Lawsuit argues Iowa’s unemployment benefit cuts are illegal

Aug 25, 2021, 9:35 AM | Updated: 10:47 am

IOWA CITY, Iowa (AP) — A proposed class-action lawsuit claims that Iowa Gov. Kim Reynolds’ decision to cut off enhanced unemployment benefits for tens of thousands of residents violated state law and asks a court to reinstate their eligibility.

The lawsuit, filed this week in Polk County, seeks to make claimants eligible for potentially hundreds of millions of dollars in unemployment aid they have been denied since Iowa dropped federal pandemic benefit programs June 12.

Reynolds, a Republican, announced in May that Iowa would end participation in federal programs that provided an extra $300 per week to normal unemployment benefits and expanded eligibility criteria. She cited a “severe workforce shortage,” saying the move would encourage those affected to return to work.

The lawsuit claims the decision violated a law that says Iowa’s workforce agency “shall cooperate with the United States Department of Labor to the fullest extent” necessary in order “to secure to this state and its citizens all advantages available” under federal unemployment programs.

Several Des Moines attorneys, including B.J. Stoltze, Jr. and Jeff Carter, filed the lawsuit, which notes that the Iowa law calls economic insecurity caused by unemployment “a serious menace to the health, morals and welfare” of residents.

“The Legislature decided it was a serious menace. Unfortunately, the governor appears to be treating it like it’s an inconvenience to big business,” Stoltze said.

Carter said attorneys have heard from dozens of Iowans suffering economic hardships after having been initially promised by the state they would be eligible for the aid through early September.

Reynolds spokesman Pat Garrett said the governor believes “we cannot continue to pay able-bodied people to stay home.” He said the number of people looking for jobs at unemployment offices and participating in the state’s labor force has increased since May.

“This was not only the right decision, but also in accordance with the law and this lawsuit has no merit,” he said.

Reynolds is one of 26 governors, mostly Republicans, who have taken similar steps, ahead of the Sept. 6 date that the federal aid will expire.

Lawsuits have been filed in about half of those states, including Ohio, Texas and Florida, on behalf of those affected. They have had mixed success so far.

The lawsuit names three plaintiffs but estimates the class could involve up to 55,000 who have been illegally deprived “life-sustaining benefits.”

They include claimants who were receiving the $300 weekly supplement; who were eligible for unemployment after exhausting 26 weeks of state benefits; and others who were made eligible if they’d been unable to work due to COVID-19.

Iowa was paying out $33 million through the programs per week when Iowa Workforce Development Director Beth Townsend recommended ending them in May, according to a memo from Townsend. The lawsuit names Reynolds and Townsend as defendants.

The Century Foundation, a progressive think tank, has estimated that $337 million in benefits are at stake for Iowa claimants during the 12-week cutoff.

The lawsuit describes how the pandemic affected the plaintiffs’ employment prospects before the cut hurt their finances.

Crystal Marciniak of Garner took time off from her job as a pig care manager to undergo carpal tunnel surgery in March 2020 as Iowa saw its first COVID-19 cases, and her return to work was subsequently delayed. She had been using benefits to pay for food, housing and items for her two children, and has depleted her savings since June.

Brian Wisch of Ankeny was laid off by Collins Aerospace in May 2020 due to lack of demand caused by the pandemic. The company told him he might be rehired when the business rebounded, but he’s unsure that will happen and had used his benefits for basic expenses while looking for a job.

Karla Smith had been working at a Casey’s convenience store in retirement to make ends meet but quit in March 2020 after a doctor advised that her preexisting lung condition made it dangerous for her to work in retail. The cut left her “without a critical income source” as the Delta variant has caused a new wave of hospitalizations and deaths in the state.

The lawsuit seeks a temporary restraining order requiring the state to resume participation in the programs, and an order for the state to pay back benefits that are owed with interest.

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Lawsuit argues Iowa’s unemployment benefit cuts are illegal