SSR 85-26c: SECTION 210(a)(3)(A) (42 U.S.C. 410(a)(3)(A)) EMPLOYMENT -- EXCLUSION OF SERVICE IN EMPLOY OF PARENT -- CONSTITUTIONALITY OF EXCLUSION

20 CFR 404.1015(a)(2)

SSR 85-26c

Tyson v. Heckler , 727 F.2d 1029 (11th Cir. 1984), cert.

denied, _____ U.S. _____ (1984)

GODBOLD, Chief Judge:

This appeal, in a social security case, raises the constitutionality of

42 U.S.C. 410(a)(3)(A) (1976 & Supp. V 1981), which provides in

pertinent part:

The district court found that the statute had a rational basis, was not

constitutionally overinclusive, and therefore was constitutional. We

affirm.

Plaintiff's son, Timothy, was employed by his father, who owned a sole

proprietorship. Timothy was married, self-supporting, and lived away from

home. Timothy and his father had reported his wages, and the proper Social

Security tax had been paid as provided by FICA. During the month in which

Timothy turned 21 he was involved in a car accident and became totally

disabled.

Timothy's mother filed an application for Social Security dissability

insurance benefits with the Social Security Administration. The agency

denied benefits on the ground that Timothy did not meet the insured status

requirements because the wages he earned from his father's business were

excluded from coverage under Sec. 410(a)(3)(A). On reconsideration the

agency affirmed the denial of benefits because of the statute's exclusion.

The Secretary of Health and Human Services and the plaintiff then executed

an expedited appeals agreement under which further administrative

proceedings were waived and Timothy's entitlement to benefits was

established except for the exclusion mandated by Sec. 410(a)(3)(A). This

agreement constituted the final decision of the Secretary.

Plaintiff brought this action in district court seeking a finding that

Sec. 410(a)(3)(A) is unconstitutional because it is arbitrary and

irrational, lacks a legitimate government goal, is not related to a

legitimate government goal, and is overinclusive. The district court

rejected these arguments and found the statute constitutional.

ement constituted the final decision of the Secretary.

Plaintiff brought this action in district court seeking a finding that

Sec. 410(a)(3)(A) is unconstitutional because it is arbitrary and

irrational, lacks a legitimate government goal, is not related to a

legitimate government goal, and is overinclusive. The district court

rejected these arguments and found the statute constitutional.

[1] Social security legislation is tested under a rational basis

standard. See Weinberger v. Salfi, 422 U.S. 749, 768-70, 95 S.Ct.

2457, 2468-69, 45 L.Ed.2d 522 (1975). As the Salfi court

explained:

Id. at 768, 95 S.Ct. at 2468 (quoting Flemming v. Nestor, 363 U.S. 603, 611, 80 S.Ct. 1367, 1373, 4 L.Ed.2d 1435 (1960)). The Court

has pointed out, however, that the rational basis standard is "not a

toothless one." Mathews v. Lucas, 427 U.S. 495, 510, 96 S.Ct. 2755,

2764, 49 L.Ed.2d 651 (1976).

[2] Legislative history indicates that prevention of collusion was the

intent of Congress when it adopted this provision in 1939. H.R.Rep. No.

728, 76th Cong., 1st Sess. 46 (1939). Prevention of fraud on the Social

Security System is a legitimate government goal. See Salfi, 422

U.S. at 777-84, 95 S.Ct. at 2472-76. The statute furthers this legitimate

government goal by excluding a class of people whose situation suggests a

high potential for collusion. See Id. at 780, 95 S.Ct. at 2474.

Furthermore, "Congress could rationally have concluded that any

imprecision from which it [the state] might suffer was justified by its

ease and certainty of operation." Id.

22

U.S. at 777-84, 95 S.Ct. at 2472-76. The statute furthers this legitimate

government goal by excluding a class of people whose situation suggests a

high potential for collusion. See Id. at 780, 95 S.Ct. at 2474.

Furthermore, "Congress could rationally have concluded that any

imprecision from which it [the state] might suffer was justified by its

ease and certainty of operation." Id.

That the age of majority in many states is now 18 rather than 21 does not

affect the constitutionality of the statute. The age of majority and the

age limitation for exclusion of employment by parents from Social Security

coverage implicate different concerns. When Congress enacted Sec.

410(a)(3)(A), it sought to prevent fraud on the Social Security

Administration by parents who employ their children. Reduction in the age

of majority does not necessarily reduce or even affect the likelihood of

fraud between parents and children when children seek employment.

Furthermore, reduction of the age limitation is a choice for Congress, and

as long as Congress's original purpose of preventing fraud on the Social

Security system by parental employment of children under 21 is not

presently arbitrary and irrational, change in the age of majority in

states does not change our analysis of the statute.

The "irrebutable presumption" cases of Cleveland Board of Education v.

LaFleur, 414 U.S. 632, 94 S.Ct. 791, 39 L.Ed.2d 52 (1974), Vlandis

v. Kline, 412 U.S. 441, 93 S.Ct. 2230, 37 L.Ed.2d 63 (1973), and Stanley v. Illinois, 405 U.S. 645, 92 S.Ct. 1208, 31 L.Ed.2d 551

presently arbitrary and irrational, change in the age of majority in

states does not change our analysis of the statute.

The "irrebutable presumption" cases of Cleveland Board of Education v.

LaFleur, 414 U.S. 632, 94 S.Ct. 791, 39 L.Ed.2d 52 (1974), Vlandis

v. Kline, 412 U.S. 441, 93 S.Ct. 2230, 37 L.Ed.2d 63 (1973), and Stanley v. Illinois, 405 U.S. 645, 92 S.Ct. 1208, 31 L.Ed.2d 551

(1972) do not require the government to make an individualized

determination of collusion. The Salfi court answered this argument

when it stated that "these [irrebutable presumption] cases are not

controlling on the issue before us now." Salfi, 422 U.S. at 771, 95

S.Cr. at 2470. The Court distinguished Stanley and LaFleur on the ground that the interests in those cases, unlike a noncontractual

claim to government funds, enjoyed "constitutionally protected status." Id. at 771-72, 95 S.Ct. at 2470. The Salfi court further

explained that Vlandis was distinguishable because it involved a

different issue, making "plainly relevant evidence . . . inadmissable." Id. The irrebutable presumption cases do not control this case.

In 1960 Congress repealed another provision of the section at issue that

had excluded from coverage employment of a parent by a child. This action

does not make the remaining provision arbitrary. Congress could have

rationally concluded that there likely would be less occasion for fraud

when children employed their parents because such a situation would occur

less often. Furthermore,

Williamson v. Lee Optical Co., 348 U.S. 483, 489, 75 S.Ct. 461,

465, 99 L.Ed. 563 (1955) (citations omitted). Congress's repeal of the

provision excluding coverage of employment of a parent by a child does not

render the statute unconstitutional.

ere likely would be less occasion for fraud

when children employed their parents because such a situation would occur

less often. Furthermore,

Williamson v. Lee Optical Co., 348 U.S. 483, 489, 75 S.Ct. 461,

465, 99 L.Ed. 563 (1955) (citations omitted). Congress's repeal of the

provision excluding coverage of employment of a parent by a child does not

render the statute unconstitutional.

[3] The statute is not unconstitutionally overinclusive. Congress is not

required to draw lines with great precision when it enacts social welfare

legislation. Dandridge v. Williams, 397 U.S. 471, 485, 90 S.Ct.

1153, 1161-62, 25 L.Ed.2d 491 (1970). As the Salfi court noted, the

question raised is not whether a statutory provision precisely filters out

those, and only those, who are in the factual position which generated the

congressional concern reflected in the statute . . . Nor is the question

whether the provision filters out a substantial part of the class which

caused congressional concern, or whether it filters out more members of

the class than non-members. The question is whether Congress, its concern

having been reasonably aroused by the possibility of an abuse which it

legitimately desired to avoid, could rationally have concluded both that a

particular limitation or qualification would protect against its

occurence, and that the expense and other difficulties of individualized

determinations justified the inherent imprecision of a prophylatic

rule.

Salfi, 422 U.S. at 777, 95 S.Cr. at 2472-73. Under this standard,

the statute is constitutional. Exclusion of children under 21 employed by

their parents protects against the occurrence of fraud. Making

individualized determinations of collusion would not only be expensive but

could also be difficult, as it may be possible to structure a situation so

that no collusion appears although fraud actually exists. Consequently,

potential overinclusiveness does not make the statute unconstitutional.

of children under 21 employed by

their parents protects against the occurrence of fraud. Making

individualized determinations of collusion would not only be expensive but

could also be difficult, as it may be possible to structure a situation so

that no collusion appears although fraud actually exists. Consequently,

potential overinclusiveness does not make the statute unconstitutional.

That the statute does not exclude from coverage children employed by

their parents' wholly-owned corporation or partnership does not render the

statute unconstitutional. Congress reasonably could have concluded that

less likelihood of collusion exists with employment by partnerships and

corporations, as many such organizations are not wholly-owned, and

consequently people other than a child's parents play a role in hiring the

child. Such a difference in treatment is not arbitrary and does not render

the statute unconstitutional.

AFFIRMED.