Laid-off workers are scoring early wins in lawsuits against GOP governors attempting to cut off federal jobless aid

unemployment insurance weekly benefits stimulus checks recession job losses coronavirus pandemic
Carlos Ponce joins a protest in in Miami Springs, Florida, asking senators to continue unemployment benefits past July 31, 2020.

  • Jobless workers in Indiana and Maryland racked up early court wins about restoring federal unemployment.
  • “I think it certainly has the potential to start more cases,” one expert said of the litigation.
  • A lawyer who brought a similar case in Ohio said he may even go after the state for damages.
  • See more stories on Insider’s business page.

Jobless workers in Ohio are the latest group to push back against Republican governors cutting off their federal benefits early – in court.

Federal benefits in the state wound down on June 26, months ahead of their scheduled expiration in September. Now, a new lawsuit representing three Ohio workers claims that the state is obligated to continue paying up.

The suit follows similar ones filed in Indiana and Maryland, both of which won temporary victories. In Indiana, firms argued that a similar law mandates the state procure all unemployment compensation conferred upon it, including compensation from amendments like those in the CARES Act. In other words, Republican governors might be trying to cancel extra unemployment from Biden’s stimulus, but it’s illegal.

The Ohio suit hinges on a specific part of state law that deals with the state’s responsibility to cooperate with the federal government on unemployment insurance – and whether it should “secure to this state and its citizens all advantages available.”

Former Ohio Attorney General Marc Dann is now with DannLaw, one of the two firms representing plaintiffs in the case. He told Insider he believes the amendments to federal unemployment written into pandemic-era laws “are exactly the type of thing that it was the intention of the legislature that the governor is required – has a clear, legal duty – to accept and pass on to the folks that were represented.”

“I think it certainly has the potential to start more cases,” Andrew Stettner, a senior fellow and jobless policy expert at the left-leaning Century Foundation, said. “The legal argument made in Indiana was based on a set of components that were not unique to Indiana law.”

At least 400,000 jobless workers in Ohio are impacted by the additional $300 ending, according to an estimate from Stettner.

The three plaintiffs in the case say they won’t be able to pay their basic living expenses if all federal benefits are cut off early, including rent, food, and medications for pets and service animals.

But in Indiana, where a preliminary injunction was granted to temporarily halt the end of benefits, jobless workers may still face difficulty getting their money. The state’s Department of Workforce Development claims it can’t restore the benefits, HuffPost’s Arthur Delaney reported. It’s a situation that Labor Secretary Marty Walsh told Insider he’s keeping a close eye on.

But in Ohio, “it would be real easy to get it restarted and, frankly, if they don’t, then we’ll look at bringing some sort of a damage action against the state to recover what they should have gotten,” Dann said.

Maryland Gov. Larry Hogan has said he’s planning to appeal the court’s 10-day injunction ordering the state to continue dispensing federal jobless benefits.

“Why wouldn’t a state that cares about the people that live in it, and who has a statutory obligation to pass on benefits that are available under federal law, why wouldn’t they do it?” Dann said.

Are you an unemployed worker with a story to share? Email these reporters at jkaplan@insider.com and jzeballos@insider.com.

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Democrats and Republicans want to fund infrastructure using federal unemployment benefits yanked from workers

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Demonstrators rally near the Capitol Hill residence of Senate Majority Leader Mitch McConnell, R-Ky., to call for the extension of unemployment benefits on July 22.

  • President Joe Biden threw his support behind a bipartisan infrastructure package on Thursday.
  • But that package doesn’t contain funding from tax hikes, as he initially proposed.
  • It would be partially paid for by targeting unemployment fraud and unused federal unemployment funds.
  • See more stories on Insider’s business page.

President Joe Biden has thrown his support behind a $1 trillion bipartisan infrastructure deal focused on roads and bridges – and part of the spending would be potentially offset by unused relief funds and targeting unemployment insurance fraud.

Repurposed federal UI will account for $25 billion of the deal’s pay-fors, a person familiar with details of the plan told Insider. The bulk of the funding from UI will come in the form of “unemployment insurance program integrity,” which will provide $80 billion in revenue.

“It’s the fraud. It’s the fraud from UI,” Sen. Jeanne Shaheen (D-N.H.) told Insider when asked about the inclusion of unemployment insurance in the funding. She added: “Apparently, there are several reports that talk about significant fraud in the UI.”

Sen. Joe Manchin, a key moderate, said the deal wouldn’t detract from enhanced UI. “There’s an awful lot of fraud in UI that can be repurposed,” Manchin told Insider.

Previously, Sen. Shelley Moore Capito – a major GOP player and negotiator – had floated repurposing unemployment funds from the states ending federal early benefits early to pay for an infrastructure package. That seems to have garnered traction among lawmakers.

Andrew Stettner, a senior fellow and unemployment expert at the left-leaning Century Foundation, cautioned that legislative details still needed to be ironed out. He also said there’s a risk people could lose jobless aid they’re entitled to if anti-fraud prevention policies are poorly implemented.

“There’s been certainly a surge in organized crime activity in the UI system that has led to a lot of fraud,” Stettner told Insider. “The thing that we have to be concerned about: Are the mechanisms that are being put in place to try and prevent that fraud? Does it lead to unfairness in the system? Are people being wrongly implicated in fraud? We’ve had a lot of cases with that.”

At least 26 states are prematurely cutting off federal unemployment benefits this summer.

Many of the states opting out are ending all federal benefits, including programs with expanded eligibility. That means thousands of workers will lose – or already have lost – all benefits completely. So far, a dozen states have ended their benefits, cutting off somewhere between 400,000 and 500,000 people.

Now, lawmakers are proposing that those severed benefits be used to fund new infrastructure spending, rather than tax hikes on America’s wealthiest and its large corporations.

Overall, about 4 million Americans will see their benefits end ahead of schedule. Federal programs are set to end nationwide in September, but several governors have opted to cut off their benefits in an effort to get workers back into the workforce – although the current labor shortage may also be driven by lack of childcare, or a mismatch between open roles and unemployed workers’ qualifications. As Insider’s Ayelet Sheffey reported, job searches were actually down in states ending those benefits early.

“This is not because the government – because the world – is suffering from people not returning to their jobs,” Keshya Dempsey told Insider of the decision to end benefits prematurely, which will cut her off as well. The 35-year-old Dempsey lives in Florida, where the $300 in extra weekly benefits will end on Saturday.”This is political. It has always been political.”

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