News & Information

CCH® UNEMPLOYMENT INSURANCE — 9/29/14

“When due” clause not implicated when claimants simply not eligible for benefits under state UI law

The court dismissed with prejudice the claim filed by a group of Indiana bus drivers, Head Start teachers, and teachers' aides whose unemployment benefits were terminated pursuant to an amendment to the state's unemployment insurance law. The amendment provided that employees who are on a vacation or planned break from work are not "unemployed." The claimants alleged the termination of benefits without individualized prior hearings violated the "when due" clause in the Social Security Act. The provision requires that the Secretary of Labor will not provide funding for state unemployment programs unless the state implements "[s]uch methods of administration … as are found by the Secretary of Labor to be reasonably calculated to insure full payment of unemployment compensation when due." In considering the motion to dismiss, the court first proceeded under the assumption that standing existed for the claimants despite doubts raised by recent case law because a cause of action to enforce the "right" created by the when due clause was available. The court read the when due clause as a "timeliness" requirement that extended to both eligibility determinations and the payments themselves. Here, the court concluded that there was no nexus at all between the timeliness with which the state administers its benefits to entitled claimants and its legislative determination that the class to which the claimants belonged was simply ineligible for benefits. Pursuant to precedent, the when due clause was not implicated where the plaintiffs "could have waited forever and still would have been ineligible to receive benefits" (Jessica Gann v. Richardson, D.C. (S.D. Ind.), No. 1:13-cv-00532-SEB-TAB, September 03, 2014).