Preface PR 20
This section discusses the constitutional basis for the procedural "due process of law" requirement, defines due process, and describes how due process applies to state action.
A. History of "Due Process"
The Bill of Rights (the first ten amendments to the U.S. Constitution) is the source of governmental limitation of power. Originally, the Bill of Rights was not applicable to the individual states; but under the Civil War Amendments, the Bill of Rights was made applicable to the states through the 14th Amendment, enacted in 1868, which provides, in part:
No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.
Some rights in the Bill of Rights have not been applied to the states and are applicable only to the federal government, while other rights have been applied to state, city, and county governments as well as the federal government. Congress also has the power to adopt legislation to protect individual rights (see PR 25).
The Supreme Court has stated that only those safeguards in the Bill of Rights that are "essential to liberty" are applicable to the states. Among these are:
- First Amendment: All the First Amendment guarantees of speech, press, assembly, right to petition for redress of grievances, free exercise of religion, and governmental non establishment of religion (see, e.g., VQ 90): and
- Fourth Amendment: The Fourth Amendment guarantees of protection from unreasonable search and seizure (see, e.g., MC 270).
The California Constitution, Article I, Section 7, provides:
"A person may not be deprived of life, liberty, or property without due process of law . . ."
B. "Due Process of Law," Defined
"Due process of law" is a procedural safeguard to ensure that life, liberty, or property is not taken without a fair process or procedure. Both claimants and employers are affected by due Process requirements.
A fair process or procedure requires at least an opportunity to: 1) present objections to the proposed action, to a 2) fair, neutral decision-maker.
Due process does not create property interests; it provides procedural safeguards against arbitrary deprivation of those interests. A "property interest" is more than personal belongings and real estate; it is any benefit to which the person has a legitimate claim or entitlement. While the U.S. Supreme Court has not ruled on whether an applicant for benefits, as opposed to a recipient, has an entitlement, the Ninth Circuit Court of Appeals, whose decisions are controlling on California, has found that an applicant for welfare benefits was entitled to due process safeguards as well as a claimant seeking continuing benefits (Peer v. Griffeth, 1980).
A professional license (e.g., that of a doctor or lawyer) creates an entitlement to engage in a profession. The license may not be revoked without notice and a fair hearing.
Because the government has taken control of who may drive on its highways, the person whose driver’s license is revoked is entitled to notice, and to a hearing to determine the basis for the revocation.
Tennessee law recognizes a public utility’s right to terminate service only "for cause," and the U.S. Supreme Court found that customers who disputed their bills had a legitimate claim of entitlement protected by the due process clause. Customers’ property interest lay in continued service from the utility. This principle was also followed by the Ninth Circuit Court of Appeals, whose district includes California.
A "property interest" includes Welfare, Disability, and Unemployment Insurance benefits. Because the government is not under a duty to provide these benefits on an individual basis, the government must do so in accordance with constitutional principles when it does pay the benefits. Once the government has established a system of benefits, the due process clauses impose some requirement of fairness in the treatment of individual recipients/claimants .
In American Federation of Labor and Congress of Industrial Organizations (AFL/CIO) v. California Employment Development Department, the Court of Appeal commented in 1977 upon the "property interest" inherent in UI benefits:
Procedural due process involves the deprivation of a "liberty" or "property" interest. Appellants (EDD) argue that unemployment insurance claimants have no protectable interest in government benefits, but merely a hope or expectancy interest . . . . It is clear . . . that unemployment insurance benefits are a type of property interest protected by the due process clause.
In California Department of Human Resources Development v. Java, decided by the U.S. Supreme Court in 1971, the issue concerned whether a suspension or denial of benefits already granted, resulting from an employer appeal, was violative of the due process clause. The court examined the underlying statutory scheme:
The Social Security Act received its impetus from the Report of the committee of Economic Security, which was established by executive order of President Franklin D. Roosevelt to study the whole problem of financial insecurity due to unemployment, old age, disability, and health. In its report, transmitted to Congress by the President on January 17, 1935, the Committee recommended a program of unemployment insurance compensation as a ’first line of defense for . . . (a worker) ordinarily steadily employed . . . for a limited period during which there is expectation that he will soon be re employed. This should be a contractual right not dependent on any means test . . . ’
The purpose of the Act was to give prompt if only partial replacement of wages to the unemployed, to enable workers ’to tide themselves over, until they get back to their old work or find other employment, without having to resort to relief.’
The court found:
"(I)t can be seen that the interview for the determination of eligibility is the critical point in the California procedure. In the Department’s own terms, it is ’the point at which any issue affecting the claimant’s eligibility is decided and fulfills the Department’s legal obligation to insure that . . . (b)enefits are paid promptly if claimant is eligible.’
The automatic suspension of benefits upon the employer’s appeal, after an initial determination of eligibility, is the aspect of the California procedure challenged here.
(I)f the employer has notice of the time and place of the preliminary interview . . . it is his responsibility to present sufficient data to make his objections to the claim for benefits and put the interviewer in a position to broaden the inquiry if necessary. Any procedure or regulation that fails to give notice to the employer would, of course, be violative of the statutory scheme as we construe it.
We conclude that the word ’due’ . . ., when construed in light of the purposes of the Act, means that time when payments are first administratively allowed as a result of a hearing of which both parties have notice and are permitted to present their respective positions; any other constriction would fail to meet the objective of early substitute compensation during unemployment."
California argued that "welfare is based on need; unemployment insurance is not." In a separate, concurring opinion, Mr. Justice Douglas termed the argument "surprisingly disingenuous," writing:
"But that simply in not true, for the history makes clear that the thrust of the scheme for unemployment benefits was to take care of the need of displaced workers, pending a search for other employment.
Therefore here, the requirements of procedural due process protect the payment of benefits owing the displaced employee and the employer has notice and hearing before his account is charged."
The AFL/CIO court addressed Java by stating:
"In rendering his opinion, the (superior court) judge stated: "I cannot understand any meaningful difference between the framework of this case and the framework in Java. In the Java case, the United States Supreme Court, as I understand it, determined that to withhold benefits because an employer takes an appeal after eligibility is determined, is violative of the federal law because benefits are then due. If eligibility is originally determined and subsequently the agency authorized to administer the unemployment insurance program determines that eligibility ought not to continue, the applicant unemployed is in the same position he was in Java. . . . " As the court in Java noted . . . "when due" was intended to mean "at the earliest stage of unemployment that such payments were administratively feasible after giving both the worker and the employer an opportunity to be heard." Where payment of benefits is suspended after a determination of initial eligibility, as in this case, and a department clerk then finds the claimant ineligible, then "when due" requirement of 42 U.S.C., Section 303(a)(1), has been violated."
C. Requirement of "State Action"
When a state does something that infringes a person’s constitutional rights, that action is known as "state action." State action may result either from the exercise of a government agency’s power, or from private individuals acting "under color of state law."
1. Government Agency’s Exercise of Power
The Fourteenth Amendment "due process clause" applies directly to states. When a governmental agency is established to pay state or federal benefits, it may not deprive someone of a property interest to which he or she is otherwise entitled without a procedure to determine the basis of the denial. The state may not, for instance, deny or abridge due process requirements by legislation or regulation, executive order, or court decree; such denial will be considered unconstitutional.
On the other hand, if the claim is monetarily invalid, due process is not required because the person has no claim to entitlement in the first place.
2. Private Individuals Acting "Under Color of State Law
An individual who operates "under color of state law" is one who performs traditionally exclusive public functions. In Rendell- Baker v. Kohn, a 1982 U.S. Supreme Court case, the court described a two-part test to determine if "state action" exists to deny a federal right:
First, the deprivation must be caused by the exercise of some right or privilege created by the state, or by a rule of conduct imposed by the state, or by a person for whom the state is responsible . . .
Second, the party charged with the deprivation must be a person who may fairly be said to be a state actor (either) because he is a state official, or because he has acted together with or has obtained significant aid from state officials, or because his conduct is otherwise chargeable to the state.
"State action" also exists when a state affirmatively facilitates, encourages, or authorizes acts of discrimination by its citizens, or allows violations by its own officers; it is not "state action" if the state merely permits the conduct to occur.
Example, Apparent Legal Authority:
A sheriff beat a prisoner to death in an effort to secure a confession. Both the state and the sheriff were held liable; the actions of the sheriff were "state action" because the sheriff acted "under color of state law" - the state cloaked him with apparent legal authority, regardless of whether the state had previously forbidden the officer from acting in a certain way (Screws v. United States, a 1945 U.S. Supreme Court case).
NOTE: When a state employee acts in furtherance of what he or she perceives as a state goal, the actions are "state actions" even if they exceed the scope of the employee’s authority. The rationale is that, were it not for the state action, the employee would not have had the opportunity to abuse his authority, nor to represent to the public that his actions were authorized by the government. State employee actions that deny the claimant due process are attributable to state action. Although the state may be immune from civil liability for the employee’s wrongdoing, the employee may be personally liable. (See Personnel Management Handbook, Sections 3-09-00 and 3-09-10.)
D. What Process Is Due?
There are seven elements of due process, summed up generally as notice and an opportunity to be heard.
Unemployment Insurance Code Section 1332(a)(1) provides:
"Notice" is that notification which apprises the party of a determination of eligibility and allows that party to respond accordingly."
2. A Neutral Decision-Maker
Due process also requires that the decision be made by a neutral decision-maker. "Neutral" means that the decision-maker is fair and impartial. The decision-maker may be the interviewer, a hearing officer, an agency, or a judge. The Supreme Court has strictly enforced this right, holding it constitutionally unacceptable when the decision-maker has:
- A personal monetary interest in the outcome of the adjudication (e.g., an interviewer-landlord may not make a determination decision for his claimant-renter; an interviewer may not handle relatives’ claims; and, of course, an interviewer may not request payment of a fee for a favorable decision (extortion). BUT, the fact that a government agency receives part of its funding from monetary penalties that it helps to assess does not make the agency a constitutionally unacceptable decision-maker (e.g., false statement penalties, both claimant and employer).
- Bias against a claimant because of abuse or criticism from the claimant.
Regardless of the fairness or impartiality of the determination interviewer, the law that is being applied is not open to a question of due process. Implementation of the law, from legislative action through regulation(s) (see PR 5), is subject to a public hearing process, and notice is given prior to the public hearing. Anyone who objects to the implementation of the law can, of course, protest on a number of grounds, but none of them are his personal due process rights.
3. An Opportunity to Make an Oral Presentation to the Decision-Maker
A pre-deprivation process, rather than post-deprivation, may be required whenever there is an established state procedure to take away a property interest. To measure the necessity for a hearing prior to deprivation of property interest, the U.S. Supreme Court set forth three factors in Mathews v. Eldridge (1976).
First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government’s interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requisites would entail.
Three questions based upon the factors annotated in Mathews v. Eldridge and the AFL/CIO court’s response, are:
- Of the claimant:
What is the importance of the property interest at stake?
The AFL/CIO court found:
"Any increase in government costs which might result from our decision is outweighed by the claimant’s need to receive prompt payment of benefits. The loss of unemployment insurance benefits may have severe effects upon the worker and his family. A lump sum payment, which claimants who successfully appeal a denial of continuing benefits receive, defeats the purpose of unemployment insurance. These benefits "provide cash to a newly unemployed worker ’at a time when otherwise he could have nothing to spend,’ serving to maintain the recipient at subsistence levels." (Citing Java v. Human Resources Development, U.S. Supreme Court, 1971).
To what extent will the procedure (or safeguard) reduce the possibility of erroneous decision-making?
The AFL/CIO court found:
"Appellant suggests that a claimant is free to bring an attorney and witnesses with him to the local unemployment office each time he reports for continuing benefits, but this suggestion is impractical and places an unfair, and possibly an expensive, burden upon a claimant every two weeks."
- Of the government agency:
What is the government’s interest in avoiding increased administrative and fiscal burdens that would be imposed by increased procedural requirements?
In response to the Attorney General’s suggestion, the AFL/CIO court commented:
"We do not doubt, as defendant points out, that some percentage of the funds paid to claimants eventually found ineligible for continued benefits will be unrecoverable. However, the potential abuse by some of (the) procedures designed to protect all claimants cannot be the basis for deciding whether the procedures are required by due process. Because we find that the procedures of the California EDD violate California due process, it is not necessary to reach the question of whether the due process clause of the United States Constitution has been violated."
4. An Opportunity to Present Evidence or Witnesses to the Decision-Maker
The basis of this requirement is "fairness." If the claimant cannot make an oral presentation to the decision-maker, he or she cannot present evidence or witnesses to substantiate his or her point.
5. A Chance to Confront and Cross-Examine Witnesses or Evidence to Be Used Against the Individual
From the claimant’s perspective, the opportunity to confront and examine witnesses does not arise during the telephone determinations fact-finding process, just as it is not available through an in-person interview. The claimant must be allowed, at a very minimum, an opportunity to rebut any evidence used against him or her, even though the claimant may not be allowed to see the evidence. In practice, this means that any information adverse to the claimant’s interests must be presented to the claimant for rebuttal.
As the determination was viewed by the court in AFL/CIO:
"At the interview, if any inconsistent facts or questions as to eligibility arise, the claimant is given the opportunity to make explanations. The interviewer attempts to contact by telephone any interested persons, including the latest employer. They are allowed to confirm, contradict, explain or present any relevant evidence. The eligibility interviewer then makes a determination as to eligibility, unless it is necessary to obtain further information by mail."
But the AFL/CIO court also said:
"At the interview the claimant does not have the right to confront and cross-examine witnesses. Appellant (EDD) contends that this right is not an essential element of a due process hearing as long as the decider of fact has enough information from both sides to make a fair decision. With this we cannot agree. The right of the claimant to confront witnesses against him in order to supply the interviewer with all the facts is implicit in the type of due process hearing required here."
The claimant may also validly waive his or her entitlement to due process, but the waiver must be made knowingly; failure to request an in-person hearing does not waive due process requirements by default.
Concerning the element of "surprise" inherent in an employer protest received untimely, the Java court stated:
"Although the eligibility interview is informal and does not contemplate taking evidence in the traditional judicial sense, it has adversary characteristics and the minimum obligation of an employer is to inform the interviewer and the claimant of any disqualifying factors. So informed, the interviewer can direct the initial inquiry to identifying a frivolous or dilatory contention by either party.
It would frustrate one of the Act’s basic purposes - providing a ’substitute’ for wages - to permit an employer to ignore the initial interview or fail to assert and document a claimed defense, and then effectuate cessation of payments by asserting a defense to the claim by way of appeal. If the employer fails to present any evidence, he has in effect defaulted, and neither he nor the State can with justification complain if . . . benefits are allowed."
With the exception of medical, psychological, or other records that could be damaging to the claimant if the information were revealed, the claimant is entitled to know all bases of information used in the decision-making process.
6. The right to Have an Attorney Present the Individual’s Case to the Decision-Maker
At determinations: The claimant has a right to representation, either by an attorney or an attorney-in-fact (one, not an attorney, who is representing the claimant) at the determination point as well as at the appeal point. While the right is not generally exercised by the claimant at determinations, the interviewer may not refuse the representative the opportunity to serve the claimant’s interests. The representative, whether or not an attorney, is retained at the claimant’s expense. There is no Sixth Amendment "right to counsel" in civil and administrative matters. As the claimant’s representative, the attorney or attorney-in-fact has no lesser or greater rights than the claimant.
At the appeal hearing: The Office of Appeals advises the claimant of his or her appeal rights once the appeal has been filed, including the right to counsel; no action is required by the interviewer.
7. A Decision Based on the Record With a Statement of Reasons for the Decision
There are two records and two decisions implicit here: one record and decision from the determinations interview which form the initial determination of eligibility or ineligibility, and one record and decision from the first-level appeal review which either affirms, modifies, or reversed the initial determination. (While there is a third record and decision created by the Appeals Board, this record does not concern the interviewer because it is the final step in the administrative action; further action can only take place in the courts.)
For our purposes, the record is established by the Record of Claim Status Interview, DE 2403 or DE 2403 SEP; the decision is established by the Notice of Determination, DE 1080CT. Since these documents form the basis for appeal, they should be as complete as possible and reflect the interview as accurately as possible. The record should also include copies of documents relied upon by either the claimant or the employer to justify his or her position, but lack of documentation does not mean the other party "wins by default;" each case must be decided on its individual merits.