A federal court settlement gives the Virginia Employment Commission until Labor Day to resolve the questions and claims of nearly all of the 92,000 unemployed Virginians who have been waiting for jobless benefits during the pandemic and the economic crisis it caused.
U.S. District Judge Henry Hudson signed the court order on Tuesday to settle a federal lawsuit that five Virginia women filed against the VEC, alleging that the state agency had denied them the benefits and a timely explanation they are due under the law.
“Both parties acknowledge that the adjudication of unemployment claims is a vital public service, even more so during the COVID-19 pandemic, which has inflicted economic hardships on countless Virginians,” the settlement order states.
The order directs the VEC to resume unemployment claims for the five plaintiffs — Ashley Cox, Emily Dimond, Penny Williams, Amber Dimmerling and Lenita Gibson — and pay all back benefits by Friday, unless they are “deemed ineligible” through a formal process for adjudicating disputes.
The five plaintiffs won’t be alone in reaping benefits from the settlement, which sets Sept. 6 — Labor Day — as the milestone for the VEC to resolve “any and all issues “ for at least 95% of the unpaid unemployment claims for 92,158 people. A week later, the agency must submit a status report on whether it has met the target and, if not, why .
“For more than a year, we have heard daily from Virginians across the state who needed to get emergency help — often for the first time — and instead got delays,” said Pat Levy-Lavelle, an attorney at the Legal Aid Justice Center, which filed the suit with four other legal advocacy organizations and law firms.
“Many Virginians did receive benefits, and we know that people at the VEC have been working hard during the pandemic,” Levy-Lavelle said in a statement the legal team issued Tuesday. “Still, this lawsuit has been about getting more help for gaps in the system and the Virginians who desperately need it. The steps ordered today are a hopeful sign that help is on the way.”
Help for VEC
The settlement also offers relief for the embattled employment commission, which had handled 1.6 million claims, or 10 times as many as in previous years. It has taken on three new federal unemployment benefit programs created by Congress last year in response to the public health emergency and expanded relief to previously uncovered workers.
The VEC also endured 12 COVID-19 outbreaks in its offices, lost two employees to the coronavirus disease, and suffered death threats and other verbal abuse to workers from frustrated people seeking benefits.
“I don’t think anyone could have anticipated what happened with the pandemic,” Virginia Employment Commissioner Ellen Marie Hess said in an interview Tuesday.
In a response to the settlement on Tuesday, Hess said: “The VEC is grateful that Judge Hudson has recognized the hard work of our employees throughout this pandemic, and we will continue to ensure Virginians have access to all benefits for which they are eligible.
“The VEC is focused on serving our customers, and we are committed to continuing the important work our team is doing for their fellow Virginians.”
Many of the steps that the settlement requires are part of an executive directive that Gov. Ralph Northam issued a week earlier with a commitment of $20 million to an agency that he said has relied for years on insufficient administrative funding from the federal government through the payroll taxes it receives from Virginia employers.
Northam’s plan directs the VEC to launch a new information technology system for handling claims and appeals on Oct. 1 under a modernization program that began in 2009. The new system was supposed to launch a year ago, but stalled when the pandemic began and the agency focused all of its resources on processing claims through a 35-year-old mainframe computer.
His plan also requires the agency to continue to expand the staff at call centers, run both by the state and private contractors, to “improve call wait times,” which is also is part of the proposed court settlement to improve communication between the VEC and its clients.
But the heart of the settlement and the governor’s plan is hiring more people to handle the most complex cases involving disputed eligibility for benefits.
The state already has begun to train the first of 300 people that it has hired through a private contract to act as adjudicators of disputed claims. Under the settlement, the VEC would be committed to clearing 10,000 of those cases a week by July 1 and 20,000 a week by Aug. 1, compared with 5,700 a week now.
Most of those pending unpaid claims — almost 74,000 — involve traditional state unemployment benefits and two other new federal emergency benefits. The state program provides up to $378 a week, but workers also may be due additional federal payments of $600 a week for about four months last year under the CARES Act and $300 a week this year under additional emergency relief packages.
The VEC also must resolve disputes over an additional 18,000 claims under another federal emergency program — Pandemic Unemployment Assistance — that provides benefits for the first time to people who are independent contractors, sole proprietors or “gig” workers not covered by employers in the traditional unemployment insurance program.
The federal benefits are scheduled to end Sept. 4, although some states, led by Republican governors, have cut off the additional stipends sooner to push people back into jobs. Northam, a Democrat, has no plans to do so, said Megan Healy, the governor’s chief workforce adviser, who will become the state’s first secretary of labor on July 1, with jurisdiction over the VEC.
“Not at this time,” Healy said in an interview last week.
On Tuesday afternoon, Virginia Senate GOP leaders proposed that the state give workers who are now getting supplemental federal unemployment payments a one-time bonus of $1,500 when they return to the workforce. The employee would have to remain employed for six weeks. Under the GOP plan, the money would come from the American Rescue Plan Act.
The settlement also addresses specific classes of employees who might have been missed in the system because they weren’t associated with an employer who helps pay for their benefits.
The settlement requires the VEC to notify all applicants for unemployment benefits who quit their jobs voluntarily to determine why and whether they did so for reasons that would qualify them for other emergency relief, such as the lack of child care or closed schools.
In those cases, the settlement requires the VEC to immediately disqualify them for regular benefits and try to shift them to the Pandemic Unemployment Assistance program.
It also requires the agency to eventually notify people receiving unemployment of other potential public benefits, including mortgage or rent relief.
The settlement imposes a series of reporting requirements on VEC to ensure that the agency shares information with the legal aid organizations that filed the suit.
For example, it requires the agency to explain the steps it took last December to resolve the cases of almost 42,000 people who should have been paid while their claims were pending, while not identifying some of the plaintiffs and providing them with the same relief.
The settlement does not address any unpaid claims from cases flagged for suspected fraud, which Healy has said totals about $59 million. The settlement also does not address future claims that must be adjudicated, including those arising from a requirement that all applicants search for jobs, beginning June 1, and that those who receive benefits from the Pandemic Unemployment Assistance program prove by May 30 that they earned wages in 2019.
In addition, it does not address the handling of appeals under a new state law that takes effect July 1 to allow hardship waivers for people who were overpaid by VEC but can’t afford to repay the excess amount.
However, advocates say the settlement provides a clear path forward for both the VEC and the people it serves.
“The VEC has had a lot of hardships it’s had to deal with,” Levy-Lavelle said in an interview Tuesday. “We know there are a lot of dedicated career employees there who have faced challenges during the pandemic.”
“At the same time, we’re concerned about people who have fallen through the cracks and have been waiting a long time for answers and benefits,” he said. “Today is an important step forward, and we’ll be tracking the progress closely.”