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New York Telephone Co. v. New York State Department of Labor, 566 F.2d 388 (1977).

The payment of unemployment insurance benefits to strikers has long been a hotly contested political issue, with state legislatures producing a variety of statutory plans to resolve and regulate the area.' Some states flatly refuse to compensate employees who are direct participants in a strike, while others condition benefits on the employer's continued operations during the strike or on the employer's violation of the collective bargaining agreement. Strikers qualify for benefits in some states only if they are protesting hazardous conditions, have been laid off from a subsequent job, or are not in the grade or class financing the dispute.

The conflict has moved in recent years from the political arena to judicial forums, where state statutes which confer such benefits have been challenged on constitutional grounds. The challenges are premised on the contention that the payments, by providing strikers with an economic weapon, substantially disrupt the federal policy of free collective bargaining and thus are void under the supremacy clause., Challengers maintain that state provisions for strikers conflict with and are preempted by the national mandate of neutrality in the bargaining process. The Court of Appeals for the Second Circuit responded to the challenge in New York Telephone Co. v. New York State Department of Labor. The court found no evidence of preemption and thus upheld the constitutionality of New York's unemployment insurance provision for striking workers. In carving out an area of protected state activity, the decision reconciled a First Circuit formula for assessing the extent of preemption with the rationale from a recent and arguably distinguishable Supreme Court case. The result, which varies from the general pattern of preemption in labor-related areas and from prior cases overturning benefits to strikers, is indicative of a recent trend toward protecting state legislation which arguably falls within the federal purview.

Recent cases suggest a trend toward protection of state activity by the Court in areas other than labor preemption. In the area of labor preemption the Court has until recently tended to accord greater protection to federal policy. Whether a state unemployment compensation plan which includes striking workers conflicts with national labor policy will be decided by the Supreme Court, which has granted certiorari in New York Telephone.

Even if the .Court finds that New York's unemployment benefits statute is preempted by the federal policy, the Second Circuit's careful analysis will have served propitiously to frame for resolution a significant constitutional question. This note will analyze the reasoning underlying the New York Telephone decision, and other factors likely to be considered by the Court on review.

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