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ELAINE MARTIN v. UNEMPLOYMENT COMPENSATION BOARD REVIEW (09/28/83)

decided: September 28, 1983.

ELAINE MARTIN, APPELLANT,
v.
UNEMPLOYMENT COMPENSATION BOARD OF REVIEW, APPELLEE



NO. 17 WESTERN DISTRICT APPEAL DOCKET 1982, Appeal from the Order of the Commonwealth Court of Pennsylvania of January 6, 1982 at No. 1910 CD-1979 affirming the Order of the Unemployment Compensation Board of Review of August 9, 1979 at B-174717 denying unemployment compensation benefits to claimant, Roberts, C.j., and Nix, Larsen, Flaherty, McDermott, Hutchinson and Zappala, JJ. Zappala, J., concurs in the result. Larsen, J., files a dissenting opinion in which Flaherty, J., joins.

Author: Hutchinson

[ 502 Pa. Page 285]

OPINION OF THE COURT

This is an appeal from an order of Commonwealth Court affirming the Unemployment Compensation Board of Review's denial of appellant's application for unemployment compensation benefits. The sole issue raised is whether the statutory scheme chosen by the legislature to determine the levels of monetary earnings qualifying a worker for unemployment benefits*fn1 violates the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution by creating invidious eligibility classifications. The statute applicable to this case required that claimants earning $3,738.00 or more in their highest quarter also earn the maximum of $6,000.00 in fixed qualifying wages in their base year, with a minimum 20% of such base year wages earned outside their highest quarter. On the other hand claimants earning less than $3,738.00 in their highest quarter had to earn 35% to 38% of their wages outside their highest

[ 502 Pa. Page 286]

    quarter without any higher fixed constant amount.*fn2 Since there is a rational basis for this legislative distinction the statute is valid and we affirm the Commonwealth Court's order.

The facts are not in dispute. Elaine Martin, appellant, had been employed by the National Biscuit Company (Nabisco) for three and one-half years on October 18, 1979 when she became unemployed. Because of sporadic lay-offs, she averaged approximately five months of employment per year during that period. On April 22, 1979, appellant filed a claim with the Bureau of Unemployment Compensation. The Bureau found her financially ineligible. The table set forth in section 404(e)(1) of the Act, 43 P.S. § 804(e)(1), provides that a claimant such as appellant, with highest quarter earnings of $2,989.00 during her base year,*fn3 can qualify for benefits of $122.00 per week, provided she earned total base year wages ("qualifying wages") of $4,800.00. Because appellant's "qualifying wages" during her base year, $4,433.00, were less than the amount required, the Bureau determined her ineligible for benefits.*fn4

Following a hearing held on June 7, 1979, a referee upheld the Bureau's determination. Appellant sought further review before the Unemployment Compensation Board of Review

[ 502 Pa. Page 287]

(Board), appellee. On August 9, 1979 the Board affirmed the finding of financial ineligibility.

Appellant challenged the constitutionality of section 404(e)(1) of the Act, 43 P.S. § 804(e)(1), in her appeal to Commonwealth Court. By opinion and order of January 6, 1982, a panel of the Commonwealth Court affirmed the denial of benefits. 63 Pa. Commonwealth Ct. 629, 439 A.2d 207 (1982). Thereafter, we granted appellant's petition for allowance of appeal. The parties initially argued the appeal before this Court on September 23, 1982, at which the Board was represented by the Attorney General's office. On December 15, 1982, this Court ordered reargument with leave to file supplemental briefs and we invited interested parties and organizations to submit briefs as amici curiae. The case was reargued on March 7, 1983 with only the original parties participating.

I.

The Bureau determines financial eligibility for unemployment compensation benefits by applying Section 404(e)(1), 43 P.S. § 804(e)(1), Table Specified for the Determination of Rate and Amount of Benefits (hereinafter Table) a portion of which is printed as follows:

Part A Part B Part C Part D*fn5

Highest

Quarterly Rate of Qualifying Amount of

Wage Compensation Wages Compensation

$2,888-2,912 $118 $4,640 $3,540

2,913-2,937 119 4,680 3,570

2,938-2,962 120 4,720 3,600

2,963-2,987 121 4,760 3,630

2,988-3,012 122 4,800 3,660

$3,713-3,737 $151 $5,960 $4,530

3,738 or more 152*fn* 6,000 4,560

[ 502 Pa. Page 288]

To determine financial eligibility under this Table, a claimant first determines her "highest quarterly wages" (Part A) earned during the base year which, in turn, determines the corresponding rate and total amount of compensation provided in Parts B and D of the Table. However, in order to be eligible for those benefits, the claimant must have earned, in her base year, the amount set forth in Part C, "Qualifying Wages".*fn6 The "qualifying wage" column when applied in conjunction with the highest quarterly wage column is designed to ensure that a certain percentage of a claimant's wages will have been earned outside of her highest quarter, so as to demonstrate that a claimant has been genuinely attached to the labor force. Throughout the Table, this percentage (a percentage obtained by dividing the amount earned outside the high quarter by the qualifying wages earned during the base year) is in the 35%-38% range, i.e. a claimant had to have earned from 35%-38% of her total base year wages in a quarter or quarters other than her high quarter.*fn7

[ 502 Pa. Page 289]

However, a claimant earning the highest quarterly wage specified on the Table, $3,738.00,*fn8 or more, is referred to section 401(a), 43 P.S. § 801(a), which provides, in relevant portion:

Compensation shall be payable to any employee who is or becomes unemployed, and who -- (a) Has, within his base year, been paid wages for employment as required by section 404(c) of this act: Provided, however, that not less than twenty per centum (20%) of the employe's total base year wages have been paid in one or more quarters, other than the highest quarter in such employe's base year.

The crux of appellant's argument is that Part C of the Table operates to require claimants making $3,738.00 or less in their high quarters to have earned 35%-38% of their qualifying wages in another quarter or quarters, while the Table and the so-called "20% minimum rule" of section 401(a) allow those claimants earning more than $3,738.00 in their high quarters to qualify for benefits if as little as 20% of their qualifying wages are earned outside of the high quarter.*fn9 Appellant argues these two methods of computing

[ 502 Pa. Page 290]

    eligibility create classifications impermissible under the Equal Protection Clause of the Fourteenth Amendment.

Appellant earned $2,989.00 in her highest quarter and $1,444.00 outside her highest quarter. Her qualifying wages were $4,433.00. Based on her hourly rate of $7.00 per hour she worked 427 out of a possible 520 hours in her highest quarter and 206 hours outside her highest quarter.*fn10 Appellant earned 33% of her qualifying wages outside her highest quarter. By application of Part C of the Rate Table and the "step down" provision of Section 404(a)(3) she failed to qualify for benefits.

She notes that a higher paid employee earning $9.50 per hour but working identical hours would have exceeded the $3,738.00 maximum in Part C and would qualify for benefits with only 31% of her earnings outside the highest quarter. Appellant argues that the only purpose served by permitting persons earning over $3,738.00 in their highest quarter to qualify for compensation benefits with a lower percentage of earnings outside the highest quarter than those earning under $3,738.00 in their highest quarter has no legitimate interest and the sole effect of discriminating against workers with lower hourly wages. However, careful examination of the statutory scheme in question reveals that it was designed to and does serve a legitimate state end even though it does result in some inequality.

II.

In determining whether this statute violates the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution we must first determine the appropriate standard of review. The United States Supreme Court has consistently applied only minimal scrutiny to statutory classifications employed in the regulation of

[ 502 Pa. Page 291]

    economic activity or in the distribution of economic benefits so long as those classifications do not discriminate against "suspect classes". If the statutory classification bears some rational relationship to a legitimate state end, it is within the legislative power. McGinnis v. Royster, 410 U.S. 263, 93 S.Ct. 1055, 35 L.Ed.2d 282 (1973). See also Commonwealth of Pennsylvania, Department of Public Welfare v. Molyneaux, 498 Pa. 192, 445 A.2d 730 (1982). Moreover, such a classification does not offend the Equal Protection Clause merely because it "is not made with mathematical nicety or because in practice it results in some inequality." Dandridge v. Williams, 397 U.S. 471, 485, 90 S.Ct. 1153, 1161, 25 L.Ed.2d 491 (1970).

[ 502 Pa. Page 292]

"It is by practical experience and not by theoretical inconsistencies that the question of equal protection is to be decided" and it is "no requirement of equal protection that all evils of the same genus be eradicated." Railway Express Agency v. New York, 336 U.S. 106, 69 S.Ct. 463, 93 L.Ed. 533 (1949). The Supreme Court has concluded that "the problems of government are practical ones and may justify, if they do not require, rough accommodations -- illogical, it may be, and unscientific." Dandridge v. Williams, 397 U.S. at 485, 90 S.Ct. at 1161 (quoting Metropolis Theatre Co. v. City of Chicago, 228 U.S. 61, 69-70, 33 S.Ct. 441, 443, 57 L.Ed. 730 [1913]; United States v. Carolene Products Co., 304 U.S. 144, 58 S.Ct. 778, 82 L.Ed. 1234 [1938]). See generally "Developments in the Law of Equal Protection," 82 Harv.L.Rev. 1065 (1969).*fn11 Moreover, the legislature need not justify its logical presumptions with statistical evidence. Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 812, 96 S.Ct. 2488, 2499, 49 L.Ed.2d 220 (1976). See also Massachusetts Board Page 292} of Retirement v. Murgia, 427 U.S. 307, 96 S.Ct. 2562, 49 L.Ed.2d 520 (1976).

In determining whether a classification is rational a court is free to hypothesize the reasons the legislature might have had for its classification. See Williamson v. Lee Optical, 348 U.S. 483, 75 S.Ct. 461, 99 L.Ed. 563 (1955). The courts do not require record evidence to justify the classification nor do they require the legislative history to show that the legislature had considered the particular rationale that satisfies the court. See Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 812, 96 S.Ct. 2488, 2499, 49 L.Ed.2d 220 (1976). McGowan v. Maryland, 366 U.S. 420, 425-426, 81 S.Ct. 1101, 1105, 6 L.Ed.2d 393 (1961). Indeed, the legislative action always carries a strong presumption of constitutional validity. National Woodpreservers v. DER, 489 Pa. 221, 414 A.2d 37 (1980) (Opinion by Mr. Justice, now Chief Justice, Roberts) (citing United States v. Vuitch, 402 U.S. 62, 91 S.Ct. 1294, 28 L.Ed.2d 601 [1971]).

The consistency with which the United States Supreme Court has applied these principles to state social and economic policies is illustrated in Dandridge where the Court upheld a state law placing an upper limit on the number of children for which any family could receive subsistence payments. Justice Stewart, writing for the majority, concluded that although the classification "involved the most basic needs of impoverished human beings . . . we can find no basis for applying a different constitutional standard." Id. 397 U.S. at 485, 90 S.Ct. at 1161. See also Jefferson v. Hackney, 406 U.S. 535, 92 S.Ct. 1724, 32 L.Ed.2d 285 (1972).

Again, in City of New Orleans v. Dukes, 427 U.S. 297, 96 S.Ct. 2513, 49 L.Ed.2d 511 (1976) the United States Supreme Court upheld a law prohibiting pushcart vendors from selling their goods in the French Quarter. The law, in its effect, exempted from the ban only two pushcart vendors who qualified under the ordinance's grandfather clause. In upholding the City ordinance the United States Supreme Court explicitly overruled Morey v. Dowd, 354 U.S. 457, 77

[ 502 Pa. Page 293]

S.Ct. 1344, 1 L.Ed.2d 1485 (1957).*fn12 The Dukes Court summarized the equal protection standard as follows:

When local economic regulation is challenged solely as violating the Equal Protection Clause, this Court consistently defers to legislative determinations as to the desirability of particular statutory discriminations. See, e.g., Lehnhausen v. Lake Shore Auto Parts Co., 410 U.S. 356 [93 S.Ct. 1001, 35 L.Ed.2d 351] (1973). Unless a classification trammels fundamental personal rights or is drawn upon inherently suspect distinctions such as race, religion, or alienage, our decisions presume the constitutionality of the statutory discriminations and require only that the classification challenged be rationally related to a legitimate state interest. States are accorded wide latitude in the regulation of their local economies under their police powers, and rational distinctions may be made with substantially less than mathematical exactitude. Legislatures may implement their program step by step, Katzenbach v. Morgan, 384 U.S. 641 [86 S.Ct. 1717, 16 L.Ed.2d 828] (1966), in such economic areas, adopting regulations that only partially ameliorate a perceived evil and deferring complete elimination of the evil to future regulations. See, e.g., Williamson v. Lee Optical Co., 348 U.S. 483, 488-489 [75 S.Ct. 461, 464-465, 99 L.Ed. 563] (1955). In short, the judiciary may not sit as a superlegislature to judge the wisdom or desirability of legislative policy determinations made in areas that neither affect fundamental rights nor proceed along suspect lines, see, e.g., Day-Brite Lighting, Inc. v. Missouri, 342 U.S. 421, 423 [72 S.Ct. 405, 407, 96 L.Ed. 469] (1952); in the local economic sphere, it is only the invidious discrimination, the wholly arbitrary act, which cannot stand consistently with the Fourteenth Amendment. See, e.g., Ferguson v. Skrupa, 372 U.S. 726, 732 [83 S.Ct. 1028, 1032, 10 L.Ed.2d 93] (1963).

427 U.S. at 303, 96 S.Ct. at 2516-2517. See also Nowak, Constitutional Law (1978). The United States Supreme

[ 502 Pa. Page 294]

Court has applied the same standard in reviewing constitutional challenges to a state's eligibility requirement for unemployment compensation. See Ohio Bureau of Employment Security v. Hodory, 431 U.S. 471, 97 S.Ct. 1898, 52 L.Ed.2d 513 (1977). See also Idaho Department of Employment v. Smith, 434 U.S. 100, 98 S.Ct. 327, 54 L.Ed.2d 324 (1977) (An Idaho statute granting unemployment benefits to night students, but denying benefits to otherwise eligible day students, does not deny equal protection).

Recently in Hodel v. Indiana, 452 U.S. 314, 101 S.Ct. 2376, 69 L.Ed.2d 40 (1981) (an equal protection challenge to the Surface Mining and Reclamation Act of 1977) a majority of that Court reiterated its support of this standard of scrutiny for challenges to social and economic legislation.

Social and economic legislation like the Surface Mining Act that does not employ suspect classifications or impinge on fundamental rights must be upheld against equal protection attack when the legislative means are rationally related to a legitimate governmental purpose. Schweiker v. Wilson, [450] U.S. [221], 101 S.Ct. 1074, 67 L.Ed.2d 186 (1981); U.S. Railroad Retirement Board v. Fritz, [449] U.S. [166], 101 S.Ct. 453, 66 L.Ed.2d 368 (1980). Moreover, such legislation carries with it a presumption of rationality that can only be overcome by a clear showing of arbitrariness and irrationality. Duke Power Co. v. Carolina Environmental Study Group, 438 U.S. [59] at 83, 98 S.Ct. [2620], at 2635 [57 L.Ed.2d 595 (1978)]; Usery v. Turner Elkhorn Mining Co., 428 U.S. [1], at 15, 96 S.Ct. [2882], at 2892 [49 L.Ed.2d 752 (1976)]. As the Court explained in Vance v. Bradley, 440 U.S. 93, 97, 99 S.Ct. 939, 943, 59 L.Ed.2d 171 (1979), social and economic legislation is valid unless "the varying treatment of different groups or persons is so unrelated to the achievement of any combination of legitimate purposes that [a court] can only conclude that the legislature's actions were irrational." This is a heavy burden, and appellees have not carried it.

[ 502 Pa. Page 295]

District v. Rodriguez, 411 U.S. 1, 93 S.Ct. 1278, 36 L.Ed.2d 16 (1973). The Court of Appeals in Medora recognized that a classification based on wealth alone would not justify closer scrutiny of the regulation. Rather it based its determination on the fact that the classifications were based on appellee's status as blind, aged or disabled and that the right to "welfare" is "important." c.f. United States Department of Agriculture v. Moreno, 413 U.S. 528, 93 S.Ct. 2821, 37 L.Ed.2d 782 (1973); United States Department of Agriculture v. Murry, 413 U.S. 508, 93 S.Ct. 2832, 37 L.Ed.2d 767 (1973). But c.f. Jefferson v. Hackney, supra.

Without questioning the validity of the Medora decision on its facts, both the classification and the nature of the right involved in that case are not analogous to appellant's situation. In reviewing the Federal Constitutional challenge to this Commonwealth's unemployment compensation law, we must apply the less stringent "rational relationship" test articulated by the United States Supreme Court in cases involving constitutional challenges to unemployment compensation laws which include non-suspect or sensitive classifications, as here. Ohio Bureau of Employment Security v. Hodory, supra; Idaho Department of Employment v. Smith, supra. See also Schweiker v. Wilson, supra; United States Railroad Retirement Board v. Fritz, supra.

As the United States Supreme Court stated in Daniel v. Family Security Life Ins. Co., 336 U.S. 220, 224, 69 S.Ct. 550, 552, 93 L.Ed. 632 (1949):

We are asked to agree with respondents and call the statute arbitrary and unreasonable.

Looking through the form of this plea to its essential basis, we cannot fail to recognize it as an argument for invalidity because this Court disagrees with the desirability of the legislation. We rehearse the obvious when we say that our function is thus misconceived. We are not equipped to decide desirability; and a court cannot eliminate measures which do not happen to suit its tastes if it seeks to maintain a democratic system. The forum for

[ 502 Pa. Page 297]

    the correction for ill-considered legislation is a responsive legislature.

Thus, in reviewing appellant's Federal Constitutional challenges based solely on Equal Protection grounds, we are constrained by these firmly established principles.

III.

We turn now to an examination of the general purpose behind the requirement that a claimant earn a percentage of base year earnings outside her highest quarter as a criterion for eligibility. This has traditionally been a statistical surrogate for direct evidence of time worked. Evidence of time worked in a recent period is a legitimate eligibility requirement for unemployment compensation:

First, it serves to exclude new entrants or reentrants to the work force, who suffer no loss. Second, it is appropriate in an insurance program that there be a period of time in which workers earn their rights and some contributions are paid on their behalf (unlike workers' compensation, where persons are covered from the first day of work). Finally, . . . . recent work history is part of a series of tests, along with the reasons for termination of the last job and evidence of continuing availability, that establish the work-oriented motives of the applicant. In this sense, "the monetary determination of eligibility," as bureaucrats call the qualifying requirement, is the first screen of a work test.

C. Munts, Previous Work Requirements and the Duration of Benefits: Unemployment Compensation Studies and Research, at 3 (1980).

Various methods have been adopted in the numerous jurisdictions which require claimants to earn a percentage of qualifying wages outside their highest quarter as an alternative measure for actual time worked because of the difficulty in obtaining accurate statistics for the latter. All such methods are only rough measures of time actually worked, since the amount of a claimant's earnings in any period is a function of both time and rate of compensation. They have,

[ 502 Pa. Page 298]

    nevertheless, survived constitutional challenge. Ertman v. Fusari, 442 F.Supp. 1147 (D.C.Conn.1977). Thus, the rational relationship between the requirement that a claimant earn a percentage of income outside the highest quarter to a legitimate government interest is not disputed.

IV.

We have already explained the mechanics of Pennsylvania's statutory method for establishing attachment to the labor force. Without repeating all of that exigesis here, suffice it to say that the variation of the "multiple of weekly benefits" method used in the applicable Pennsylvania statute to calculate qualifying wages under Section 404 of the Unemployment Compensation Law required claimants receiving $3,738.00*fn14 or less as wages in their high quarter to earn 35-38% of qualifying base year wages outside that highest quarter. Claimants earning $3,738.00 or more in their highest quarter were required to earn qualifying wages of $6,000.00 or a minimum of 20% of their qualifying base year wages outside their highest quarter. The necessary rational basis for this ...


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