Pennington v. Didrickson
| Decision Date | 31 May 1994 |
| Docket Number | No. 92-3725,92-3725 |
| Citation | 22 F.3d 1376 |
| Parties | Unempl.Ins.Rep. (CCH) P 22,107 Luella PENNINGTON, individually and on behalf of other similarly situated persons, Plaintiffs-Appellants, v. Loleta DIDRICKSON, * Director of the Illinois Department of Employment Security, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Jeffrey B. Gilbert (argued), Karyn Galss, Robert E. Lehrer, Legal Assistance Foundation of Chicago, Chicago, IL, for Luella Pennington.
Deborah L. Ahlstrand, Asst. Atty. Gen., Chicago, IL (argued), for Loleta Didrickson.
Before ESCHBACH, RIPPLE and KANNE, Circuit Judges.
The plaintiffs are a certified class of unemployment insurance claimants who brought action under 42 U.S.C. Sec. 1983 against the Illinois Department of Employment Security ("IDES"). The plaintiff class challenges the definition of "base period" in section 237 of the Illinois Unemployment Insurance Act (the "IUIA"), 820 ILCS 405 /237. It maintains that the definition violates the "when due" clause of section 303(a)(1) of the Social Security Act (the "SSA"), 42 U.S.C. Sec. 503(a)(1). Following a bench trial, the district court entered judgment for IDES. For the reasons that follow, we reverse and remand the case to the district court.
Although unemployment insurance is administered at the state level, the SSA makes federal funds available to the states to encourage them to enact unemployment insurance laws. However, before the federal government will provide funds for a state to administer its unemployment insurance programs, the Secretary of Labor must certify that a recipient state's program meets certain statutory requirements. See 42 U.S.C. Secs. 502, 503(b)(2), 504. One of those requirements is the "when due" clause of section 303(a)(1) of the SSA; it requires a state's unemployment insurance laws to 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." 42 U.S.C. Sec. 503(a)(1). Department of Labor regulations state that the "when due" clause requires a state to provide for such "methods of administration as will reasonably insure the full payment of unemployment benefits to eligible claimants with the greatest promptness that is administratively feasible." 20 C.F.R. Sec. 640.3(a). Although "[f]ederal laws provide no authority for the Secretary of Labor to determine the eligibility of individuals under a State law," the regulations make clear that "implicit in prompt performance with respect to benefit payments is the corresponding need for promptness by the State in making determinations of eligibility." 20 C.F.R. Sec. 640.1(a)(2).
In Illinois, an eligible unemployment insurance claimant can draw benefits in "the one-year period beginning with the first day of the week with respect to which the individual first files a valid claim for benefits." 820 ILCS 405/242. This is known as a claimant's "benefit year." Id. However, in order to file a "valid claim" for unemployment insurance, a claimant must have earned sufficient wages during the claimant's "base period." 1 Section 237 of the IUIA defines a "base period" as "the first four of the last five completed calendar quarters immediately preceding the benefit year." 820 ILCS 405/237. Thus, section 237's base period excludes the wages a claimant earns in the quarter immediately preceding the quarter in which a claimant files (the fifth quarter, or the "lag quarter") and excludes the wages a claimant earns in the quarter in which the claimant files (the sixth quarter, or the "filing quarter"). For example, for a claimant who filed for benefits in June 1993 (the second calendar quarter of 1993), the resulting base period would have been the four calendar quarters of 1992; the first quarter of 1993 would have been the claimant's lag quarter, and the second quarter of 1993 would have been the claimant's filing quarter. Pursuant to section 237's base period, IDES would consider only the wages the claimant earned in the four calendar quarters of 1992 in determining the claimant's eligibility for unemployment insurance. 2
Illinois uses its base period scheme because it is a "wage record system" state. Under this system, employers covered by the IUIA report the gross wages of all their employees to the state unemployment security Although a wage record system is the most common system in the United States, some states use a "wage request system," under which a state requests a claimant's wage information from the claimant's employer when the claimant files for unemployment benefits. Because a state agency under this system handles only wage information needed to adjudicate each particular claim, a state agency can request the most recent wage information for each claimant, thereby obviating the need for a substantial gap between the end of a claimant's base period and the beginning of a claimant's benefit year. App. VII at 67-68. Finally, some states move their base periods. Under this approach, when a claimant has insufficient qualifying wages in the first four of the last five completed quarters under an IUIA section 237-type base period, the state agency redetermines the claim based on wages earned in the four completed calendar quarters immediately preceding the filing quarter. App. VII at 68.
agency on a quarterly basis. Employers must report their employees' wages by the last day of the month following the quarter in which the wages were paid. As a result, IDES experiences peak periods that begin about one week prior to the end of the reporting month; the peak periods last about 3 to 8 weeks with an additional week to process delinquent reports. App. VII at 70-71 (Stipulated Facts). The gap created by the base period in section 237 of the IUIA (i.e., the gap between the end of a claimant's base period and the beginning of a claimant's benefit year) gives employers in a wage record system time to report wage information to the state agency and gives the state agency time to make that information available to local unemployment insurance offices. App. VII at 66-67.
Luella Pennington is the class representative for the unemployment insurance claimants. She filed a claim with IDES for unemployment insurance on June 7, 1984, the second quarter of 1984. Under IUIA section 237, Ms. Pennington's base period was January 1, 1983 to December 31, 1983, the four calendar quarters of 1983. Because Ms. Pennington had not earned sufficient qualifying wages in her section 237 base period, IDES denied her application. Ms. Pennington remained unemployed and therefore filed a second claim on October 5, 1984, the fourth quarter of 1984. Her base period for this application encompassed the third and fourth quarters of 1983, and the first and second quarters of 1984. She was entitled to benefits this time because she had earned enough section 500 E qualifying wages in the first two quarters of 1984.
Section 237's base period required Ms. Pennington to wait until October 5, 1984 to claim benefits. If IDES had considered lag quarters in determining qualifying wages, Ms. Pennington could have successfully refiled on July 2, 1984, the third quarter of 1984, because IDES would have considered the first two quarters of 1984 in determining her qualifying wages. Instead, she had to wait to file in October 1984, the fourth quarter of 1984, in order to have both the first and second quarters of 1984 considered as qualifying wages under the section 237 base period. Ms. Pennington therefore brought a Sec. 1983 action against IDES on behalf of herself and all others similarly situated alleging that section 237's base period violates the "when due" clause of the SSA. The plaintiff class's first complaint alleged that it was "administratively feasible," 20 C.F.R. Sec. 640.3(a), for IDES to include as the four-quarter base period both the lag quarter and, if necessary, the filing quarter. The class's second amended complaint, however, alleges only that it would be administratively feasible for IDES to consider the lag quarter in calculating a claimant's qualifying wages, thus making the base period the four calendar quarters immediately preceding the filing quarter.
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