[327 U.S. 358, 359] Mr.Paul A. Sweeney, of Washington, D.C., for petitioner.
Mr. Ernest Goodman, of Detroit, Mich., for responde t.
Mr. Justice REED delivered the opinion of the Court.
A problem as to whether 'back pay,' which is granted to an employee under the National Labor Relations Act, shall be treated as 'wages' under the Social Security Act comes before us on this record. If such 'back pay' is a wage payment, there is also at issue the proper allocation of such sums to the quarters of coverage for which the 'back pay' was allowed.
The respondent, Joseph Nierotko, was found by the National Labor Relations Board to have been wrongfully discharged for union activity by his employer, the Ford Motor Company, and was reinstated by that Board in his employment with directions for 'back pay' for the period February 2, 1937, to September 25, 1939.1 The 'back [327 U.S. 358, 360] pay' was paid by the employer on July 18, 1941. Thereafter Nierotko requested the Social Security Board to credit him in the sum of the 'back pay' on his Old Age and Survivor's Insurance account with the Board. 2 In conformity with its minute of formal general action of March 27, 1942, the Board refused to credit Nierotko's 'back pay' as wages. On review of the Board's decision,3 the District Court upheld the Board. The Circuit Court of Appeals reversed. 149 F.2d 273. On account of the importance of the issues in the administration of the Social Security Act, we granted certiorari. 4 326 U.S. 700 , 66 S.Ct. 55; Judicial Code 240, 28 U.S.C.A. 347.
During the period for which 'back pay' was awarded respondent the Federal Old Age benefits were governed by Title II of the Social Security Act of 1935. 49 Stat. 622. As Title II of the Social Security Act Amendments of 1939 became effective January 1, 1940 (53 Stat. 1362, 42 U.S. C.A. 401 et seq.), the actual payment of the 'back wages' occurred thereafter. In our view the governing provisions which determine whether this 'back pay' is wages are those of the earlier enactment. 5
[327 U.S. 358, 361] Wages are the basis for the administration of Federal Old Age Benefits. 49 Stat. 622. Only those who earn wages are eligible for benefits. 6 The periods of time during which wages were earned are important and may be crucial on eligibility under either the original act or the Amendments of 1939. See sec. 210(c) and compare sec. 209 [327 U.S. 358, 362] (g), 53 Stat. 1376, 42 U.S.C.A. 409(g).7 The benefits are financed by payments from employees and employers which are calculated on wages. 8 The Act defines 'wages' for Old Age benefits as follows:
Sec. 210. When used in this title-
The tax titles of the Social Security Act have identical definitions of wages and employment. 9 An employee under the Social Security Act is not specifically defined but the individual to whom the Act's benefits are to be paid is o e receiving 'wages' for 'employment' in accordance with 210( c) and employment is service by an 'employee' to an 'employer.' Obviously a sharply defined line between payments to employees which are wages and which are not is essential to proper administration. 10
Under the National Labor Relations Act an employee is described as 'any individual whose work has ceased ... because of any unfair labor practice.' Sec. 2(3), 49 Stat. 450, 29 U.S.C.A. 152(3). The enforcement provisions of this Act under which Nierotko received his 'back pay' allow the Labor Board to reinstate 'employees with or without back pay.' Sec. 10( c). The purpose of the 'back pay' allowance is to effectuate the policies of the Labor Act for the preservation of industrial peace. 11
[327 U.S. 358, 364] The purpose of the Federal Old Age Benefits of the Social Security Act is to provide funds through contributions by employer and employee for the decent support of elderly workmen who have ceased to labor. 12 Eligibility for these benefits and their amount depends upon the total wages which the employee has received and the periods in which wages were paid. 13 While the legislative history of the Social Security Act and its amendments or the language of the enactments themselves do not specifically deal with whether or not 'back pay' under the Labor Act is to be treated as wages under the Social Security Act, we think it plain that an individual, who is an employee under the Labor Act and who receives 'back pay' for a period of time during which he was wrongfully separated from his job, is entitled to have that award of back pay treated as wages under the Social Security Act definitions which define wages as 'remuneration for employment' and employment as 'any service ... performed ... by an employee for his employer.'
Surely the 'back pay' is 'remuneration.' Under Section 10(c) of the Labor Act, the Labor Board acts for the public to vindicate the prohibitions of the Labor Act against unfair labor practices (section 8, 29 U.S.C.A. 158) and to protect the right of employees to self- organization which is declared by section 7, 29 U.S.C.A. 157.14 It is also true that in requiring reparation to the employee through 'back pay' that reparation is based upon the loss of wages which the employee has suffered from the employer's wrong. 'Back pay' is not a fine or penalty imposed upon the employer by the Board. Reinstate- [327 U.S. 358, 365] ment and 'back pay' are for the 'protection of the employees and the redress of their grievances' to make them 'whole.' Republic Steel Corp. v. Labor Board, 311 U.S. 7, 11 , 12 S., 61 S.Ct. 77, 79; '* * a worker's loss, in wages and in general working conditions must be made whole.' Phelps Dodge Corp. v. Labor Board, 313 U.S. 177, 196 , 61 S.Ct. 845, 853, 133 A.L.R. 1217. A worker is not given 'back pay' by the Board equal to what he would have earned with the employer but for the unlawful discharge but is given that sum less any net earnings during the time between discharge and reinstatement. 15
Since Nierotko remained an employee under the definition of the Labor Act, although his employer had attempted to terminate the relationship, he had 'employment' under that Act and we need further only consider whether under the Social Security Act its definition of employment, as 'any service ... performed ... by an employee for his employer,' covers what Nierotko did for the Ford Motor Company. The petitioner urges that Nierotko did not perform any service. It points out that Congress in considering the Social Security Act thought of benefits as related to 'wages earned' for 'work done.' 16 We are unable, however, to follow the Social Security Board in such a limited circumscription of the word 'service.' The very words 'any service ... performed ... for his employer,' with the purpose of the Social Security Act in mind import breadth of coverage. They admonish us against holding that 'service' can be only productive activity. We think that 'service' as used by Congress in this definitive phrase means not only work [327 U.S. 358, 366] actually done but the entire employer-employee relationship for which compensation is paid to the employee by the employer. 17
An argument against the interpretation which we give to 'service performed' is the contrary ruling of the governmental agencies which are charged with the administration of the Social Security Act. Their competence [327 U.S. 358, 367] and experience in this field command us to reflect before we decide contrary to their conclusion. The first administrative determination was apparently made in 1939 by an Office Decision of the Bureau of Internal Revenue on the problem of whether 'back pay' under a Labor Board order was wages subject to tax under Titles VIII and IX of the Social Security Act which the Bureau collects. 18 The back pay was held not to be subject as wages to the tax because no service was performed, the employer had tried to terminate the employment relationship and the allowance of back pay was discretionary with the Labor Board. Reliance for the conclusions was placed upon Agwilines, Inc. v. National Labor Relations Board, 5 Cir., 87 F.2d 146, which had held 'back pay' a public reparation order and therefore not triable by jury as a private right for wages would have been. This position is maintained by the Social Security Board by minute of March 27, 1942. It is followed by the National Labor Relations Board which at one time approved the retention by the employer of the tax on the employees' back pay for transmission to the Treasury Department as a tax on wages and later reversed its position on the authority of the Office Decision to which reference has just been made. Re Pennsylvania Furnace and Iron Co., 13 N.L.R.B. 49, 53(5), 54, 58.19
The Office Decision seems to us unsound. The portion of the Agwilines decision, which the Office Decision relied upon, was directed at the constitutional claim to a right of trial by jury. It stated that 'back pay' was not a penalty or damages which a private individual might [327 U.S. 358, 368] claim. But there is nothing in the opinion which supports the idea that the 'back pay' award differs from other pay. Indeed the opinion said that 'Congress has the right to eradicate them (unfair practices) from the beginning.' 87 F.2d loc.cit. 151. We think the true relation of awards of 'back pay' to compensation appears in the Republic Steel and Phelps-Dodge cases, hereinbefore discussed.