UNEMPLOYMENT BENEFITS

Unemployment benefits: Why are Americans suing and can they recover their payments?

States across the country have withdrawn from a batch of pandemic-era federal programmes which provide extra support for jobless residents, but are now facing a legal backlash.

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Unemployment benefits: Why are Americans suing and can they recover their payments?
NELSON ALMEIDA AFP

Throughout the pandemic the federal government has been providing additional unemployment benefits for out-of-work Americans to help them deal with the economic consequences of the pandemic.

In recent months 26 states have announced their intention to prematurely withdraw from the pandemic unemployment benefits, saying that the programmes are encouraging workers to stay at home.

All but two of those states have now passed their deadlines to cancel the additional federal support but they are now facing legal challenges from residents who argue that the state does not have the right to deny them access to the schemes.

Indiana rules that state must continue to provide additional unemployment benefits 

The first state to face legal challenges was Indiana, where an estimated 230,000 lost their additional benefits from 19 June onwards. That decision stood for less than a week and on 25 June a state judge ruled that residents should continue to receive the payments until the case has gone to court.

The case was brought by Indiana Legal Services and private employment law firm Macey Swanson Hicks & Sauer who argued that the decision violated a state law requiring Indiana to "procure all available federal insurance benefits to citizens.”

In the ruling, Marion Superior Court Judge John Hanley said that the dangers associated with cutting off additional support for out of work residents outweighs the risk of harming the state’s economic recovery.

Hanley wrote on his decision: "A loss of housing or medical care and the inability to provide food, shelter and adequate childcare for a family constitute irreparable harm pending resolution of this cause of action and are not adequately compensable by an award of damages.”

Maryland follows suit with another unemployment benefits legal challenge

Following the ruling in Indiana, a group of six unemployed Marylanders filed a similar lawsuit against Gov. Larry Hogan and Maryland Secretary of Labor Tiffany Robinson on 30 June. They also allege that the decision to withdraw from the federal programme violates the state’s constitutional obligation to secure any available support for residents.

On Saturday a Maryland judge issued a temporary restraining order, preventing the state from ending participation in the scheme. The ruling came just in time for jobless residents who were due to lose the additional benefits later that day.

In Maryland, where more than 300,000 residents are currently receiving unemployment benefits, 84.7% will be left without any support if the state is able to cancel the federal programme.

Across the country roughly 4.1 million Americans will be affected if states are allowed to revoke access to the additional unemployment benefits. After the initial success of the Indiana and Maryland challenges expect to see more groups launch a lawsuit against other states.