Appendix — New Hampshire v. Marshall

In The

SUPREME COURT OF THE UNITED STATES

October Term, 1979

No. 79-1846

THE STATE OF NEW HAMPSHIRE,

DEPARTMENT OF EMPLOYMENT SECURITY;

AND THE STATE OF NEW HAMPSHIRE,

Appellants

Vv.

THE HONORABLE E. RAY MARSHALL, SECRETARY OF LABOR

OF THE UNITED STATES; AND THE UNITED STATES

DEPARTMENT OF LABOR,

Appellees

ON APPEAL FROM THE UNITED STATES

COURT OF APPEALS FOR THE FIRST CIRCUIT

APPENDIX TO JURISDICTIONAL STATEMENT

Gregory H. Smith Edward F. Smith

Acting Attorney General General Counsel

James E. Morris Charles G. Cleaveland

Assistant Attorney of Counsel

General

State House Annex For the New Hampshire

Concord, New Hampshire Department of Employment

03301 Security

Counsel for the State 32 South Main Street

of New Hampshire Concord, New Hampshire

May 20, 1980

APPENDIX

TABLE OF CONTENTS

Opinion Below

Order of the Secretary of Labor

. Federal Statutes Involved

State Statutes Involved

United States Court of Appeals

For the First Circuit

No. 78-1564

STATE OF NEW HAMPSHIRE DEPARTMENT OF

EMPLOYMENT SECURITY, ET AL.,

PETITIONERS,

v.

THE HONORABLE F. RAY MARSHALL, SECRETARY

OF LABOR OF THE UNITED STATES, AND THE

UNITED STATES DEPARTMENT OF LABOR,

RESPONDENTS.

ON PETITION FOR REVIEW OF THE DECISION OF THE

SECRETARY OF LABOR OF THE UNITED STATES

Before

CAMPBELL and Bowness, Circuit Judges,

Devine, District Judge. *

Charles S. Rhyne and James E. Morris, with whom Edward F.

Smith, General Counsel, Paul V. Kenneally, William S. Rhyne,

Martin W. Matzen, Stephen P. Elmendorf, and Rhyne & Rhyne,

were on brief, for petitioners.

Robert T. Duffy, Attorney, Tax Division, Department of Justice,

with whom M. Carr Ferguson, Assistant Attorney General, Gilbert

E. Andrews and Leonard J. Henzke, Jr., Attorneys, Tax Division,

Department of Justice, were on brief, for respondents.

George Kaufmann, with whom Zwerdling and Maurer, A.L.

Zwerdling, Janet Kohn, Leonard Lesser, J. Albert Woll, General

Counsel, AFL-CIO, Laurence Gold, Special Counsel, AFL-CIO,

and Edward J. Hickey, General Counsel, Public Employee Dept.,

AFL-CIO, were on brief, for American Federation of Labor, et al.,

amici curiae.

Richard M. Flynn, Charles S. Rhyne, William S. Rhyne, Martin

W. Matzen, Stephen P. Elmendorf, and Rhyne and Rhyne, on brief

for Business and Industry Association of New Hampshire, et al.,

amici curiae.

*Of the District of New Hampshire, sitting by designation.

February 20, 1980

Bownes, Circuit Judge. This is an appeal pursuant to 26

U.S.C. § 3310! of the decision of the Secretary of Labor that

the New Hampshire Unemployment Compensation law fails

to conform in six separate respects with the requirements of

the Federal Unemployment Tax Act (FUTA), 26 U.S.C. §§

3301-3311.

In order to understand the issues involved, some explanation

of the unemployment compensation law is necessary. The law

has its roots in the Great Depression when unemployment was

so widespread that the separate states were unable to meet the

basic needs of their citizens. Several states, of which Wisconsin

was the leader and New Hampshire an early follower, enacted

their own unemployment insurance programs. The financing

for these programs was obtained mainly by a tax on private

employers. Many states, however, refused to enact such pro-

grams fearing that the tax on local employers would cause

them to flee to other states which did not have such a law. The

federal unemployment insurance law was thus devised to meet

a national problem. The constraints of federalism and the dic-

tates of practical politics resulted in legislation designed to

equalize the burden on the states with full participation by all.

This was accomplished by the inducement of tax credits to

private employers and outright grants made available to the

states to help defray the administrative costs of the program.

The tax on the private employer was levied and collected by

the state. The moneys collected had to be promptly remitted

by the states to the Secretary of the Treasury. A credit of up to

90% of the tax due was given the employer if he had made

'We understand that this is the first appeal under 26 U.S.C. §

3310, which provides in pertinent part:

(a) In general.— Whenever under section 3303(b) or section

3304(c) the Secretary of Labor makes a finding pursuant to

which he is required to withhold a certification with respect to

a State under such section, such State may, within 60 days

after the Governor of the State has been notified of such ac-

tion, file with the United States court of appeals for the circuit

in which such State is located of with the United States Court

of Appeals for the District of Columbia, a petition for review

of such action.

3

contributions to his state’s unemployment insurance fund. The

tax credit and the grants were contingent on certification by

the Secretary of Labor that the state had enacted an

unemployment compensation program that conformed to

federal statutory requirements.

There was no direct statutory command to the states requir-

ing them to conform to federal law. The federal government

made an offer to the states which they could accept or refuse.

Up until now, all the states found the combination of tax

credits to its private employers and outright grants in return

for conforming legislation an offer that could not be refused.?

Although the Act has been extensively amended since its in-

ception ‘n 1935, the basic design and statutory machinery have

remained constant. The present statutory machinery works as

follows. Under 26 U.S.C. §§ 3301 and 3306(b)(1), private

employers are taxed an amount equal to 3.4 percent of the first

$6,000 in wages paid each employee. 26 U.S.C. § 3302(a)(1)

allows a credit of up to 2.7 percent of such wages against the

tax for the employer’s contribution to an unemployment fund

maintained under state law. But the employer can obtain this

credit only if the state’s unemployment law is certified by the

Secretary of Labor as provided in 26 U.S.C. § 3304.

26 U.S.C. § 3304(a) requires that the Secretary of Labor ap-

prove any state unemployment compensation law that con-

forms to the federal requirements. Section 3304(b) requires the

Secretary to notify the governor of the state of such approval,

and section 3304(c) requires the Secretary to certify such ap-

proval to the Secretary of the Treasury. Failure to obtain cer-

tification means not only the loss of FUTA tax credits for

private employers, but also the loss to noncertified states of

two kinds of federal grants. One grant goes towards the cost of

*For a full discussion of the genesis of the unemployment in-

surance program and its statutory mechanism, see Carmichael v.

Southern Coal Co., 301 U.S. 495 (1937), and Steward Machine Co.

v. Davis, 301 U.S. 548 (1937).

4

administering the state’s unemployment compensation pro-

gram. 42 U.S.C. §§ 501-503. The other goes towards the ad-

ministration of public employment offices which provide for

job-finding, employment recruiting and other services. 29

U.S.C. §§ 49-49n.

Coverage under the unemployment compensation law was

modified, restricted and expanded in 1976 by amendments to

FUTA. The changes that concern us are as follows.

1. Employees of a state and its political subdivisions were

required to be covered. 26 U.S.C. § 3304(a)(6)(A), 26 U.S.C. §

3309(a)(1)(B), and 26 U.S.C. § 3306(c)(7).

2. Coverage was extended to the employees of nonprofit

schools which are not institutions of higher learning. 26

U.S.C. § 3304(a)(6)(A), 26 U.S.C. § 3309(a)(1)(A), and 26

U.S.C. § 3306(c)(8).

3. Political subdivisions of a state were given the option of

reimbursing the state for unemployment benefits paid to

former employees in lieu of making payments in the same

manner as private sector employees. 26 U.S.C. § 3304(a) (6)(B)

and 26 U.S.C. § 3309(a)(2).

4. 26 U.S.C. § 3304(a)(14)(A), (B) and (C) restricted the

coverage of aliens, requried uniform reporting of alien status

data and imposed the preponderance of the evidence test for

denying compensation based on alien status. Under 26 U.S.C.

§ 3304(a)(9)(A), denial of compensation to an alien from a

country contiguous to the state of employment solely on the

basis that he filed another claim in that country was forbid-

den.

5. Coverage afforded to professional athletes was restricted

by prohibiting the payments of benefits between athletic

seasons. 26 U.S.C. § 3304(a)(13).

6. The coverage of employees of educational institutions

was modified in regard to the coverage of professional and

non-professional employees between academic terms or years,

and during vacation periods and vacation recesses. 26 U.S.C. §

3304(a)(6)(A).

5

This case was precipitated by the veto on June 23, 1978, by

the then governor of New Hampshire, of a bill that was in-

tended to bring the New Hampshire Unemployment Compen-

sation law into conformity with the provisions of 26 U.S.C. §

3304. The state had amended its unemployment compensation

law, effective January 1, 1978, in an effort to conform with

the 1976 amendments. It was notified by the Secretary of

Labor in February of 1978 that he had serious questions as to

whether this law conformed with federal requirements. This

led to the June, 1978, legislation, the veto of which was ac-

cepted by the legislature.

After the veto of the conformity legislation, a hearing pur-

suant to 26 U.S.C. § 3304(c), was scheduled by the Depart-

ment of Labor on whether New Hampshire was in conformity

in regard to the five categories of coverage and the optional

payment provision for political subdivisions of the state. The

hearing was held on September 14 and 15, 1978. In addition to

the six conformity issues, New Hampshire challenged the con-

stitutionality of the 1976 amendments as they related to

coverage of the employees of a state and its political subdivi-

sion. Indeed, almost all of the evidence introduced by New

Hampshire focused on the constitutional issue. The ad-

ministrative law judge (ALJ) found that New Hampshire's

unemployment law failed to conform with federal law in all

six respects claimed by the Secretary. He made findings of fact

as to the constitutional issue, but made no ruling thereon. In

reviewing the opinion of the ALJ, the Secretary made addi-

tional findings, modified a conclusion of law, corrected some

errors and then adopted the findings of facts and conclusions

of law of the ALJ as his own.*

*On June 23, 1979, New Hampshire enacted House Bill 808 in an

attempt to conform with the 1976 FUTA amendments. We asked for

briefs on the question of whether this legislation rendered the case

moot. The State of New Hampshire, in a brief by its Attorney

General, urged that the case was moot. The other parties, the

Department of Labor, the State of New Hampshire Department of

Employment Security, and the Amicus took the position that the

case was not moot.

The parties differ on the scope of our review. Petitioners

focus on the constitutionality of the 1976 amendments while

respondents assert that, if we uphold the findings of statutory

violations, we need not and should not reach the constitutional

issue. While the course suggested by respondents is tempting,

we feel that we must decide both the conformity and constitu-

tional issues.

The state did not meet the conformity requirements of 26

U.S.C. § 3304, nor does it so claim. As already noted, it in-

troduced practically no evidence at the hearing on conformity

and did not urge that it had complied with the law. New

Hampshire’s brief is devoted almost exclusively to the constitu-

tional question. In fact, it admits nonconformity by stating,

“New Hampshire has failed to satisfy the Secretary as to the re-

quirements of the 1976 amendments, solely because of its

Our examination of the bill and subsequent events convince us

that the case is not moot. House Bill 808 did provide a framework

for bringing New Hampshire into conformity with FUTA. The

legislation alone, however, could not bring New Hampshire into full

compliance. Conforming rules and regulations had to be pro-

mulgated by the New Hampshire Department of Employment

Security to flesh out the bare bones legislation. These required the

approval of the Secretary of Labor. In addition, administrative ac-

tion by New Hampshire was necessary to give such rules and regula-

tions retroactive effect. The parties attempted for months to agree

on the rules and regulations and administrative action for im-

plementing House Bill 808 and bringing New Hampshire into con-

formity with the FUTA amendments. The State of New Hampshire

and the Department of Labor did agree on conforming rules and

regulations and a judgment was prepared embodying them. The

New Hampshire Department of Employment Security, however,

refused to approve the judgment agreed upon by the Department of

Labor and the State. Since the judgment had to be implemented by

the New Hampshire Department of Employment Security and since

this department is completely autonomous, there can be no settle-

ment without its approval.

It must also be noted that House Bill 808’s statement of purpose

expresses clearly and forcibly the opinion of the New Hampshire

Legislature that it had no other alternative but to accede to this

“federal intrusion of its sovereignty” and that the legislation was

enacted “under duress and for no other reason.”

~

refusal to amend its law to accommodate the unconstitutional

public sector program financing requirements.” Brief at 66.

This admission is repeated in its supplemental brief at 11.

This is clearly not the type of case where statutory inter-

pretation makes it unnecessary to meet the constitutional

issues. New Hampshire made it clear before the ALJ at the

hearing, and_ before us, that it was refusing to conform

because it felt that the statute itself was unconstitutional. New

Hampshire’s decision to put all its eggs in the constitutional

basket, however, does not mean that we can avoid our

statutory duty of review of the Secretary's order. See New York

City Transit Authority v. Beazer. 440 U.S. 568 (1979). We

must determine whether there is substantial evidence on the

record to support the Secretary's findings.°

The evidence presented at the hearing can be summarized

as follows. New Hampshire was advised during the period Oc-

tober 21, 1976, through June 24, 1978, by the Department of

Labor what amendments would be necessary to bring its

unemployment compensation law into conformity with 26

U.S.C. § 3304. The Department of Labor specifically in-

formed the state that its law was deficient in the six categories

already outlined.

The evidence was uncontradicted that. although New

Hampshire has provided full unemployment insurance

coverage for its permanent and classified civil service

employees, temporary and seasonal workers and those not

classified are not covered. N.H. Rev. Stat. Ann. §

282:1-H(4)(g) and (q) specifically exclude from coverage

employees of political subdivisions and nonclassified state

workers. The finding of the Secretary that New Hampshire did

not meet the requirements of federal law as to coverage of

emplovees of the state and its political subdivisions was clearly

correct. This finding is also the basis for the Secretary's deter-

926 U.S.C. § 3310(b) provides in pertinent part:

(b) Findings of fact.—The findings of fact bv the Secretary

of Labor, if supported by substantial evidence. shall be con-

clusive[ .]

8

mination that the option provisions of the federal statute were

not met because, under New Hampshire law, N.H. Rev. Stat.

Ann. § 282:6-A-2, payments into the unemployment compen-

sation fund by political subdivisions of the state were limited

to those who had elected coverage.

N.H. Rev. Stat. Ann. § 282:1-H(4)(s)(3) specifically ex-

cludes from coverage those “in the employ of a school which is

not an institution of higher education.” This is directly con-

trary to the 1976 FUTA amendment which requires the states

to cover employees of nonprofit schools below the level of in-

stitutions of higher education.

Under subsections (B) and (C) of 26 U.S.C. § 3304(a)(14),

information as to alien status must be uniformly required from

all compensation applicants, and a state agency can only deny

compensation because of alien status on a preponderance of

the evidence. New Hampshire law does not have any alien

status conforming provisions. Under N.H. Rev. Stat. Ann. §

282:1-N(1)(a), it is specified that wages shall not include the

amount of any payment to an alien unless he was in the United

States under color of law. The Secretary found this provision

was ambiguous and might conflict with federal law relative to

aliens from a country contiguous to that of the state in which

he is employed. We agree.

The Secretary properly found that, under New Hampshire

law, N.H. Rev. Stat. Ann. § 282:1-0, payments to athletes bet-

ween seasons were not prohibited as required by federal law,

but only reduced by eliminating the sports income from the

athlete’s base period earnings.

The Secretary’s findings as to employees of educational in-

stitutions are based on a restricted and technical reading of the

federal statutory provisions. If this were the only issue, we

might be persuaded to find that New Hampshire was in

substantial compliance, but the broad provisions of the New

Hampshire statute, N.H. Rev. Stat. Ann. § 282:3-F, leave too

much to interpretation and construction to satisfy the tight

federal requirements.

9

We uphold the decision of the administrative law judge, as

modified and adopted by the Secretary, that New Hampshire's

Unemployment Compensation law was in the six respects

specified not in conformity with the requirements of the im-

plicated 1976 amendements to FUTA.

The constitutional issue can be stated thusly: do the 1976

amendments to FUTA violate the sovereign integrity of the

states and impair their ability to function effectively under the

federal system as guaranteed by the tenth amendment.

The basic question is whether this case falls within the new

furrow ploughed by National League of Cities v. Usery, 426

U.S. 833 (1976), or follows in the wake of Steward Machine

Co. v. Davis, 301 U.S. 548 (1937). In Usery, the Supreme

Court, in a five to four decision, overruled Maryland v. Wirtz,

392 U.S. 183 (1968), and held that the 1974 amendments of

the Fair Labor Standards Act (FLSA) extending its provisions

to employees of the states and their political subdivisions were

unconstitutional and prohibited by the tenth amendment.

Petitioners urge that its holding and rationale also doom the

1976 FUTA amendments which apply to the same employee

groups.

We note first that only two of the six nonconformity findings

implicate the tenth amendment, the one pertaining to

coverage of employees of the state and its political subdivi-

sions’ and the option given these entities relative to the method

of payment.®

“While there are obvious differences between the schools and

hospitals involved in Wirtz, and the fire and police departments af-

fected here, each provides an integral portion of those governmental

services which the States and their political subdivisions have tradi-

tionally afforded their citizens. We are, therefore, persuaded that

Wirtz must be overruled.” National League of Cities v. Usery, 426

U.S. 833, 855 (1976).

‘The other four nonconformity findings are limited to the private

sector. New Hampshire, in its latest brief, acknowledges its duty to

conform to the 1976 amendments as they apply to the private sector,

but argues that respondent Secretary waived these requirements

pending resolution of the constitutional issue. The Secretary denied

any waiver and argues that New Hampshire is precluded from

asserting a waiver since it was not raised below. We find no evidence

of a waiver by the Secretary.

10

Our analysis begins with the obvious; that we are dealing

with a different federal statute and, more importantly, a dif-

ferent regulatory method than was at issue in Usery. The

minimum wage and maximum hour provisions of the Fair

Labor Standards Act (FLSA) invalidated in Usery were im-

posed on the states by command. The authority for such com-

mand rested on the commerce clause. On the other hand, the

1976 FUTA amendments, following the design of the original

Act, were not based on the commerce clause and were not

directly imposed on the states which had the option of confor-

ming or not.

There is no doubt that Usery focused on the command of the

FLSA amendments that the states must adopt the maximum

hours and minimum wage provisions for its own employees.

The Act, speaking directly to the states qua States, re-

quires that they shall pay all but an extremely limited

minority of their employees the minimum wage rates cur-

rently chosen by Congress.

National League of Cities v. Usery, supra, 426 U.S. at 847-48.

But, like the minimum wage provisions, the vice of the

Act as sought to be applied here is that it directly

penalizes the states for choosing to hire governmental

employees on terms different from those which Congress

has sought to impose.

Id. at 849.

This command to the state is given bite by 29 U.S.C. § 216,

which provides for both civil and criminal penalties in the

event of a violation.

*For purposes of this discussion, we include public school

employees as employees of political subdivisions of the state. We are

aware, of course, that in Mt. Healthy City School District Board of

Education v. Doyle, 429 U.S. 274 (1977), the Supreme Court held

that a local school board was not an arm of the state and, therefore,

not entitled to invoke the bar of the eleventh amendment. Id. at

280-81. We do not think, however, that this limitation applies to the

tenth amendment.

11

In contrast, the basic premise and statutory scheme of the

federal-state unemployment compensation program, which

have remained unchanged since 1935, are based on the con-

cept that a state is free to accept federal conditions by confor-

ming to federal statutory requirements or can refuse to par-

ticipate entirely. Unlike the legislation at issue in Usery and

Maryland v. Wirtz, supra, the commerce clause is not im-

plicated. Congress chose to advance this legislation through its

spending power. In Steward Machine Co. v. Davis, supra, 301

U.S. 548 (1937), the validity of the tax on employers was

upheld against constitutional attack. Mr. Justice Cardozo,

writing for the majority, outlined the history and purpose of

this historic legislation and held that “[t]he excise is not void as

involving the coercion of the States in contravention of the

Tenth Amendment or of restrictions implicit in our federal

form of government.” Jd. at 585. An attack on a state’s

(Alabama) conforming legislation on the ground that its enact-

ment was coerced by the federal government was rebuffed in

Carmichael v. Southern Coal Co., 301 U.S. 495 (1937).

Petitioners argue, however, that this option of the state to

refuse to participate in the program is illusory, since the severe

financial consequences that would follow such refusal negate

any real choice. Petitioners assert that, while the 1976 federal

statutory requirements are not imposed by fiat, as with the

1974 amendments to the FLSA, the coercive effect is the same.

This is particularly so, they contend, because most of the

financial burden for a state’s decision not to conform falls on

its private employers through loss of federal tax credits. All

parties agree that the cost to the private employers in New

Hampshire will be about forty million dollars in 1978 tax

credits. It is argued that by holding the private employers

“ransom,” Congress coerces compliance.

We do not agree that the carrot has become a club because

rewards for conforming have increased. It is not the size of the

stakes that controls, but the rules of the game.’ The basic

7New Hampshire is the only state that has opted not to conform. It

12

design and mechanism of the Act have not changed since 1935.

Its coverage has been extended,® but the percentage of tax

credits remains essentially the same.*® The primary reason, of

course, for the increase in the dollar amount of tax credits has

been the expansion of our economy since 1935. The increase in

the number of employers and employees and the amount paid

in wages has meant a corresponding increase in the dollar

amount of tax credits.

We must also recognize that, since 1935, the philosophy and

objective of the unemployment compensation program, viz.,

that unemployment is a national problem that must be dealt

with on a national basis, have been woven inte: the fabric of

our society.'°

repeatedly stresses in its brief the burden on the state’s employers if

the Act is held constitutional. We observe that it is easy to gamble

for high stakes when the money on the table comes from someone

else’s pocket.

®The categories of employees has expanded. Single employees are

now covered. Federal civilian employees were included in 1954 with

provisions to reimburse the states for the benefits paid and the ad-

ministrative costs. In 1966, federal military personnel were covered.

In 1970, conformity requirements were passed to extend coverage to

employees of large nonprofit organizations and employees of state

hospitals and state institutions of higher learning. The 1976 amend-

ments extended the tax to farms which employ ten or more workers

for certain time periods or pay at least $20,000 in wages in any

calendar quarter. 29 U.S.C. § 3306(a)(2). Under 26 U.S.C. §

3306(a)(3), employees of domestic workers were included.

°Originally, FUTA was based on the total wages of each

employee. In 1940, the tax was limited to the first $3,000 of each

employee’s wages. At present, the tax base is the first $6,000 of

wages. Unemployment Compensation Amendments of 1976. The

tax rate has gone from 3.0 percent to its present rate of 3.4 percent;

the tax credit has remained constant at 2.7 percent.

In the Emergency Unemployment Compensation Act of 1974,

Congress extended emergency benefits for individuals who had ex-

hausted their regular benefits during a period of high unemploy-

ment. Although emergency benefits were funded entirely by the

federal government, only certified states could participate in the

program. The Emergency Jobs and Unemployment Assistance Act of

1974 provided unemployment benefits for individuals generally not

covered under the regular program, i.e., agricultural and domestic

13

In Usery, the Court specifically refrained from deciding

whether the spending power could be unconstitutionally used

to impair state sovereignty:

We express no view as to whether different results

might obtain if Congress seeks to affect integral opera-

tions of state governments by exercising authority granted

it under other sections of the Constitution such as the

spending power, Art. I, § 8, cl. 1, or § 5 of the Fourteenth

Amendment.

National League of Cities v. Usery, 426 U.S. at 852 n.17.

We construe Usery to hold that congressional legislation

based upon the commerce clause which impairs the sovereign

functions of the states is unconstitutional. Two other circuits

have refused to extend the Usery doctrine to legislation not

squarely bottomed on the commerce clause. In Usery v.

Charlestown City School District, 558 F.2d 1169 (4th Cir.

1977), and in Usery v. Allegheny County Institution District,

544 F.2d 148 (3d Cir. 1976), cert. denied, 430 U.S. 946 (1977),

the courts rejected arguments that, in light of National League

of Cities v. Usery, 426 U.S. 833 (1976), the Equal Pay Act was

workers and employees of state and local governments. This pro-

gram was fully funded by the federal government, but was payable

only in areas designated by the Secretary of Labor during periods of

high unemployment. During fiscal 1976, the federal government

paid about 3.4 billion dollars in emergency benefits. U.S. Dept. of

Labor, Sixty-Fourth Annual Report 12-13 (1976). Federal grants to

the states for the administration of their unemployment compensa-

tion program amounted to over $9,000,000 for fiscal 1977. 1 House

Hearings before SubComm. of Comm. on Appropriations, 95th

Cong. 2d Sess. 191 (1978). When state reserves are insufficient to

meet the need for benefit payments, the federal government through

the unemployment trust fund lends the needed funds to the state.

Such loans are interest free. As of February 1, 1978, there were

outstanding loans to twenty-one states in the aggregate amount of

$4.9 billion. 1 House Hearings, supra, at 168-69. Federal appropria-

tions of FUTA tax receipts to the unemployment trust fund

amounted to over $1.5 billion in fiscal 1976, and almost $2 billion in

fiscal 1977. The Budget of the U.S., Fiscal Year 1978, App. 508; The

Budget of the U.S., Fiscal Year 1979, App. 621.

14

an unconstitutional exercise of congressional authority under

the commerce clause. Both courts viewed the application of

the Equal Pay Act to the states as a legitimate exercise of con-

gressional authority to adopt legislation enforcing the four-

teenth amendment’s guaranty of equal protection of the law.

Similarly, in Arritt v. Grissell, 567 F.2d 1267 (4th Cir. 1977),

the court held that Congress enacted the Age Discrimination

in Employment Act, 29 U.S.C. §§ 621 et seq., under section 5

of the fourteenth amendment,'! rejecting the contention that

the ADEA was impermissibly grounded on the commerce

clause.

The tax at issue here, FUTA, is not based on the power of

Congress under the commerce clause. Congress has relied on

the attraction of the federal purse to persuade the states that it

is in their best interests to conform to a national unemploy-

ment insurance program. Inducing state participation in na-

tional progams by the offer of federal funds is not limited to

the unemployment compensation program. In North Carolina

ex rel. Morrow v. Califano, 445 F. Supp. 532 (E.D.N.C.

1977), aff'd, 435 U.S. 962 (1978), the issue of the constitu-

tionality of a conformity addition to the National Health Plan-

ning and Resources Development Act of 1974, 42 U.S.C. §

300k et seg. was raised. In upholding the constitutionality of

the Act, the court specificaly stated:

It must be remembered that this Act is not compulsory

on the State. Unlike the legislation faulted in State of

Maryland v. Environmental Protection Ag., supra, 530

F.2d 215, it does not impose a mandatory requirement to

enact legislation on the State; it gives to the states an op-

tion to enact such legislation and, in order to induce that

enactment, offers financial assistance. Such legislation

conforms to the pattern generally of federal grants to the

states and is not “coercive” in the constitutional sense

(emphasis in original).

''“The Congress shall have power to enforce, by appropriate

legislation, the provisions of this article.”

15

Id. at 535-36.

Under the Medicaid Act, Title XIX of the Social Security

Act of 1965, participating states are enabled by the use of

federal funds to provide medical services for welfare reci-

pients. A state’s participation in Medicaid is voluntary but, if

it chooses to participate, its plan must conform to the re-

quirements imposed by the Medicaid Act. Preterm, Inc. v.

Dukakis, 591 F.2d 121, 124 (lst Cir.), cert. denied, 47

U.S.L.W. 3745 (May 15, 1979).

Since it can be argued that Usery was based on two separate

and distinct concepts, the tenth amendment supremacy over

the commerce clause and/or the impairment of state sovereign-

ty, we next consider the evidence presented at the Labor

Department hearing on impairment of New Hampshire's

sovereignty due to the cost of extending unemployment

benefits to uncovered state employees and employees of its

political subdivisions. The finance officer of the City of Man-

chester (New Hampshire’s largest city) testified that over the

past nine years no permanent employees had been laid off, but

the cost of covering the City’s temporary seasonal employees

would require costly new staffing and record-keeping prac-

tices which would affect the ability of the City to maintain ex-

isting programs. The testimony of Elizabeth Puddington, a

consultant to the New Hampshire School Boards Association,

was that, because of New Hampshire’s dependence on the pro-

perty tax and the difficulties inherent in increasing revenues

therefrom, the cost of extending unemployment benefits to

public schools would probably result in a curtailment of

educational programs.

The sale of liquor through state licensed stores is one of the

main sources of state revenue. The Director of Merchandising

and Accounts of the New Hampshire State Liquor Commis-

sion estimated that the cost of extending unemployment

benefits to Commission employees would be $75,000-$80,000

annually with a potential cost of $120,000 annually. The

Comptroller of the State testified that the annual cost under

16

the reimbursement method of financing unemployment

benefits could amount to as much as $4.3 million and that,

under the alternate contributing tax method, the cost would

be about $300,000.

The cost to the New Hampshire Department of Employ-

ment Security for administering the additional coverage

would be between $75,000 and $150,000 annually, according

to the affidavit of its deputy commissioner. There was also af-

fidavit testimony as to the additional cost to the Department of

Health and Welfare - $30,528 and $4,830 for the Fish and

Game Department.

The overall cost to New Hampshire and its political subdivi-

sions for unemployment coverage was the subject of expert

testimony at the hearing. Lennox L. Moak was the expert for

the state. He testified that the additional cost to the state

would be $200,000 and $900,000 for its political subdivisions,

for a total of $1,100,000. Dr. James D. Van Erden testified as

an expert for the Labor Department. He estimated that the

total cost to New Hampshire and its political subdivisions for

fiscal 1978 would amount to $227,585, for fiscal 1979,

$288,935, and for fiscal 1980, $330,787.'2

Unlike the effect of the wage and hour standards in Usery,

we do not think that this evidence establishes that extending

coverage to the employees of New Hampshire and its political

subdivisions will “significantly alter or displace” the ability of

New Hampshire “to structure employer-employee relation-

ships in such areas as fire prevention, police protection, sanita-

tion, public health, and parks and recreation.” National

League of Cities v. Usery, 426 U.S. at 851. FUTA does not set

the wage rates or affect hours worked. All it does is insure

unemployment benefits for state employees. Its administration

is entirely within the control of the state. See Pearce v.

'2In reviewing the findings of the ALJ, the Secretary made the

following conclusion of law, which we find to be correct. “Due to

New Hampshire’s base period and benefit year, all of the cost for FY

1978 and approximately one-half the cost for FY 1979 of extending

coverage to state and local government employees could have been,

at New Hampshire’s option, covered by the Federal Government

under the transition provision (Section 121) of the 1976

Amendments.”

17

Wichita County, 590 F.2d 128 (5th Cir. 1979), and Marshall

v. City of Sheboygan, 577 F.2d 1 (7th Cir. 1978), in which the

Equal Pay Act was upheld as constitutional under the com-

merce clause on the grounds that, unlike the minimum wage

provisions condemned in Usery, the provisions of the Equal

Pay Act did not impermissibly interfere with the states’

employment scheme.

We hold that the 1976 amendments to FUTA relative to

employees of a state or its political subdivisions do not impair

the sovereignty of New Hampshire and have not been

rendered unconstitutional by Usery.

There is one more matter that requires our attention, the re-

quest of Amicus Los Angeles County to reconsider our order

dismissing it as a named petitioner in the case. Our order is

reaffirmed for lack of jurisdiction under 26 U.S.C. § 3310(a).'°

We must also note that Amicus is represented by the sarne at-

torneys representing the State of New Hampshire Department

of Employment Security. By use of the Amicus format, the

petitioner has had an opportunity to present its constitutional

arguments exhaustively from every conceivable angle.

CAMPBELL, Circuit Judge (Concurring). Like my col-

leagues, I find substantial evidence to support the decision of

the Secretary of Labor that New Hampshire’s unemployment

compensation law failed in six specific respects to conform to

the 1976 federal amendments. See 26 U.S.C. § 3310(b). This

being so, even if New Hampshire’s constitutional challenge to

1326 U.S.C. § 3310(a) provides in pertinent part:

Whenever under section 3303(b) or section 3304(c) the

Secretary of Labor makes a finding pursuant to which he is re-

quired to withhold a certification with respect to a State under

such section, such State may, within 60 days after the Gover-

nor of the State has been notified of such action, file with the

United States court of appeals for the circuit in which such

State is located or with the United States Court of Appeals for

the District of Columbia, a petition for review of such action.

18

the statutory provision requiring it to provide unemployment

coverage to state and local employees were correct, the

Secretary was nonetheless entitled to withhold funding. Given

an adequate statutory ground upon which to uphold the

Secretary’s decision, I therefore believe it to be unnecessary

and inappropriate to decide New Hampshire’s constitutional

challenge.

Under 26 U.S.C. § 3304(c), the Secretary is commanded by

Congress to withhold certification from any state which the

Secretary “finds has failed to amend its law so that it contains

each of the provisions required by reason of the enactment of

the Unemployment Compensation Amendments of 1976 to be

included therein.” (Emphasis added.) As I read this law, if the

state’s enactment fails to conform to the federal requirements

in even one material respect, the Secretary is required to

withhold certification. New Hampshire concedes that its law

has not been amended to conform to the federal requirements,

and that the law is deficient in six different areas. The state’s

constitutional challenge, however, relates to only two of these

areas, those involving coverage for public employees. Even

were we to find this part of the federal act unconstitutional, as

New Hampshire urges, we would nevertheless be constrained

to affirm the decision of the Secretary insofar as it rests on the

four provisions of the 1976 amendments that are undoubtedly

constitutional.'

As the Supreme Court has recently observed:

“ “If there is one doctrine more deeply rooted than any

other in the process of constitutional adjudication, it is

that we ought not to pass on questions of constitutionality

. unless such adjudication is unavoidable.’ Spector

'T think it is plain that Steward Machine Co. v. Davis, 301 U.S.

548 (1937), would foreclose any attempt by the state to argue that

the federal act is unconstitutional in its application to private

employers. Four of the requirements to which New Hampshire's

statute was found not to conform concerned private employers only.

See discussion in majority opinion at pp. 7-8.

19

Motor Co. v. McLaughlin, 323 U.S. 101, 105. Before

deciding [a] constitutional question, it [is] incumbent on

. courts to consider whether . . . statutory grounds

might be dispositive.”

New York Transit Authority v. Beazer, 440 U.S. 568, 582

(1979); see also Rescue Army v. Municipal Court, 331 U.S.

549, 568-69 (1947); Ashwander v. TVA, 297 U.S. 288, 346-47

(1936) (Brandeis, J., concurring). Since the statutory ground

in this case is entirely dispositive, I see no reason to follow the

parties into collateral issues. If New Hampshire wished a rul-

ing on its point of constitutional law, it should first have con-

formed its laws in all respects not implicating the constitu-

tional issue.

I would add that apart from the reasons given above for

avoiding constitutional adjudication, I take no particular ex-

ception to the court’s decision.

Adm. Office, U.S. Courts — Blanthard Press, Inc., Boston, Mass.

UNITED STATES OF AMERICA

DEPARTMENT OF LABOR

REKKKKKKKKRKKKKKKKKKKRRRKKEK

STATE OF NEW HAMPSHIRE

DEPARTMENT OF FMPLOYMENT

SECURITY

*

In the Matter of *

*

U.S. DEPARTMENT OF LABOR *

* .

¥, * CONFORMITY

* PROCEEDING

*

*

*

*

REKEKEKREEEEKRKKKRKKKR RRR

DECISION OF THE SECRETARY

The Unemployment Compensation Law of the

State of New Hampshire must be determined by

the Secretary of Labor, by October 31, 1978, to

be in conformity with the requirements of the

Federal Unemployment Tax Act (26 U.S.C. 3301-

3311), hereinafter referred to as FUTA in order

to be certified under section 3304(c) of FUTA and

thereby to have that State receive the benefits

for itself and its inhabitants provided by Title

III of the Social Security Act, 42 U.S.C. 501-

504, and FUTA. Such benefits include federal

grants for the administration of its unemploy-

ment compensation law as well as tax credits for

private employers within the State. The purpose

of this proceeding is to determine whether the

New Hampshire Unemployment Compensation Law

is in conformity with the requirements of FUTA.

Pursuant to a notice published in the

Federal Register (43 F.R. 26500, 36721, 42048)

and rules of procedure incorporated therein, a

hearing was held before an Administrative Law

Judge, hereinafter sometimes referred to as the

Judge, at which the parties were afforded the

opportunity to examine witnesses and introduce

documentary evidence relating to the issues of

conformity as well as to the constitutionality

of certain federal requirements. Thereafter,

briefs and proposed findings of fact and con-

clusions of law were filed by the parties.

On October 13, 1978, the Judge issued a re-

‘commended decision in the matter, (hereinafter

ceecteia referred to as Rec. Dec. or R.D.), in

which he found that the New Hampshire Unemploy-

ment Compensation Law is not in conformity with

the requirements of FUTA with regard to each of

the six conformity issues (and sub-issues)

specified in the notice of hearing. He also

made findings of fact relating to the iseues of

constitutionality, in accordance with the rules

of procedure.

The New Hampshire Department of Employment

Security (NHDES) and the U.S. Department of

Labor (USDOL) have filed exceptions to the Admin-

istrative Law Judge's recommended decision.

The U.S. Department of Labor has excepted

to certain of the findings of fact on the issues

of constitutionality contained in the Judge's

recommended decision. The USDOL notes that find-

ings nos. 6, 7, 8, and 9 (Rec. Dec., pp. 3l-

32) all incorporate cost estimates, and that such

findings are based upon the affidavits of four

New Hampshire state officials, Fowler, Buswell,

Whalen, and Barry, which contain such estimates.

The USDOL contends that the affidavits in question

should be given no weight because, among other

things, three of them contain no explanation

of the assumptions or factors used to arrive at

their cost estimates, the fourth makes only a

" and

general reference to "our past experience,

none of the four officials was present at the

hearing and subject to cross-examination as

to the basis for arriving at his cost estimate.

For these and other reasons the USDOL argues that

the affidavits are deficient, and therefore the

findings of the Judge based upon them should

be deleted. I agree. Accordingly, findings of

fact nos. 6, 7, 8, and 9 on the issues of con-

stitutionality contained in the Judge's recom-

mended decision at pages 31-32, are deleted.

The USDOL takes exception to certain other

findings on the issues of constitutionality which

contain cost estimates. In its Statement of Ex-

ceptions (at pages 5-6, it states:

Subparagraphs 3(1) and 4(a) of the 'Find-

ings of Fact on the Issues of Constitutional-

ity’ (R.D. at 29, 30) contain cost estimates

from the oral testimony of two New Hampshire

officials: Robert Herlihy, Director of Mer-

chandising and Accounts for the New Hampshire

State Liquor Commission, and Daniel Durgin,

Business Administrator for Supervisory Union

16 of Exeter, New Hampshire, and President

of the New Hampshire School Administrator's

Association. Both Mr. Herlihy and Mr. Dur-

gin testified that they based their cost

estimates on the contributions method of

financing, multiplying the number of en-

ployees in their respective governmental

units times $6,000 times 2.7 percent. (Her-

lihy, Tr. at 147, 152; Durgin, Tr. at 158,

161, 166). This is the statutory formula

for assessing contributions from new pri-

vate employers under current New Hampshire

law. (See Section 282.6 of the New Hamp-

shire Unemployment Compensation Law (NHUCL)).

These estimates ignore the fact that, even

under the current NHUCL, employers with rel-

atively low turnover can eventually earn

an experience rating which enables them to

make contributions at a tax rate of less

than 2.7 percent. (See Section 282.6, D

of the NHUCL). These estimates also ignore

the fact that the state may enact a special

contribution plan for governmental entities

which may establish a standard rate for such

entities which is less than 2.7 percent.

More importantly, neither Mr. Herlihy

nor Mr. Durgin even attempted to make an

estimate of the actual cost of coverage

which would be incurred on a dollar-for-dollar

reimbursement basis. As Dr. Van Erden testi-

fied, the formula used by these New Hampshire

witnesses may indicate revenue to the state

unemployment trust fund at a tax rate of

2.7 percent, but it does not indicate the

likely actual cost of additional coverage.

(Tr. at 322-325).

For the reasons just stated, the De-

partment takes exception to subparagraphs

3(1) and 4(a) of the 'Findings of Fact on

the Issues of Constitutionality." (R.D. at

29, 30). Therefore, subparagraphs 3(1) and

4(a) should be deleted. ***

For the reasons stated in the Statement of

Exceptions filed by the USDOL (at pages 5-6),

which I find to be sound and persuasive, nos. 3(1)

and 4(a) of the Findings of Fact on the Issues of

Constitutionality, at pages 29-30 of the Reconm-

mended Decision, are deleted.

The USDOL takes exception to the Judge's

failure to consider and on findings with regard

to the testimony of three of its witnesses at

the hearing, Mr. Rubin, Mr. Rosbrow, and Mr.

Wasserman. It contends that a decision in this

proceeding would be incomplete without a con-

sideration of the evidence and expert opinions

they presented, and findings based thereon. There-

fore, the USDOL proposes the following additional

findings of fact and conclusions of law relating

to the issues of constitutionality (USDOL State-

ment of Exceptions, pp. 7-11):

Findings of Fact

l. Even if a student earned enough

in a summer job to meet New Hampshire's

financial eligibility tests, a full-time

student would rarely meet the eligibility

requirement that he or she be available for

and seeking permanent, full-time work. (US

DOL) Proposed F/F 31; USDOL Posthearing Brief

at 35-37).

2. The financial eligibility and rigor-

ous availability requirements in the New

Hampshire Unemployment Compensation Law

act to reduce the number of former tempor-

ary, seasonal, and part-time state and local

government employees who are likely to col-

lect unemployment benefits. (USDOL Proposed

F/F 32; USDOL Posthearing Brief at 37).

3. The amount of benefits payable to

individuals with part-time and/or temporary

work experience is not likely to be as high

as the amount payable to former full-time,

permanent employees. (USDOL Proposed F/F

33; USDOL Posthearing Brief at 37-38).

4. The extension of coverage to ad-

ditional state and local government employees

will not create any significant new record-

keeping or administrative burdens for New

Hampshire public employers. (USDOL Pro-

posed F/F 34; USDOL Posthearing Brief at

39-40).

5. NHDES witnesses testified uniformly

that the subject of unemployment compensation

had never come up in their collective bargain-

ing experience with New Hampshire public

employees. Mr. Donald Wasserman, Research

Director for the American Federation of State,

County, and Municipal Employees (AFSCME),

testified that he was aware of no jurisdic-

tion other than in one occasion in the State

of Delaware in which his union had attempted

to negotiate coverage of unemployment compen-

sation as part of a collective bargaining

agreement. Instead, the union has treated

such coverage as a legislative matter, not as

a subject of collective bargaining. (Tr. at

463). This evidence shows that the extension

of coverage provided for by the 1976 Amend-

ments will not interfere with the employer-

employee relationship in the public sector

in New Hampshire, since unemployment compen-

sation is generally not a subject of collec-

tive bargaining. (USDOL Proposed F/F 35;

USDOL Posthearing Brief at 40).

6. Congress passed the 1976 Amendments

as a matter of equity, in order to protect

public as well as private sector employees

against the risks of unemployment. (USDOL

Proposed F/F 40; USDOL Posthearing Brief at

47).

ie The need of public employees for

unemployment compensation is even greater

than that of employees in the private sector.

This is because, unlike the private sector,

the public sector contains virtually no sub-

stitutes for unemployment compensation, such

as severance pay or private supplemental un-

employment benefits. For example, only one

of some forty-odd AFSCME contracts in New

Hampshire contains any kind of severance pay

provision. Wages also tend to be higher in

private sector than in the State and local

government sector, so that the absence of

unemployment compensation for public employ-

ees is not counter-balanced by higher wages

(and thus the possibility of greater savings

to act as a cushion against wage loss oc-

casioned by unemployment). (USDOL Proposed

F/F 41; USDOL Posthearing Brief at 48).

8. Any costs incident to the extension

of coverage to additional state and local

government employees are outweighed by the

benefits to the newly covered employees them-

selves. (USDOL Proposed F/F 42; USDOL Post-

hearing Brief at 47-48).

Conclusions of Law

1. Due to New Hampshire's base period

and benefit year, all the cost for FY 1978

and approximately one-half the cost for FY

1979 of extending coverage to state and local

government employees could have been, at New

Hampshire's option, covered by the Federal

Government under the transition provision

(Section 121) of the 1976 Amendments. (US

DOL Proposed C/L 21; USDOL Posthearing Brief

at 19).

ee Section 282.2, B of the New Hamp-

shire Unemployment Compensation Law provides

that an individual must have earned at least

$1,200 during his base period, including at

least $300 in each of two calendar quarters,

to qualify for benefits. (USDOL Proposed

C/l. 22).

36 Section 282.3,D of the New Hampshire

Unemployment Compensation Law provides that

an unemployed individual is eligible for bene-

fits only if "(h)e is available for and seek-

ing permanent, full-time work for which he is

qualified." (USDOL Proposed C/L 23).

4. The cost of Unemployment benefits for

former Comprehensive Employment and Training

Act (CETA) employees is borne by the Federal

Government, not by state or local governments.

(USDOL Proposed C/L 24; USDOL Posthearing

Brief at 37; Tr. at 244).

5. The Federal Unemployment Tax Act

(FUTA) permits state and local governments a

number of financing options in meeting the

cost of extending coverage to their employ-

ees. The two major financing options are

the reimbursement method and the contribu-

tion method. FUTA requires that every con-

forming state offer its local governments

the option of financing benefits by dollar-

for-dollar reimbursement of benefits actual-

ly paid, or through assessment of a payroll

tax (contribution) at a set rate. (USDOL

Proposed C/L 25; USDOL Posthearing Brief at

41-42; Tr. at 414-419).

6. A number of variations on the major

options are also possible under FUTA. For

example, a governmental unit could adopt

a delayed reimbursement method, postponing

the reimbursement until after the fiscal

year in which benefits were paid. This

would remove budgetary uncertainty for govern-

ments otherwise preferring reimbursement to

contribution. Under the contribution method,

a state could adopt a special, lower tax

rate for public employers if unemployment

tended to be lower in the public than in

the private sector. Federal law would even

allow the state itself to finance the cost of

coverage for local governmental units, an

approach which might commend itself if the

state had greater financial resources and a

more varied potential tax base than its

political subdivisions. Such variations are

wholly within the control of the state. (US

DOL Proposed C/L 26; USDOL Posthearing Brief

at 41-42; Tr. at 414-419).

7. In essence, FUTA requires that pub-

lic and private sector employees be treated

equally with regard to unemployment compensa-

tion coverage. However, factors such as

qualifying wages, qualifying weeks of employ-

ment, eligibility requirements, disqualifi-

cations, weekly benefit amounts, and duration

of benefits are all matters of state discretion

and can be changed, if changed in a nondis-

criminatory manner. (USDOL Proposed C/L 27;

USDOL Posthearing Brief at 45-46; Tr. at

239-240).

8. FUTA does not require that all

temporary, seasonal, and part-time employees

be eligible for benefits; it merely forbids

treating them differently in the public and

private sectors. Thus, a state could adopt

a stronger labor force attachment require-

ment for all workers, such as requiring a

certain number of weeks of work during the

base period. For example, the State of New

York requires that an individual must have

earned at least $40 in each of 20 differ-

ent weeks during his base period to be

eligible for benefits. This type of require-

ment makes it much more difficult for

temporary workers to qualify for benefits

than under New Hampshire's present law.

(USDOL Proposed C/L 28; Tr. 419-423).

9. FUTA leaves New Hampshire, as

well as each of the other states, free to

reduce its costs and those of its political

subdivisions to whatever extent it deems

appropriate by modifying various provisions

of its unemployment compensation law (such

as the weekly benefit amount, duration of

benefits, eligibility requirements, etc.),

as long as in so doing it does not discrimi-

nate between public and private sector em-

ployees. USDOL Proposed C/L 29; USDOL Post-

hearing Brief at 45-46).

Contrary to the views expressed in the NHDES

Statement of Exceptions, I find that the additional

findings of fact and conclusions of law relating

to the issues of constitutionality which are pro-

posed by the USDOL on pages 7-11 of its Statement

of Exceptions and are set out above, are supported

by record, are in accordance with law, and are

proper, and I adopt them as my own.

In addition to the proposed findings of fact

and conclusions of law set out above, certain other

proposed findings of fact offered by the USDOL

were omitted from the Recommended Decision. The

USDOL takes exception to these omissions, and

proposes the following additional findings of

fact relating to the issues of constitutionality

(USDOL Statement of Exceptions, p. 12):

l. If New Hampshire had enacted a

law conforming to the 1976 Amendments ef-

fective January 1, 1978, data supplied by

NHDES indicates that such a law would have

added some 35,000 newly covered state and

local government employees, of whom some

62% would have been employed in full-time

permanent positions. (USDOL Proposed F/F 28;

USDOL Posthearing Brief at 34-35).

2. Evidence from the State of New

Hampshire and the City of Manchester indi-

cates that involuntary turnover in their

full-time permanent positions is almost

non-existent. (USDOL Proposed F/F 29;

USDOL Posthearing Brief at 35).

Je Even for those newly covered em-

ployees who are in temporary or part-time

positions, NHDES has not demonstrated what

proportion of such employees would meet

state eligibility requirements or what level

of benefits such employees would draw.

(USDOL Proposed F/F 30; USDOL Posthearin

Brief at 35-36. In fact, USDOL requeste

data from NHDES in interrogatories filed

July 17, 1978; but it was never supplied.)

I find that such proposed findings in the

three numbered paragraphs immediately above, are

supported by the record, are proper, and I adopt

them as my own.

Although the USDOL concurs in the cost find-

ings contained in no. 17 of the Findings of Fact

on the Issues of Conecdtetineitlaie, (Rec. Dec.,

pp. 33-35), it states that this portion of the

decision would be strengthened by an explanation

of why Dr. Van Erden's cost estimates were ac-

corded greater weight than those of Mr. Moak. The

USDOL takes exception to this omission, and proposes

the following additonal findings of fact with re-

spect to the testimony of Mr. Moak, which would

be inserted immediately after find no. 13, found

on pages 32-33 of the Recommended Decision. (US

DOL Statement of Exceptions, p. 13):

l. The cost estimate developed by Mr.

Moak on behalf of NHDES was as follows:

FY 1977 $1,140,000

FY 1979 1,352,000

FY 1980 1,510,000

2. Mr. Moak reached his estimate by

using New Hampshire data for 1977. Using

1977 data he developed a unit cost of cover-

age per state employee, which he then used

to estimate costs for both state and local

government employees in 1979 and 1980.

3. Mr. Moak's method seriously over-

states the likely costs of the extension of

coverage by using 1977 data for separations

and for duration of benefits. Actual 1978

data shows both the insured unemployment rate

(IUR) and the average duration of benefits

have dropped significantly, and economic

projections indicate both are likely to

drop further or level off during fiscal

years 1979 and 1980. Mr. Moak, in contrast,

assumed a constant economic situation

since 1977, and an assumption not reflected

in actual data for 1978 or in generally ac-

cepted economic forecasts for 1979 and 1980.

This assumption led him to a serious over-

estimate of the costs of additional coverage

in those years. (See USDOL Proposed F/F 18-

21, USDOL Posthearing Brief at 23-31).

In addition the USDOL urges that finding

no. 17 (Rec. Dec. at p.33) should be amended to

read, in pertinent part, as follows: "... I find

and conclude that the projections and estimates

of Dr. Van Erden are to be accorded the greater

weight, due to the superiority of his methodology

and his assumptions, in particular his considera-

tion of actual data for 1978 and generally ac-

cepted economic forecasts for 1978 and 1979...".

Contrary to the position of the State of New

Hampshire Department of Employment Security in its

Statement of Exceptions, the additional findings

with respect to Mr. Moak's testimony and cost ex-

timates which have been proposed by the USDOL, as

well as its proposed amendment of finding no. 17

concerning the reasons for the grea: er weight to

be accorded Dr. Van Erden's estimates, as set out

above, are supported by the record and are well

founded, and they are hereby adopted.

The USDOL takes exception to the failure of

the Recommended Decision to specify what weight,

if any, was given to nationwide evidence offered

at the hearing relating to the impact of the ex-

tension of unemployment insurance coverage to

state and local government employees. The USDOL

states (Statement of Exceptions, p. 14):

The history of this New Hampshire con-

formity proceeding reveals a continuing dis-

pute between the parties as to the admissi-

bility of nationwide evidence. The presid-

ing administrative law judge ruled such evi-

dence admissible at the hearing, but it is

unclear what weight, if any,he gave such

evidence in his Recommended Decision. (The

Recommended Decision appears to contain no

findings on such evidence.) USDOL, therefore,

proposes the following additional finding of

fact to clarify this issue:

Nationwide data was admitted by

the administrative law judge at

the hearing over UDSOL objections.

This evidenca, in the form of both

testimony and affidavits, tends

to show that neither layoffs of public

employees nor curtailments of govern-

ment services have resulted from

the extension of unemployment in-

surance coverage to state and local

employees. (See USDOL Posthearing

Brief at 32-33, 43-45; Exhibit ALJ-

45.) However, since the instant

proceeding involves conformity and its

impact in New Hampshire, I find that

nationwide evidence is entitled to

little weight.

In my opinion, the additional finding of fact

proposed by the USDOL with regard to nationwide

evidence, as setout immediately above, is sound

and proper, and it is adopted.

In its Statement of Exceptions, at pages

14-17, the USDOL takes exception to the treat-

ment of conformity issues in the Recommended

Decision (referred to in the exceptions as "R.D.")

as follows:

The 'Findings as to Conformity of New Hamp-

shire Law to Federal Requirements,' R.D. at

10-13, paragraph 19-23(e), and the 'Conclu-

sionsof Law on the Issues of Conformity,' R.D.

at13-23, paragraphs 2-7(e), are largely redun-

dant. The 'Findings,'R.D. at 10-13, appear

to be taken from USDOL's proposed conclusions

of law #15-20c while the 'Conclusions, ' R.D.

at 13-23, appear to be taken from USDOL's pre-

hearing brief (p.3-19). However, certain dis-

crepancies also exist. The 'Findings' omit

USDOL proposed conclusions of law #18b,

dealing with the treatment of aliens in a

contiguous country, and #20a, dealing with

the nonconformity of the NHUCL 'between-terms

denial’ provision during the months of Novem-

ber and December, 1977. The ‘Conclusions’

address the treatment of aliens in a con-

tiquous country but again omit the 1977 con-

formity issue.

USDOL proposes the following resolution

for the above difficuties. The ' Conclusions

of Law on the Issues of Conformity', R.D.

at 13-23, should be supplemented by the fol-

lowing additional conclusion of law:

7(£) The prior 8 3304(a)(6)(A) of

FUTA, as enacted by section 104(a) of

P.L. 91-373, required an approved State

law, effective January 1, 1972, to pro-

vide that--

(6)(A) compensation is payable

on the basis of service to

which section 3309 (a) (1) ap-

plies, in the same amount, on

the same terms, and subject to

the same conditions as compen-

sation payable on the basis

of other service subject to such

law; except that, with resepect

to service in an instructional,

research, or principal adminis-

trative capacity for an institu-

tion of higher education to

which section 3309 (a)(1) ap-

plies, compensation shall not

be payable based on such service

for any week commencing during

the period between two succes-

sive academic years (or, when

the contract provides instead for

a similar period between two

regular but not successive terms;

during such period) to any in-

dividual who has a contract to

perform services in any such ca-

pacity for any institution or in-

stitutions of higher education

for both of such academic years

or both of such terms, and

* * * * *

Although this provision of FUTA was

superseded by the currently effective

§3304(a)(6)(A) on January 1, 1978, it

was effective until December 31, 1977.

Under the above cited provision, for

the period prior to January 1, 1978,

"between terms’ denial could apply

only to those individuals who performed

services for a nonprofit or state in-

stitution of higher education in an

instructional, research or principal

administrative capacity (i.e., so-

called 'professional' capacities).

This provision did not authorize a

between terms denial with respect

to those who performed services for

such an institution of higher edu-

cation in a non-professional capacity.

Section 282:3,F of the NHUCL pro-

vides, effective July 1, 1977, than an

employed individual shall be eligible

to receive benefits with respect to

any week only if the director finds

that:

F, He is not seeking benefits

for any week commencing during

summer or other vacation breaks,

semester breaks, or any other

time during which a school or

other academic institution is

not in session, between two

successive academic years or

terms or any other period, if he

has a contract to perform, or

there is a reasonable assurance

that he will perform, professional

or non-professional services in

the second of such academic

periods and he performed such

services during the first of

such academic periods.

The above quoted New Hampshire provision

denies benefits to individuals who

performed services in a nonprofes-

sional capacity in the first of two

academic periods if they seek bene-

fits betwen the first and second aca-

demic periods and there is a contract

or a reasonable assurance to perform

nonprofessional or professional

services in the second academic

period. Such a denial under the

"between terms' denial provision is

inconsistent with the ‘equal treat-

ment’ requirement of 83304 (a) (6)

(A) cited above. Thus, for November

and December, 1977 the NHUCL failed

to conform to the then effective

83304 (a) (6) (A) of FUTA because it

does apply ‘between terms' denial to

non-professionals of such institutions.

I find that the USDOL's proposal is well founded.

Accordingly, an additional conclusion of law on

the issues of conformity, designated 7(f) and

worded as set out above, is inserted immediately

after conclusion 7(e) on page 23 of the Recom-

mended Decision.

The USDOL makes the further proposal (on

pages 17 and 18 of its Statement of Exceptions)

that certain findings, designated 22(c) and 23

(£), be added to the Recommended Decision. I

believe that such proposal is well founded.

Accordingly, the following findings, designated

22(c) and 23(f), are hereby added to the findings

as to conformity of New Hampshire's law to

Federal requirements, contained in the Recom-

mended Decision, immediately after findings

22(b) and 23 (e) on pages 12 and 13 of such

decision, respectively:

22(c). Since there exists no

provision in the NHUCL which expressly

provides that benefits will not be denied

or reduced solley for the reasons specified

in 8 3304(a) (9) (A) of FUTA, and since it

is unclear from 8 282:1, (N) (a) of the

NHUCL whether or not the phrase ‘under

color of law' is broad enough to encompass

individuals in a contiguous country with

which the United States has an agreement

with respect to unemployment compensation

and who have been temporarily admitted

into the United States for the purpose of

performing services, a finding cannot be

made that the NHUCL, effective January l,

1978, has been amended to contain a provision

which meets the requirements of 8 3304 (a)

(9) (A) of FUTA. (USDOL Proposed C/L

18b).

23(f). Under 8 3304 (a) (6) (A) of

FUTA as enacted by section 104 (a) of P.L.

91-373, which was effective until December

31, 1977, a ‘between terms’ denial could

apply only to those individuals who per-

formed services for a nonprofit or state

institution of higher education in an

instructional, research or principal

administrative capacity (i.e., so-called

"professional' capacities). This provi-

sion did not authorize a between terms

denial with respect to those who performed

services for such an institution of higher

education in a non-professional capacity.

Section 282:3,F of the NHUCL, which was

effective July 1, 1977, denies benefits to

indivuduals who performed services in a

non-professional capacity in the first of

two academic periods if they seek benefits

between the first and second academic

periods and there is a contract or a

reasonable assurance to perform non-

professional or professional services in

the second academic period. Such a denial

under the ‘between terms’ denial provision

is inconsistent with the ‘equal treatment’

requirement of 8 3304 (a) (6) (A). Thus,

for November and December, 1977 the NHUCL

fails to conform to the then effective 83304

(a) (6) (A) of FUTA because it does apply

"between terms’ denial to nonprofessionals

of such institutions. (USDOL Proposed C/L

20a).

On pages 18-22 of its Statement of Exceptions,

the USDOL lists a number of minor errors in the

Recommended Decision (R.D.) which appear to be

inadvertent but which affect the substantive

accuracy of the decision; it also lists a

number of proposed changes in language to clarify

meaning, and a number of typographical errors.

The proposed changes and corrections, as de-

scribed by the USDOL, all of which I find to be

well founded, are hereby made as indicated

below:

i. In R.D. at 2, first full para-

graph, delete last sentence and substitute:

"The purpose of the 1976 Amendments was to

extend Unemployment Insurance coverage to

employees of states and political subdivi-

sions and certain other employees.'

2. In R.D. at 3, numbered paragraph

4, fifth line, delete the word 'code' and

substitute 'color.'

3. In R.D. at 6, numbered paragraph

1, delete 'January 24, 1978' and substitute

"February 24, 1978.'

4. In R.D. at 9, numbered paragraph

7, delete ‘June 13, 1978' and substitute

"June 15, 1978'; insert after ‘a correction

to the Revised Rules' the additional

}

phrase 'dated September 14, 1978.'

De In R.D. at 10, numbered para-

graph 16, delete last sentence and substi-

tute: ‘Under current federal law, none of

these revenues could be used in support of

the nonconforming State's private sector

unemployment compensation progranm.'

Congress, of course, could pass new legis-

lation to establish interim coverage of

private and/or public sector employees in

a nonconforming state. (USDOL Response to

NHDES Supplemental Interogatory No. 2, ALJ

Exh. 48, p.14).

6. In R.D. at 11, numbered para-

graph 21, lines 4-6, delete material

inside parentheses, and add ‘and non-

profit organizations which are required by

sections 3304 (a) (6) (A) and 3309 (a) (1)

to be covered by the state unemployment

compensation law.' In the same paragraph,

line 10, after the word ‘entities' add

"and nonprofit organizations. '

7. In R.D. at 17, numbered para-

graph 4(b), fourth line, delete '3304(a)

(b) (A)' and substitute '3304 (a) (6) (A).'

8. In R.D. at 20, numbered para-

graph 6(b), fifth line, change the word

"services' at the beginning of the line to

"seasons.'

9. In R.D. at 33, numbered para-

graph 17a, delete ‘has been estimated’ and

substitute 'is likely to be'; delete

"40,421" and substitute '40,241.'

10. In R.D. at 33, numbered paragraph

17b, delete "has been estimated' and

substitute 'is likely to be.'

ll. In R.D. at 34, numbered para-

graph 17(e), delete ‘has been estimated’

and substitute ‘is likely to be.'

12. In R.D. at 34, numbered para-

graph 17 (g), delete last sentence and

substitute: 'A reasonable estimate, based

ong{hic...icai data, of the ratio between

the IUR for covered state and local em-

ployees and the IUR for the regular pro-

gram is .26.'

13. In R.D. at 35, top of page,

delete '$227,585" and substitute '$277,585.

14, In R.D. at 35, 'Recommendation,'

delete entire paragraph and substitute:

"Based upon the foregoing findings of fact

and conclusions of law, the Secretary of

Labor hereby determines that the New

Hampshire Unemployment Compensation Law

fails to conform to the provisions of the

Federal Unemployment Tax Act, as amended,

with respect to each of the six numbered

issues (and sub-issues included therein)

listed in the Notice of Hearing at 43 F.R.

26500 (June 20, 1978).'

Typographical Errors

k. In R.D. at 4, numbered paragraph

5, change ‘athlethic' to athletic.'

2. In R.D. at 5, top page, change

"‘virture' to ‘virtue.’

3. In R.D. at 7, numbered paragraph

2, thirteenth line, change 'labor' to

"Labor."

4. In R.D. at 11, numbered para-

graph 22, second line, change 'confrom' to

"conform.

. - In R.D. at 11, numbered para-

graph 22 (a), second line, change ‘form'

to 'from.'

6. In R.D. at 14, top of page,

delete first line (which duplicates last

line at bottom of p.13).

ve In R.D. at 16, numbered para-

graph 3 (c), last line, remove one 'S8'

sign.

8. In R.D. at 17, numbered para-

graph 4 (b), ninth line of quotation,

change ‘and' to ‘an.'

DP» In R.D. at 18, top of page,

thirteenth line, change ‘of' to ‘or.'

10. In R.D. at 19, numbered para-

graph 5(f), tenth line, change period to

comma,

ll. In R.D. at 20, numbered para-

graph 6(b), fifth and sixth lines, change

"substanitally' to 'substantially.'

Additional typographical errors in the Recom-

mended Decision which I have noted are hereby

corrected, as follows:

1. On page 19, in paragraph 5(d),

in the first line of the quotation of the

provisions of Section 3304 (a) (9) (A) of

FUTA, insert 'be' after ‘shall not.'

26 On the same page of the Rec.

Dec., in paragraph 5 (e), in the last

line of the quoted provision, change

‘color law’ to read ‘color of law.'

3. On page 34, in paragraph 17 (g),

in the first line change ‘uninsured' to

"insured' and in paragraph 17 (h), after

"Additional CR' delete the dollar signs

before the figures 35,148, 37,609 and

40,241.'

I have carefully studied all the evidence

in the record and have considered all the argu-

ments presented with respect to the issues, in-

cluding the exceptions to the Judge's recom-

mended decision dated October 13, 1978. It is

my conclusion that, except as indicated herein

above, the findings of fact and conclusions of

of law of the Judge with respect to the con-

formity issues which are contained in such

decision, are supported by the evidence in the

record, are in accordance with applicable law,

and are proper, and I adopt them as my own.

Accordingly, I find that the New Hampshire

Unemployment Compensation Law fails to conform

to the provisions of the Federal Unemployment

Tax Act, as amended, with respect to each of

the six numbered issues (andsub-issues included

therein) listed in the Notice of Hearing at 43

F.R. 26500 (June 20, 1978).

I find, further, that except as indicated

herein above, the findings of fact bearing on

the issues of constitutionality which the

Administrative Law Judge made in his recom-

mended decision of October 13, 1978, are supported

by the evidence in the record and are proper,

and I adopt them as my own.

Dated at Washington, D.C.

this day of October, 1978.

Secretary of Labor

FEDERAL STATUTES INVOLVED

26 U.S.C. $3301

83301. RATE OF TAX

There is hereby imposed on every employer

(as defined in section 3306(a)) for each

calendar year an excise tax, with respect to

having individuals in his employ, equal to-

(1) 3.4 percent, in the case of a calen-

dar year beginning before the first calendar

year after 1976, as of January 1 of which there

is not a balance of repayable advances made to

the extended unemployed compensation account

(established by section 905(a) of the Social

Security Act); or

(2) 3.2 percent, in the case of such

first calendar year and each calendar year

thereafter;

of the total wages (as defined in section 3306

(b)) paid by him during the calendar year with

respect to employment (as defined in section

3306(c)).

Aug. 16, 1954, c. 736, 68A Stat. 439; Sept. 13,

1960, Pub.L. 86-778, Title V, §523(a), 74 Stat.

980; Mar. 24, 1961, Pub.L. 87-6, 814(a), 75

Stat. 16; May 29, 1963, Pub.L. 88-31, §2(a), 77

Stat. 51; Aug. 10, 1970, Pub.L. 91-373, Title

III, g301(a), 84 Stat. 713; June 30, 1972, Pub.

L. 92-329, §2(a), 86 Stat. 398; Oct. 4, 1976,

Pub.L. 94-455, Title XIX, §1903(a)(11), 90

Stat. 1808; Oct. 20, 1976, Pub.L. 94-566, Title

II, §211(b), 90 Stat. 2676.

26 U.S.C. §3302

$3302. CREDITS AGAINST TAX

(a) Contributions to state unemployment

funds.-

(1) The taxpayer may, to the extent pro-

vided in this subsection and subsection (c),

credit against the tax imposed by section 3301

the amount of contributions paid by him into an

unemployment fund maintained during the taxable

year under the unemployment compensation law of

a State which is certified as provided in

section 3304 for the 12-month period ending on

October 31 of such year.

(2) The credit shall be permitted against

the tax for the taxable year only for the amount

of contributions paid with respect to such tax-

able year.

(3) The credit against the tax for any

ta::able year shall be permitted only for con-

tributions paid on or before the last day upon

which the taxpayer is required under section

6071 to file a return for such year; except

that credit shall be permitted for contributions

paid after such last day, but such credit shall

not exceed 90 percent of the amount which would

have been allowable as credit on account of such

contributions had they been paid on or before

such last day.

(4) Upon the payment of contributions

into the unemployment fund of a State which are

required under the unemployment compensation

law of that State with respect to remuneration on

the basis of which, prior to such payment into

the proper fund, the taxpayer erroneously paid an

amount as contributions under another unemploy-

ment compensation law, the payment into the proper

fund shall, for purposes of credit against the

tax, be deemed to have been made at the time of

the erroneous payment. If, by reason of such

other law, the taxpayer was entitled to cease

paying contributions with respect to services

subject to such other law, the payment into the

proper fund shall, for purposes of credit against

the tax, be deemed to have been made on the date

the return for the taxable year was filed under

section 6071.

(b) Additional credit.-In addition to the

credit allowed under subsection (a), a taxpayer

may credit against the tax imposed by section

3301 for any taxable year an amount, with respect

to the unemployment compensation law of each

State certified as provided in section 3303 for

the 12-month period ending on October 31 of

such year, or with respect to any provisions

thereof so certified, equal to the amount, if any,

by which the contributions required to be paid by

him with respect to the taxable year were less

than the contributions such taxpayer would have

been required to pay if throughout the taxable

year he had been subject under such State law to

the highest rate applied thereunder in such 12-

month period to any person having individuals in

his employ, or to a rate of 2.7 percent, which-

ever rate is lower.

(c) Limit on total credits.-

(1) The total credits allowed to a taxpayer

under this section shall not exceed 90 percent of

the tax against which such credits are allowable.

(2) If an advance or advances have been

made to the unemployment account of a State under

title XII of the Social Security Act, then the

total credits (after applying subsections (a) and

(b) and paragraph (1) of this subsection) other-

wise allowable under this section for the taxable

year in the case of a taxpayer subject to the

unemployment compensation law of such State shall

be reduced-

(A) (i) in the case of a taxable year

beginning with the second consecutive

January 1 as of the beginning of which there

is a balance of such advances, by 10 percent

of the tax imposed by section 3301 with

respect to the wages paid by such taxpayer

during such taxable year which are attribut-

able to such State; and

(ii) in the case of any succeeding taxable

year beginning with a consecutive January 1

as of the beginning of which there is a

balance of such advances, by an additional

10 percent, for each such succeeding taxable

year, of the tax imposed by section 3301

with respect to the wages paid by such tax-

payer during such taxable year which are

attributable to such State;

(B) in the case of a taxable year beginning

with the third or fourth consecutive January

1 as of the beginning of which there is a

balance of such advances, by the amount

determined by multiplying the wages paid by

such taxpayer during such taxable year which

are attributable to such State by the per-

centage (if any) by which-

(i) 2.7 percent, exceeds

(ii) the average employer contribution rate

for such State for the calendar year pre-

ceding such taxable year; and

(C) in the case of a taxable year beginning

with the fifth or any succeeding consecutive

January 1 as of the beginning of which there

is a balance of such advances, by the amount

determined by multiplying the wages paid by

such taxpayer during such taxable year which

are attributable to such State by the percen-

tage (if any) by which-

(i) the 5-year benefit cost rate appli-

cable to such State for such taxable year

or (if higher) 2.7 percent, exceeds

(ii) the average employer contribution

rate for such State for the calendar year

preceding such taxable year.

The provisions of the preceding sentence shall not

be applicable with respect to the taxable year

beginning January 1, 1975,or any succeeding tax-

able year which begins before January 1, 1980;

and, for purposes of such sentence, January l,

1980, shall be deemed to be the first January l

occurring after January 1, 1974, and consecutive

taxable years in the period commencing January l,

1980, shall be determined as if the taxable year

which begins on January 1, 1980, were the taxable

year immediately succeeding the taxable year which

began on January 1, 1974.

(3) If the Secretary of Labor determines

that a State, or State agency, has not-

(A) entered into the agreement described

in section 239 of the Trade Act of 1974,

with the Secretaryof Labor before July 15,

1975, or

(B) fulfilled its commitments under an

agreement with the Secretary of Labor as

described in section 239 of the Trade Act of

1974,

then, in the case of a taxpayer subject to the un-

employment compensation law of such State, the

total credits (after applying subsections (a) and

(b) and paragraphs (1) and (2) of this section)

otherwise allowable under this section for a year

during which such State or agency does not enter

into or fulfill such an agreement shall be reduced

by 15 percent of the tax imposed with respect to

wages paid by such taxpayer during such year which

are attributable to such State.

(d) Definitions and special rules relating

to subsection (c).-

(1) Rate of tax deemed to be 3 percent.-

In applying subsection (c), the tax imposed by

section 3301 shall be computed at the rate of 3

percent in lieu of the rate provided by such

section.

(2) Wages attributable to a particular

state.-For purposes of subsection (c), wages

shall be attributable to a particular State if

they are subject to the unemployment compensation

law of the State, or (if not subject to the un-

employment compensation law of any State) if they

are determined (under rulies or regulations pre-

scribed by the Secretary) to be attributable to

such State.

(3) Additional taxes inapplicable where

advances are repaid before November 10 of taxable

year.-Paragraph (2) of subsection (c) shall not

apply with respect to any State for the taxable

year if (as of the beginning of November 10 of

such year) there is no balance of advances

referred to in such paragraph.

(4) Average employer contribution rate.-

For purposes of subparagraphs (B) and (C) of

subsection (c)(2), the average employer contri-

bution rate for any State for any calendar year

is that percentage obtained by dividing-

(A) the total of the contributions paid

into the State unemployment fund with respect

to such calendar year, by

(B) the total of the remuneration subject

to contributions under the State unemploy-

ment compensation law with respect to such

calendar year.

For purposes of subparagraph (C) of subsection

(c)(2), if the average employer contribution rate

for any State for any calendar year (determined

without regard to this sentence) equals or ex-

ceeds 2.7 percent, such rate shall be determined

by increasing the amount taken into account under

subparagraph (A) of the preceding sentence by the

aggregate amount of employee payments (if any)

into the unemployment fund of such State with

respect to such calendar year which are to be

used solely in the payment of unemployment com-

pensation.

(5) 5-year benefit cost rate.-For purposes

of subparagraph (C) of subsection (c)(2), the 5-

year benefit cost rate applicable to any State

for any taxable year is that percentage obtained

by dividing-

(A) one-fifth of the total of the compen-

sation paid under the State unemployment

compensation law during the 5-year period

ending at the close of the second calendar

year preceding such taxable year, by

(B) the total of the remuneration subject

to contributions under the State unemploy-

ment compensation law with respect to the

first calendar year preceding such taxable

year.

(6) Rounding.-If any percentage referred to

in either subparagraph (B) or (C) of subsection

(c)(2) is not a multiple of .1 percent, it shall

be rounded to the nearest multiple of .1 percent.

(7) Determination and certification of per-

centages.-The percentage referred to in subsection

(c)(2)(B) or (C) for any taxable year for any

State having a balance referred to therein shall

be determined by the Secretary of Labor, and shall

be certified by him to the Secretary of the

Treasury before June 1 of such year, on the basis

of a report furnished by such State to the

Secretary of Labor before May 1 of such year.

Any such State report shall be made as of the

close of March 31 of the taxable year, and shall

be made on such forms, and shall contain such

information, as the Secretary of Labor deems

necessary to the performance of his duties under

this section.

(e) Successor employer.-Subject to the

limits provided by subsection (c), if-

(1) an employer acquires during any calen-

dar year substantially all the property used in

the trade or business of another person, or used

in a separate unit of a trade or business of such

other person, and immediately after the acquisi-

tion employs in his trade or business one or more

individuals who immediately prior to the

acquisition were employed in the trade or busi-

ness of such other person, and

(2) such other person is not an employer

for the calendar year in which the acquisition

takes place, then, for the calendar year in

which the acquisition takes place, in addition

to the credits allowed under subsections (a) and

(b), such employer may credit against the tax

imposed by section 3301 for such year an amount

equal to the credits which (without regard to

subsection (c)) would have been allowable to

such other person under subsections (a) and (b)

and this subsection for such year, if such other

person had been an employer, with respect to

remuneration subject to contributions under the

unemployment compensation law of a State paid by

such other person to the individual or individu-

als described in paragraph (1).

Aug. 16, 1954, c. 736, 68A Stat. 439; Sept. 13,

1960, Pub.L. 86-778, Title V, 8523(b), 74 Stat.

980; Mar. 24, 1961, Pub.L. 87-6, 814(b), 75 Stat.

16; Sept. 26, 1961, Pub.L. 87-321, §1(a), 75

Stat. 683; May 29, 1963, Pub.L. 88-31, §2(b), 77

Stat. 51; Nov. 7, 1963, Pub.L. 88-173, gl(a-c),

77 Stat. 305; Aug. 10, 1970, Pub.L. 91-373, Title

I, 8142(a), (b), 84 Stat. 707; Jan. 3, 1975, Pub.

L. 93-618, Title II, §239(e), 88 Stat. 2025;

June 30, 1975, Pub.L. 94-45, Title I, §110(a),

Title III, §302, 89 Stat. 239, 243; Oct. 4, 1976,

Pub.L. 94-455, Title XIX, 8$1903(a)(12), 1906(b)

(13) (A), 90 Stat. 1808, 1834; Apr. 12, 1977, Pub.

L. 95-19, Title II, §201(a), ¢1 Stat. 43.

26 U.S.C. $3304

$3304. APPROVAL OF STATE LAWS

(a) Requirements.-The Secretary of Labor

shall approve any State law submitted to him,

within 30 days of such submission, which he finds

provides that-

(1) all compensation is to be paid through

public employment offices or such other agencies

as the Secretary of Labor may approve;

(2) nocempensationshall be payable with

respect to any day of unemployment occurring with-

in 2 years after the first day of the first period

with respect to which contributions are required;

(3) all money received in the unemployment

fund shall (except for refunds of sums erroneously

paid into such fund and except for refunds paid

in accordance with the provisions of section

4

3305 (b)) immediately upon such receipt be paid

over to the Secretary of the Treasury to the

credit of the Unemployment Trust Fund established

by section 904 of the Social Security Act (42

U.S.C. 1104);

(4) all money withdrawn from the unemploy-

ment fund of the State shall be used solely in

the payment of unemployment compensation, exclu-

sive of expenses of administration, and for re-

funds of sums erroneously paid into such fund and

refunds paid in accordance with the provisions of

section 3305(b); except that-

(A) an amount equal to the amount of

employee payments into the unemployment fund

of a State may be used in the payment of cash

benefits to individuals with respect to

their disability, exclusive of expenses of

administration; and

(B) the amounts specified by section 903

(c)(2) of the Social Security Act may, sub-

ject to the conditions prescribed in such

section, be used for expenses incurred by

the State for administration of its unemploy-

ment compensation law and public employment

offices;

(5) compensation shall not be denied in such

State to any otherwise eligible individual for

refusing to accept new work under any of the

following conditions:

(A) if the position offered is vacant due

directly to a strike, lockout, or other

labor dispute;

(B) if the wages, hours, or other: condi-

tions of the work offered are substantially

less favorable to the individual than those

prevailing for similar work in the locality;

(c) if as a condition of being employed

the individual would be required to join a

company union or to resign from or refrain

from joining any bona fide labor organization;

(6) (A) compensation is payable on the basis

of service to which section 3309(a)(1) applies, in

the same amount, on the same terms, and subject

to the same conditions as compensation payable on

the basis of other service subject to such law;

except that-

(i) with respect to services in an instruct-

ional, research, or principal administrative

capacity for an educational institution to

which section 3309(a)(1) applies, compensa-

tion shall not be payable based on such

services for any week commencing during the

period between two successive academic years

or terms (or, when an agreement provides in-

stead for a similar period between two

regular but not successive terms, during

such period) to any individual if such

individual performs such services in the

first of such academic years (or terms) and

if there is a contract or reasonable

assurance that such individual will perform

services in any such capacity for any

educational institution in the second of

such academic years or terms,

(ii) with respect to services in any other

capacity for an educational institution

(other than an institution of higher educa-

tion) to which section 3309(a)(1) applies,

compensation payable on the basis of such

services may be denied co any individual

for any week which commences during a period

between two successive academic years or

terms if such individual performs such

services in the first of such academic years

or terms and there is a reasonable assurance

that such individual will perform such

services in the second of such academic years

or terms,

(iii) with respect to any services des-

cribed in clause (i) or (ii), compensation

payable on the basis of such services may be

denied to any individual for any week which

commences during an established and custom-

ary vacation period or holiday recess if

such individual performs such services in

the period immediately before such vacation

period or holiday recess, and there is a

reasonable assurance that such individual

will perform such services in the period

immediately following such vacation period

or holiday recess, and

(iv) with respect to any services described

in clause (i) or (ii), compensation payable

on the basis of services in any such capacity

may be denied as specified in clauses (i),

(ii), and (iii) to any individual who per-

formed such services in an educational

institution while in the employ of an educa-

tional service agency, and for this purpose

the term "educational service agency" means

a governmental agency or governmental entity

which is established and operated exclusively

for the purpose of providing such services to one

or more educational institutions, and

(B) payments (in lieu of contributions) with

respect to service to which section 3309(a) (1)

applies may be made into the State unemployment

fund on the basis set forth in section 3309(a) (2);

(7) an individual who has received compensa-

tion during his benefit year is required to have

had work since the beginning of such year in order

to qualify for compensation in his next benefit

year,

(8) compensation shall not be denied to any

individual for any week because he is in training

with the approval of the State agency (or because

of the application, to any such week in training,

of State law provisions relating to availability

for work, active search for work, or refusal to

accept work);

(9) (A) compensation shall not be denied or

reduced to an individual solely because he files

a claim in another State (or a contiguous country

with which the United States has an agreement

with respect to unemplcyment compensation) or

because he resides in another State (or such

a contiguous country) at the time he files a

claim for unemployment compensation;

(B) the State shall participate in any

arrangements for the payment of compensation on

the basis of combining an individual's wages

and employment covered under the State law with

his wages and employment covered under the

unemployment compensation law of other States

which are approved by the Secretary of Labor in

consultation with the State unemployment compen-

sation agencies as reasonably calculated to

assure the prompt and full payment of compensation

in such situations. Any such arrangement shall

include provisions for (i) applying the base

period of a single State law to a claim involving

the combining of an individual's wages and

employment covered under two or more State laws,

and (ii) avoiding duplicate use of wages and

employment by reason of such combining;

(10) compensation shall not be denied to any

individual by reason of cancellation of wage

credits or total reduction of his benefit rights

for any cause other than discharge for misconduct

connected with his work, fraud in connection with

a claim for compensation, or receipt of dis-

qualifying income;

(11) extended compensation shall be payable

as provided by the Federal-State Extended Unem-

ployment Compensation Act of 1970;

(12) no person shall be denied compensation

under such State law solely on the basis of

pregnancy or termination of pregnancy;

(13) compensation shall not be payable to any

individual on the basis of any services, sub-

stantially all of which consist of participating

in sports oF athletic events or training or pre-

paring to so participate, for any week which

commences during the period between two succes-

sive sport seasons (or similar periods) if such

individual performed such services in the first

of such seasons (or similar periods) and there

is a reasonable assurance that such individual

will perform such services in the later of such

seasons (or similar periods);

(14) (A) compensation shall not be payable on

the basis of services performed by an alien unless

such alien is an individual who was lawfully

admitted for permanent residence at the time such

services were performed, was lawfully present for

purposes of performing such services, or was

permanently residing in the United States under

color of law at the time such services were per-

formed (including an alien who was lawfully present

in the United States as a result of the application

of the provisions of section 203(a)(7) or section

212(d)(5) of the Immigration and Nationality Act),

(B) any data or information required of

individuals applying for compensation to

determine whether compensation is not pay-

able to them because of their alien status

shall be uniformly required from all

applicants for compensation, and

(C) in the case of an individual whose

application for compensation would other-

wise be approved, no determination by the

State agency that compensation to such

individual is not payable because of his

alien status shall be made except upon a

preponderance of the evidence;

(15) the amount of compensation payable to an

individual for any week which begins after March

31, 1980, and which begins in a period with re-

spect to which such individual is receiving a

governmental or other pension, retirement or

retired pay, annuity, or any other similar periodic

payment which is based on the previous work of

such individual shall be reduced (but not below

zero) by an amount equal to the amount of such

pension, retirement or retired pay, annuity, or

other payment, which is reasonably attributable

to such week;

(16) (A) wage information contained in the

records of the agency administering the State law

which is necessary (as determined by the Secre-

tary of Health, Education, and Welfare in

regulations) for purposes of determining an

individual's eligibility for aid or services, or

the amount of such aid or services, under a State

plan for aid and services to needy families with

children approved under part A of title IV of the

Social Security Act, shall be made available to a

State or political subdivision thereof when such

information is specifically requested by such

State or political subdivision for such purposes,

and

. (B) such safeguards are established as are

necessary (as determined by the Secretary of

Health, Education, and Welfare in regulations)

to insure that such information is used only

for the purposes authorized under subpara-

graph (A);

(17) all the rights, privileges, or immunities

conferred by such law or by acts done pursuant

thereto shall exist subject to the power of the

legislature to amend or repeal such law at any

time.

(b) Notification.-The Secretary of Labor

shall, upon approving such law, notify the gov-

ernor of the State of his approval.

(c) Certification.-On October 31 of each

taxable year the Secretary of Labor shall certify

to the Secretary of the Treasury each State whose

law he has previously approved, except that he

shall not certify any State which, after reason-

able notice and opportunity for hearing to the

State agency, the Secretary of Labor finds has

amended its law so that it no longer contains the

provisions specified in subsection (a) or has

with respect to the 12-month period ending on such

October 31 failed to comply substantially with any

such provision in such subsection. No finding of

a failure to comply substantially with any pro-

vision in paragraph (5) of subsection (a) shall

be based on an application or interpretation of

State law (1) until all administrative review

provided for under the laws of the State has been

exhausted, or (2) with respect to which the time

for judicial review provided by the laws of the

State has not expired, or (3) with respect to

which any judicial review is pending. On October

31 of any taxable year after 1971, the Secretary

of Labor shall not certify any State which, after

reasonable notice and opportunity for hearing to

the State agency, the Secretary of Labor finds

has failed to amend its law so that it contains

each of the provisions required by reason of the

enactment of the Employment Security Amendments

of 1970 to be included therein, or has with re-

spect to the 12-month period ending on such

October 31, failed to comply substantially with

any such provision. On October 31 of any taxable

year after 1977, the Secretary shall not certify

any State which, after reasonable notice and

opportunity for a hearing to the State agency,

the Secretary of Labor finds has failed to amend

its law so that it contains each of the pro-

visions required by reason of the enactment of

the Unemployment Compensation Amendments of 1976

to be included therein, or has with respect to the

12-month period ending on such October 31, failed

to comply substantially with any such provision.

(d) Notdce of noncertification.-If at any

time the Secretary of Labor has reason to believe

that a State whose law he has previously approved

may not be certified under subsection (c), he

shall promptly so notify the governor of such

State.

(e) Change of law during 12-month period.-

Whenever-

(1):any provision of this section, section

3302, or section 3303 refers to a 12-month period

ending on October 31 of a year, and

(2) the law applicable to one portion of

such period differs from the law applicable to

another portion of such period,

then such provision shall be applied by taking

into account for each such portion the law

applicable to such portion.

(f) Definition of institution of higher

education.-For purposes of subsection (a) (6),

the term "institution of higher education" means

an educational institution in any State which-

(1) admits as regular students only

individuals having a certificate of graduation

from a high school, or the recognized equivalent

of such a certificate;

(2) is legally authorized with such State

to provide a program of education beyond high

school;

(3) provides an educational program for it

which awards a bachelor's or higher degree, or

provides a program which is acceptable for full

credit toward such a degree, or offers a program

of training to prepare students for gainful employ-

ment in a recognized occupation; and

(4) is a public or other nonprofit insti-

tution.

Aug. 16, 1954, c. 736, 68A Stat. 443; Aug. 10,

1970, Pub.L. 91-373, Title I, §8104(a), 108(a),

121(a), 131(b)(2), 142(f£)-(h), Title II, §206,

84 Stat. 697, 701, 704, 707, 708, 712; Oct. 4,

1976, Pub.L. 94-455, Title XIX, §1903(a)(14),

1906(b) (13) (C), (E), 90 Stat. 1809, 1834; Oct.

20, 1976, Pub.L. 94-566, Title I, 8115(c)(1), (5),

Title III, §$312(a), (b), 314(a), Title V, §506(b),

90 Stat. 2670, 2671, 2679, 2680, 2687; Apr. 12,

1977, Pub.L. 95-19, Title III, 8302(a), (c), (e),

91 Stat. 44, 45; Nov. 12, 1977, Pub.L. 95-171,

§2(a), 91 Stat. 1353; Dec. 20, 1977, Pub.L. 95-

216, Title IV, 8403(b), 91 Stat. 1561.

26 U.S.C. 83306 (c)

(c) Employment.-For purposes of this

chapter, the term "employment" means any service

performed prior to 1955, which was employment for

purposes of subchapter C of chapter 9 of the ~

Internal Revenue Code of 1939 under the law

applicable to the period in which such service

was performed, and (A) any service, of whatever

nature, performed after 1954 by an employee for

the person employing him, irrespective of the

citizenship or residence of either, (i) within

the United States, or (ii) on or in connection

with an American vessel or American aircraft under

a contract of service whick is entered into within

the United States or during the performance of

which and while the employee is employed on the

vessel or aircraft it touches at a port in the

United States, if the employee is employed on and

in connection with such vessel or aricraft when

outside the United States, and (B) any service,

of whatever nature, performed after 1971 outside

the United States (except in a contiguous country

with which the United States has an agreement

relating to unemployment compensation) by a citizen

of the United States as an employee of an American

employer (as defined in subsection (j)(3)),

except, -

(1) agrigultural labor (as defened in sub-

section (k)) unless-

(A) such labor is performed for a person

who-

(i) during any calendar quarter in the

calendar year or the preceding calendar year

paid remuneration in cash of $20,000 or more

to individuals employed in agricultural labor

(not taking into account labor performed

before January 1, 1980, by an alien referred

to in subparagraph (B)), or

(ii) on each of some 20 days during the

calendar year or the preceding calendar year,

each day being in a different calendar week,

employed in agricultural labor (not taking

into account labor performed before January

1, 1980, by an alien referred to in sub-

paragraph (B)) for some portion of the day

whether or not at the same moment of time)

10 or more individuals; and

(B) such labor is not agricultural labor

performed before January 1, 1980, by an individual

who is an alien admitted to the United States to

perform agricultural labor pursuant to sections

214(c) and 101(a)(15)(H) of the Immigration and

Nationality Act;

(2) domestic service in a private home,

local college club, or local chapter of a college

fraternity or sorority unless performed for a

person who paid cash remuneration of $1,000 or

more to individuals employed in such domestic

service in any calendar quarter in the calendar

year or the preceding calendar year;

(3) service not in the course of the

employer's trade or business performed in any cal-

endar quarter by an employee, unless the cash

remuneration paid for such service is $50 or

more and such service is performed by an individual

who is regularly employed by such employer to per-

form such service. For purposes of this paragraph,

an individual shall be deemed to be regularly

employed by an employer during a calendar quarter

only if-

(A) on each of some 24 days during such

quarter such individual performs for such

employer for some portion of the day

service not in the course of the employer's

trade or business, or

(B) such individual was regularly employed

(as determined under subparagraph (A)) by

such employer in the performance of such

service during the preceding calendar quarter;

(4) service performed on or in connection

with a vessel or aircraft not an American vessel

or American aircraft, if the employee is employed

on and jn connection with such vessel or aircraft

when outside the United States;

’

(5) service performed by an individual in

the employ of his son, daughter, or spouse, and

service performed by a child under the age of

21 in the employ of his father or mother;

(6) service performed in the employ of the

United States Government or of an instrumentality

of the United States which is-

(A) wholly or partially owned by the United

States, or

(B) exempt from the tax imposed by section

3301 by virtue of any provision of law which

specifically refers to such section (or the

corresponding section of prior law) in

granting such exemption;

(7) service performed in the employ of a

State, or any political subdivision thereof, or

any instrumentality of any one or more of the

foregoing which is wholly owned by one or more

States or political subdivision; and any service

performed in the emplcy of any instrumentality of

one or more States or political subdivisions to

the extent that the instrumentality is, with

respect to such service, immune under the

Constitution of the United States from the tax

imposed by section 3301;

(8) service performed in the employ of a

religious, charitable, educational, or other

organization described in section 501(c)(3) which

is exempt from income tax under section 501(a);

(9) service performed by an individual as an

employee or employee representative as defined in

section 1 of the Railroad Unemployment Insurance

Act (45 U.S.C. 351);

(10) (A) service performed in any calendar

quarter in the employ of any organization exempt

from income tax under section 50l(a) (other than

an organization described in section 401(a)) or

under section 521, if the remuneration for such

service is less than $50, or

(B) service performed in the employ of a

school, college, or university, if such service

is performed (i) by a student who is enrolled

and is regularly attending classes at such

school, college, or university, or (ii) by the

spouse of such a student, if such spouse is

advised, at the time such spouse commences to

perform such service, that (I) the employment

of such spouse to perform such service is pro-

vided under a program to provide financial

assistance to such student by such school,

college, or university, and (II) such employment

will not be covered by any program of unemploy-

ment insurance, or

(C) service performed by an individual under

the age of 22 who is enrolled at a nonprofit or

public educational institution which normally

maintains a regular faculty and curriculum and

normally has a regularly organized body of

students in attendance at the place where its

educational activities are carried on as a

student in a full-time program, taken for credit

at such institution, which combines academic

instruction with work experience, if such service

is an integral part of such program, and such

institution has so certified to the employer,

except that this subparagraph shall not apply to

service performed in a program established for or

on behalf of an employer or-group of employers,

or

(D) service performed in the employ of a

hospital, if such service is performed by a patient

of such hospital;

(11) service performed in the employ of a

foreign government (including service as a

consular or other officer or employee or a non-

diplomatic representative);

(12) service performed in the employ of an

instrumentality wholly owned by a foreign govern-

ment-

(A) if the service is of a character similar

to that performed in foreign countries by

employees o. the United States Government or

of an instrumentality thereof; and

(B) if the Secretary of State shall certify

to the Secretary of the Treasury that the

foreign government, with respect to whose

instrumentality exemption is claimed, grants

an equivalent exemption with respect to

similar service performed in the foreign

country by employees of the United States

Government and of instrumentalities thereof;

(13) service performed as a student nurse in

the employ of a hospital or a nurses’ training

school by an individual who is enrolled and is

regularly attending classes in a nurses’ training

school chartered or approved pursuant to State

law; and service performed as an intern in the

employ of a hospital by an individual who has

completed a 4 years' course in a medical school

chartered or approved pursuant to State law;

(14) service performed by an individual for

a person as an insurance agent or as an insurance

solicitor, if all such service performed by such

individual for such person is performed for re-

muneration solely by way of commission;

(15) (A) service performed by an individual

under the age of 18 in the delivery or distribution

of newspapers or shopping news, not including

delivery or distribution to any point for sub-

sequent delivery or distribution;

(B) service performed by an individual in,

and at the time of, the sale of newspapers or

magazines to ultimate consumers, under an

arrangement under which the newspapers or magazines

are to be sold by him at a fixed price, his

compensation being based on the retention of the

excess of such price over the amount at which she

newspapers or magazines are charged to hin,

whether or not he is guaranteed a minimum amount

of compensation for such service, or is entitled

to be credited with the unsold newspapers or

magazines’ turned back;

(16) service performed in the employ of an

international organization;

(17) servige performed by an individual in

(or as an officer or member of the crew of a ves-

sel while it is engaged in) the catching, taking,

harvesting, cultivating, or farming of any kind

of fish, shellfish, crustacea, sponges, seaweeds,

or other aquatic forms of animal and vegetable

life (including service performed by any such

individual as an ordinary incident to any such

activity), except-

(A) service performed in connection

with the catching or taking of salmon or

halibut, for commercial purposes, and

(B) service performed in connection

with a vessel of more than 10 net tons (deter-

mined in the manner provided for determining

the register tonnage of merchant vessels

under the laws of the United States); or

(18) Service which is performed by a non-

resident alien individual for the period he is

temporarily present in the United States as

a nonimmigrant under subparagraph (F) or (J) of

section 101 (a) (15) of the Immigration and

Nationality Act, as amended (8 U.S.C. 1101 (a)(15)

(F) or (J)), and which is performed to carry

out the purpose specified in subparagraph (F) or

(J), as the case may be.

26 U.S.C. 83309

$3309 STATE LAW COVERAGE OF SERVICES PERFORMED

FOR NONPROFIT ORGANIZATIONS OR GOVERN-

MENTAL ENTITIES

(a) STATE LAW REQUIREMENTS. - For purposes

of section 3304 (a) (6) -

(1) except as 1erwise provided in

subsections (b) and (c), the services to which

this paragraph applies are -

(A) service excluded from the term

"employment" solely by reason of para-

graph (8) of section 3306(c), and

(B) service excluded from the term

"employment" solely by reason of para-

graph (7) of section 3306(c); and

(2) the State law shall provide that a

governmental entity or any other organiza-

tion (or group of governmental entities

or other organizatious) which, but for the

requirements of this paragraph, would be

liable for contributions with respect to

service to which paragraph (1) applies may

elect, for suchminimm period and at such

time as may be provided by State law, to

pay (in lieu of such contributions) into

the State unemployment fund amounts equal

to the amounts of compensation attributable

under the State law to such service. The

State law may provide safeguards to ensure

that governmental entities or other organ-

izations so electing will make the payments

required under such elections.

(b) SECTION NOT TO APPLY TO CERTAIN SERVICE.

- This sectionshall not apply to service performed

(1) in the employ of (A) a church or

convention or association of churches, or (B)

an organization which is operated primar-

ily for religious purposes and which is

operated, supervised, controlled, or

principally supported by a church or conven-

tion or association of churches;

(2) by duly ordained, commissioned, or

licensed minister of a church in the exercise

of his ministry or by a member of a religious

order in the exercise of duties required by

such order;

(3) in the employ of a governmental

entity referred to in paragraph (7) of

section 3306(c), if such service is performed

by an individual in the exercise of his

duties -

(A) as an elected official;

(B) as a member of a legislative

body, or a member of the judiciary,

of a State or political subdivision

thereof;

(C) as a member of the State Na-

*tonal Guard or Air National Guard;

(D) as an employee serving on a

temporary basis in case of fire, storm,

snow, earthquake, flood, or similar

emergency; or

(E) in a position which, under

or pursuant to the State law, is de-

signated as (i) a major nontenured

policymaking or advisory position, or

(ii) a policymaking or advisory posi-

tion the performance of the duties of

which ordinarily does not require more

than 8 hours per week;

(4) in a facility conducted for the

purpose of carrying out a program of -

(A) rehabilitation for individuals

who earning capacity is impaired by

age or physical or mental deficiency

or injury, or

(B) providing remunerative work

for individuals who because of their

impaired physical or mental capacity

cannot be readily absorbed in the compe-

titive labor market,

by an individual receiving such rehabilita-

tion or remunerative work;

(5) as part of an unemployment work-

relief or work-training program assisted or

financed in whole or in part by any Feder-

al agency or an agency of a State or politi-

cal subdivision thereof, by an individual

receiving such work relief or work train-

ing; and

(6) by an inmate of a custodial or pe-

nal institution.

(c) NONPROFIT ORGANIZATIONS MUST EMPLOY 4

OR MORE. - This section shall not apply to service

performed during any calendar year in the employ

of any organization unless on each of some 20 days

during such calendar year or the preceding calendar

year, each day being in a different calendar week,

the total number of individuals who were employed

by such organization in employment (determined

without regard to section 3306(c) (8) and by ex-

cluding service to which this section does not

apply by reason of subsection (b)) for some

portion of the day (whether or not at the same mo-

ment of time) was 4 or more.

Added Pub.L. 91-373, Title I, $104(b) (1), Aug.

10, 1970, 84 Stat. 697, and amended Pub.L. 94-

566, Title I, 8115 (a), (b) (c) (2), (3),

26 U.S.C. $3310

83310 JUDICIAL REVIEW

(a) IN GENERAL. - Whenever under section

3303(b) or section 3304(c) the Secretary of Labor

makes a finding pursuant to which he is required

to withhold a certification with respect to a

State under such section, such State may, within

60 days after the Governor of the State has been

notified of such action, file with the United

States court of appeals for the circuit in which

such State is located or with the United States

Court of Appeals for the District of Columbia,

a petition for review of such action. A copy

of the petition shall be forthwith transmitted

by the clerk of the court to the Secretary of

Labor. The Secretary of Labor thereupon shall

file in the court the record of the proceedings

on which he based his action as provided in

section 2112 of title 28 of the United State Code.

(b) FINDINGS OF FACT. - The findings of fact

by the Secretary of Labor, if supported by

substantial evidence, shall be conclusive; but

the court, for good cause shown, may remand the

case to the Secretary of Labor to take further

evidence, and the Secretary of Labor may there-

upon make new or modified findings of fact and may

modify his previous action, and shall certify

to the court the record of the further proceed-

ings. Such new or modified findings of fact

shall likewise be conclusive if supported by

substantial evidence.

(c) JURISDICTION OF COURT; REVIEW. - The

court shall have jurisdiction to affirm the action

of the Secretary of Labor or to set it aside,

in whole or in part. The judgment of the court

shall be subject to review by the Supreme Court of

the United States upon certiorari or certification

as provided in section 1254 of title 28 of the

United States Code.

(d) STAY OF SECRETARY OF LABOR'S ACTION. -

(1) The Secretary of Labor shall not with-

hold any certification under section 3303

(b) or section 3304(c) until the expiration

of 60 days after the Governor of the State

has been notified of the action referred

to in subsection (a) or until the State has

filed a petition for review of such action,

whichever is earlier.

(2) The commencement of judicial pro-

ceedings under this section shall stay the

Secretary of Labor's actiowfor a period

of 30 days, and the court may thereafter

grant interim relief if warranted, includ-

ing a further stay of the Secretary of

Labor's action and including such other

relief as may be necessary to preserve

status or rights.

(e) PREFERENCE. - Any judicial proceedings

under this section shall be entitled to, and,

upon request of the Secretary of Labor or the

State, shall receive a preference and shall be

heard and determined as expeditiously as possible.

Added Pub.L. 91-373, Title I, 8 131(b) (1), Aug.

10, 1970, 84 Stat 703, and amended Pub. L.

94-455, Title XIX, 8 1906(b) (13) (F), (H), Oct.

4, 1976, 90 Stat. 1835.

NEW HAMPSHIRE UNEMPLOYMENT COMPENSATION LAW

RSA 282: 1-H (4)

(4) The term "employment" shall not include:...

RSA 282: 1-H (4) (g)

(g) Service performed in the employ of any state

other than this state or of any of political sub-

divisions of such other state or of any instru-

mentality of such other state, or of any town,

city or other political subdivision of this state

unless such town, city or other political sub-

division of this state elects to become subject

under section 7 of this chapter; (1971, 156:4,

effective 4/1/71)

RSA 282: 1-H (4) (q) (r) (s)

(q) Service performed for this state by any

individual who is not a classified employee in

the state classified service; except that this

provision shall not apply to service performed

by an individual in the employ of a state

hospital and/or an institution of higher educa-

tion; (1971, 156:9, effective 1/1/72)

(r) Service performed by seasonal or temporary

classified employees as herein defined. Seasonal

classification in the state employment c.ass-

ification system shall mean service in a position

the need for which may be reasonably anticipated

as likely to recur each year for a varying period

of time. Temporary classification in the state

employment classification system shall mean ser-

vice of a qualified person to a position that is

known to be of limited duration. This provision

shall not apply to service performed by an

individual in the employ of a state hospital and/

or an institution of higher education. (1971,

156:10, effective 1/1/72)

(s) The following services performed in the em-

ploy of an organization described in section 501

(c)(3) and exempt under section 501 (a) of the

Internal Revenue Code:

RSA 282: 1-H (4) (s) (1) (2) (3) (4) (5) (6)

(1) in the employ of a church or convention or

association of churches, or an organization which

is operated primarily for religious purposes and

which is operated, supervised, controlled, or

principally supported by a church or convention

or association of churches; or

(2) by a duly ordained, commissioned or licensed

minister of a church in the exercise of his

ministry or by a member of a religious order in

the exercise of duties required by such order; or

(3) in the employ of a school which is not an

institution of higher education; or

(4) in a facility conducted for the purpose of

carrying out a program of rehabilitation for

individuals whose earning capacity is impaired by

age or physical or mental deficiency or injury or

providing remunerative work for individuals who

because of their impaired physical or mental

capacity cannot be readily absorbed in the com-

petative labor market by an individual receiving

such rehabilitation or remunerative work; or

(5) as part of an unemployment work-relief or

work-training program assisted or financed in whole

or in part by any federal agency or an agency of

a state or political subdivision thereof, by an

individual receiving such work relief or work

training; or

(6) for a hospital in a state prison or other

state correctional institution by an inmate of the

prison or correctional institution. (1971, 156:11,

effective 1/1/72)

RSA 282: 1-N (1) (a)

N. "Wages" means every form of remuneration for

personal services paid or payable to a person

directly or indirectly, by his employing unit,

including salaries, commissions, bonuses, and the

reasonable value of board, rent, housing, lodging,

payment in kind and similar advantages estimated

and determined in accordance with the rules of the

commissioner of the department of employment

security. (1977, 441:6 effective 1/1/78)

(1) The term "wages" shall not include:

(a) The amount of any payment to an alien

unless said individual was, at the time he

performed services, in the United States of

America under colorof law. (1977, 441:12,

effective 1/1/78)

RSA 282: 1-0

O. "Annual earnings" shall be the wages, to the

nearest dollar, earned during each base period

from an employer by an individual in employment

in New Hampshire and an amount equivalent to the

average weekly wage, as determined under the

New Hampshire Workmen's Compensation statute, for

each week that an individual has been found by

either the labor commissioner or a court to be

entitled to receive workman's compensation based

on a claim involving such an employer. Annual

earnings shall be reduced by all wages for services

in training preparation to participate or

participation in sports °f athletic events with

respect to any weekly benefit amount for a week

of total or partial unemployment during the period

between successive sport seasons for any individual

so engaged in the first of such seasons if there

is a reasonable assurance of such performance in

the second. Services as parking lot attendants,

ushers, ticket sellers, and cafeteria workers

shall be excluded from this provision. (1977,

441:7, effective 1/1/78)