Rene Zambrano v. Jennifer Reinert, in Her Official Capacity as Secretary of the Wisconsin Department of Workforce Development

KANNE, Circuit Judge.

After being denied unemployment compensation benefits in accordance with Wis. Stat. § 108.02(15)(k)(14) (the “Cannery Rule”), Rene Zambrano filed suit pursuant to 42 U.S.C. § 1983, alleging that the Cannery Rule was in conflict with two federal statutes and violated the Equal Protection Clause of the Fourteenth Amendment. The district court upheld the validity of the Cannery Rule, and we affirm.

I. Background

Under Wisconsin’s unemployment compensation scheme, “base period” wages count towards unemployment compensation eligibility. See Wis. Stat. §§ 108.02(4) & 108.06. Base period wages include, inter alia, wages earned during employment, see id. at § 108.02(4m), and “employment” is defined as “any service ... performed by an individual for pay.” Id. at § 108.02(15)(a). However, in applying the Cannery Rule, the definition of employment does not include services

*967[b]y an individual for an employer which is engaged in the processing of fresh perishable fruits or vegetables within a given calendar year if the individual has been employed by the employer solely within the active processing season or seasons, as determined by the department [of workforce development], of the establishment in which the individual has been employed by the employer, and the individual’s base period wages with the employer are less than the wages required to start a benefit year under s. 108.04(4)(a), unless the individual was paid wages of $200 or more for services performed in employment or other work covered by the unemployment insurance law of any state or the federal government, other than work performed for the processing employer, during the 4 most recently completed quarters preceding the individual’s first week of employment by the processing employer within that year.

Id. at § 108.02(15)(k)(14). In other words, for a seasonal fruit or vegetable processing worker to meet the definition of “employment,” and thus be eligible to receive unemployment compensation benefits, he must have 1) been employed with the processor outside the “active processing season”; 2) been separately eligible under Wis. Stat. § 108.04(4)(a); or 3) earned over $200 in another job during the time period outlined in the statute. See id. at § 108.02(16)(k)(14).

Zambrano, a Texas resident, provided seasonal labor for vegetable processor Seneca Foods, Inc. in Mayville, Wisconsin from June 11 to October 7, 1999, earning $10,290.98. On April 4, 2000, Zambrano filed for unemployment compensation in Wisconsin. Because Zambrano was employed by Seneca, a processor of vegetables, the Department for Workforce Development (the “DWD”) noted that his claim for unemployment compensation fell under the purview of the Cannery Rule and thus found that Zambrano was ineligible to receive unemployment compensation benefits.

To be eligible for benefits, Zambrano had to meet one of three conditions listed in the Cannery Rule: First, Zambrano would have had to have worked for Seneca outside the active processing season. See id. at § 108.02(15)(k)(14). Zambrano concedes that he did not, and therefore this provision is irrelevant to our present review.

Second, he would have been eligible if his “base period wages” with Seneca were equal to or greater than the wages described in Wis. Stat. § 108.04(4)(a). See id. at § 108.02(15)(k)(14). To start a benefit year under that section, an applicant’s base period wages must, among other things, be equal to at least four times his weekly benefit rate “in one or more quarters outside of the quarter within the claimant’s base period in which the claimant has the highest base period wages.” Id. at § 108.04(4)(a). In this case, as Zam-brano concedes, the amount of wages that he earned during this time period was $1,159.81, and this amount was less than four times his weekly benefit rate of $305 (i.e., 4 x $305 = $1,200). Thus, the DWD concluded that Zambrano did not meet the second condition to be eligible for unemployment compensation benefits under the Cannery Rule.

Finally, Zambrano would have been entitled to receive benefits had he earned more than $200 from an employer other than Seneca during the four most recently completed quarters preceding his first week of work at Seneca. See id. at § 108.02(15)(k)(14) (the “Other Employment” provision). Zambrano’s only income from Wisconsin employers other than Seneca that year was $1,250 that he *968earned for work performed for Lifestyle Staffing during May and June 1999. However, because these wages were earned in the same quarter as the start of his employment with Seneca, and not in the preceding quarter, the DWD concluded that Zambrano was not eligible to receive benefits because he did not meet the requirements of the Other Employment provision of the Cannery Rule. See id.

As a result of this ruling, Zambrano brought suit against' Jennifer Reinert in her official capacity as Secretary of the DWD, alleging that the Cannery Rule ran afoul of two federal statutes and that it violated principles of equal protection. The district court granted summary judgment in favor of the Secretary, upholding the Cannery Rule in the face of Zambra-no’s challenges.

II. Analysis

The facts of this case are essentially undisputed. The only issues on appeal involve the interpretation of statutory and constitutional provisions. We review these questions of law de novo. See, e.g., Publ’ns Int’l Ltd. v. Meredith Corp., 88 F.3d 473, 478 (7th Cir.1996).

A. Social Security Act

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. §§ 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. §§ 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. § 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 J), rev’d on other grounds sub nom. Pennington v. Doherty, 138 F.3d 1104, 1105 (7th Cir.1998) (Pennington //)• 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 *969of determining whether work performed by an applicant is “employment” and thus whether the applicant is eligible to receive benefits. See Wis. Stat. § 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 1, 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.1 See id. at 1387.

On appeal, Zambrano notes that Pennington I was abrogated by federal statute. See Pennington II, 138 F.3d at 1104-05.2 He posits, and we agree, that the Balanced Budget Act of 1997, § 5401 does not apply to the Cannery Rule because that Act only applies to state law provisions that define “base periods.”3 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 *970vegetable 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.

B. Federal Unemployment Tax Act

The Federal Unemployment Tax Act (“FUTA”) taxes employers on the wages they pay to their employees and provides a tax credit for employers’ contributions to federally-approved state unemployment compensation laws. See 26 U.S.C. §§ 3301 & 3302(a)(1). For the Secretary of Labor to approve a state’s unemployment compensation law (as the Secretary of Labor did in this case), he must find, among other things, that the state law does not operate to cancel “wage credits” or reduce “benefit rights” for reasons other than fraud or misconduct. Id. at § 3304(a)(10).

Zambrano asserts that the Cannery Rule cancels wage credits or benefit rights for reasons other than fraud or misconduct and thus violates 26 U.S.C. § 3304(a)(10). In order for the Cannery Rule to have cancelled Zambrano’s wage credits or reduced his benefit rights, he must have had such wage credits or benefits in the first place. Thus, the initial issue is whether Zambrano earned wage credits or benefit rights—a matter of state law. We have previously noted that states have “free rein” to design eligibility requirements for receiving unemployment compensation. Pennington I, 22 F.3d at 1382. In the present case, eligibility is calculated from wages earned during employment—employment being a statutorily defined term. See Wis. Stat. §§ 108.02(4) & 108.02(15)(a). The Cannery Rule qualifies that statutory definition of employment, excluding wages earned by fruit and vegetable processors unless those workers meet one of the three aforementioned conditions. See id. at § 108.02(15)(k)(14). As discussed above, the Cannery Rule merely sets forth requirements for being eligible to receive unemployment compensation, and Zambra-no concedes that he did not meet those requirements. Therefore, he never had any wage credits or benefit rights to cancel or reduce in the first place, and accordingly, the application of the Cannery Rule in this case does not violate FUTA.

C. Equal Protection

Zambrano argues that seasonal fruit and vegetable workers are denied equal protection because they are subject to different eligibility requirements under Wisconsin’s unemployment compensation laws than are other workers. Seasonal fruit and vegetable workers are not a suspect classification, nor does Zambrano’s claim implicate fundamental rights. Therefore, we will address Zambrano’s equal protection claim under the familiar rational basis test, see, e.g., Turner v. Glickman, 207 F.3d 419, 424 (7th Cir. 2000), and uphold the Cannery Rule if “there is any reasonably conceivable state of facts that could provide a rational basis for the classification.” FCC v. Beach Communications, Inc., 508 U.S. 307, 313, 113 S.Ct. 2096, 124 L.Ed.2d 211 (1993).

The Secretary asserts that Wisconsin’s interest in treating seasonal fruit and vegetable processing workers differently is to ensure that workers receiving unemployment compensation benefits are firmly committed to the Wisconsin labor market. Because fruit and vegetable processing occurs during only three to four months a year, employment availability and duration in this line of work is necessarily limited. Nevertheless, under the Cannery Rule, individuals working in seasonal fruit and vegetable processing can show a commit*971ment to the Wisconsin labor market, and consequently gain unemployment compensation eligibility, by meeting the requirements of the Other Employment provision. See Wis. Stat. § 108.02(15)(k)(14). Under this provision, seasonal fruit and vegetable processors are eligible to receive benefits if they earned a mere $200 in unrelated employment in the year prior to the quarter in which they began working for seasonal processors. See id. Thus, the Other Employment provision of the Cannery Rule has a rational basis for its classification, which is sufficiently linked to the government purpose of ensuring commitment to the Wisconsin labor market. See FCC, 508 U.S. at 313,113 S.Ct. 2096.

III. Conclusion

For the foregoing reasons, we Affirm the district court’s grant of summary judgment in favor of the Secretary.

. We note, however, that it was never determined whether this provision violated the When Due Clause. See id.

. The Balanced Budget Act of 1997, Pub. L. No. 105-33, § 5401 reads: “No provision of a State law under which the base period for such State is defined or otherwise determined shall, for purposes of the [SSA] be considered a provision for a method of administration.”

.The section of the Wisconsin statute that defines “base period” is Wis. Stat. § 108.02(4).