Opinion ID: 2995714
Heading Depth: 2
Heading Rank: 1

Heading: Social Security Act

Text: Initially, Zambrano contends that the Cannery Rule conflicts with section 503(a)(1) (the When Due Clause) of the Social Security Act (the SSA). Under the SSA, federal funds are made available to states in order to encourage them to enact unemployment insurance laws. See 42 U.S.C. sec.sec. 501-04; see also Jenkins v. Bowling, 691 F.2d 1225, 1228 (7th Cir. 1982). However, before the federal government will provide funds to a state to administer its unemployment insurance laws, the Secretary of Labor must certify that the recipient state’s unemployment program meets certain statutory requirements. See 42 U.S.C. sec.sec. 502- 03; Jenkins, 691 F.2d at 1228. The When Due Clause states that one of those requirements is that the state’s program must provide for such methods of administration . . . as are found by the Secretary of Labor to be reasonably calculated to insure full payment of unemployment compensation when due. Jenkins, 691 F.2d at 1228 (quoting 42 U.S.C. sec. 503(a)(1)). The basic thrust of the When Due Clause is timeliness--the state should determine who is eligible to receive unemployment compensation and make payments to such individuals at the earliest stage that is administratively feasible. See, e.g., California Human Resources Dept. v. Java, 402 U.S. 121, 131, 91 S. Ct. 1347, 28 L. Ed. 2d 666 (1971). The first step in deciding whether a state statute violates the When Due Clause is to determine whether the state provision is an administrative provision or an eligibility requirement. See Pennington v. Didrickson, 22 F.3d 1376, 1381 (7th Cir. 1994) (Pennington I), rev’d on other grounds sub nom. Pennington v. Doherty, 138 F.3d 1104, 1105 (7th Cir. 1998) (Pennington II). An administrative provision governs when eligibility is determined or when unemployment benefits are paid, while an eligibility requirement governs who is eligible to receive unemployment compensation benefits. See Pennington I, 22 F.3d at 1385-87. Drawing this distinction is important because eligibility requirements do not fall under the purview of the When Due Clause, whereas administrative provisions do. See id. 1381 (stating that eligibility requirements are beyond the reach of the ’when due’ clause). Zambrano contends that the Other Employment provision of the Cannery Rule violates the When Due Clause because it operated to exclude the wages he earned at Lifestyle Staffing from his eligibility determination. Zambrano’s claim is unavailing, however, because the Other Employment provision sets forth a method of determining whether work performed by an applicant is employment and thus whether the applicant is eligible to receive benefits. See Wis. Stat. sec. 108.02(15)(k)(14). Therefore, because it determines who is eligible to receive benefits, as opposed to when the eligibility determination is made or when an eligible person receives benefits, the Cannery Rule is an eligibility requirement that is beyond the reach of the ’when due’ clause. Pennington I, 22 F.3d at 1381. Zambrano relies on Pennington I to support his argument that the Cannery Rule is an administrative provision. In that case, we addressed whether the definition of base period in section 237 of the Illinois Unemployment Insurance Act (the IUIA), 820 ILCS 405/237, violated the When Due Clause. See Pennington I, 22 F.3d at 1377. We noted that in order to be eligible for unemployment compensation in Illinois, a claimant must have earned sufficient wages during the base period. Id. at 1378. We further noted that the IUIA defined a base period as the first four of the last five completed calendar quarters immediately preceding the benefit year, thus excluding the wages that a claimant earned in the quarter immediately preceding the quarter in which the claimant filed a claim (the lag quarter). Id. (citation omitted). We concluded that excluding wages earned during the lag quarter had the purpose of accommodating the time needs of those administering Illinois’ unemployment compensation program. See id. at 1387. We also concluded that the lag quarter affected the timing of when the claimant would file his claim. See id. In sum, the IUIA did not determine what wages would be considered, but rather when certain wages would be considered. See id. at 1385-87. Therefore, we held that the provision of the IUIA was an administrative provision subject to the When Due Clause. See id. at 1387. On appeal, Zambrano notes that Pennington I was abrogated by federal statute. See Pennington II, 138 F.3d at 1104-05. He posits, and we agree, that the Balanced Budget Act of 1997, sec. 5401 does not apply to the Cannery Rule because that Act only applies to state law provisions that define base periods. However, he asserts that the reasoning of the original Pennington decision . . . remains apt, since the base period and the cannery rule period serve similar purposes. Assuming, arguendo, that Zambrano is correct in this assertion, his claim is still unavailing because our case is distinguishable from Pennington I. In contrast to the lag quarter at issue in Pennington I, the Other Employment provision affects what wages will be considered, not when they will be considered. Further, the Cannery Rule did not have the effect of requiring Zambrano to delay in filing his claim for unemployment compensation, but rather only determined whether or not Zambrano was eligible to receive unemployment compensation benefits based on his earnings in non-food processing jobs before his work with Seneca. Because the wages that the Other Employment provision excluded are not those earned prior to filing a claim, but rather those earned in the same quarter as when the claimant started working for a fruit or vegetable processors, Zambrano could have waited forever and still would have been ineligible to receive benefits under the Cannery Rule. Therefore, in the absence of the Cannery Rule’s delay of either the determination or the payment of unemployment compensation benefits, we hold that it does not violate the When Due Clause.