provide the services those customers demand, they are forced to find alternate sources that can lead to new long-term relationships, leaving the struck employer without many of its former customers.
    
3. Provide some advance notice of the theory that striking workers will use at the Appeal Tribunal hearing to support their claim. There are at least four separate and distinct theories that striking employees can use to relieve themselves of the disqualification from benefits; (i) forced to accept wages substantially below area standards; (ii) locked out to force concessions from them; (iii) denied the right of collective bargaining by the employer’s bad faith bargaining; and (iv) employer did not suffer a work stoppage as a result of the strike. Each defense is separate and distinct and requires different facts and perhaps even witnesses to present. Unfortunately, as the system works now, an employer must show up at the hearing prepared for anything and everything. If strikers or their representative had to declare their theory when applying for benefits, the employer could save considerable time and expense in preparing for the hearing. That’s not asking for too much, is it?

 That’s my wish for the New Year – I hope all yours come true.