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University of Michigan

U-M Law Clinic Meets High Demand for Unemployment Benefit Assistance

8-Jun-2020 9:00 AM EDT, by University of Michigan

Workers nationwide have struggled to receive unemployment benefits during the global pandemic that forced many businesses and organizations to close. Navigating through numerous phone calls for help and online snafus have frustrated many people, especially as government leaders seek to open businesses to revive an economy on life support.

Rachael Kohl directs the University of Michigan Workers' Rights Project, a free law clinic that helps workers get unemployment benefits. Now in its 10th year, the clinic's students and staff have answered questions from more than 3,000 claimants—and the number continues to grow. 

Why have many states nationwide struggled to process claims in a timely manner? 


State agencies are under-resourced. Typically, the federal government pays for the state's administration costs based on the prior quarters' unemployment rate. Because unemployment exploded overnight, even with the additional administrative funding per the federal legislation (the CARES Act), the state agencies started this crisis extremely understaffed.  


State agencies are also overwhelmed. Given that agencies are understaffed, they have to hire and train new staff. It typically takes six weeks to onboard new agency workers to handle easier claims.  


Michigan, for example, started this crisis with a staff of about 635 employees, who processed around 300,000 claims last year. Since COVID-19's impact on the economy, there have been more than 300,000 claims in just a single week. In the past few months, Michigan has seen over 1.8 million individual claims for benefits. The agency is also receiving over 150,000 calls a day and continues to process 100,000+ claims of UI a week—all while trying to continue all other functions (like reviewing claims, adjudicating appeals and paying out benefits) and adapt to the helpful expansions. 


In addition, state agencies are developing their programs to respond to the CARES Act, which covers more workers than the states' typical programs. The CARES Act created the Pandemic Unemployment Assistance (PUA) to cover more workers who are not typically covered by many state unemployment programs (like low-income workers, part time workers, self-employed workers, independent contractors, etc.). This new program required state agencies to figure out how they were going to administer the application process and the review process. The Department of Labor came out with guidance on the CARES Act in early April. Some states, like Michigan and New York, prioritized setting up and paying out PUA by mid-April. Other states did not have the PUA programs up and running until May.


How long will it take until states reach a point where most Americans get their benefits?


A majority of people who are entitled to benefits are already receiving them. However, those that are not will hopefully get processed in the upcoming weeks. As noted prior, many states had to increase staff, and these new hires require six weeks of training. Now that there are more agency workers to process and review claims, the remaining claims will likely be processed even faster than earlier claims.


In Michigan, 92% of the people who are eligible and qualified for benefits are being paid. However, agencies have denied some claims. While some of those claims have been properly denied, claimants should be aware of their appeal rights. If a claimant has been denied, they have the right to appeal it. While it is important to note that not all unemployed workers are covered by benefits, many cases are overturned in claimants' favor on appeal because the agency made the wrong call initially. Likely right now, many will be covered due to the CARES Act. But each state has their own state statute that impacts who gets benefits and how much.


In Michigan, based on calls the clinic received (hundreds per day compared with 15 per week before the pandemic), what is a common complaint and what have been the outcomes? 


The biggest issue is confusion. The online platform for Michigan is highly confusing, with ample opportunities to make mistakes. Further, once a mistake is made, there is no way for claimants or employers to go in and fix it themselves. They have to call the agency to go in the system to fix it—but claimants and employers often can't get through because of the amount of people calling all at once while the agency is understaffed.


Additionally, information about the federal and state programs and eligibility is not very accessible. Many people have basic questions about their eligibility because most of these questions don't have a clear "Google" answer. Unemployment is complicated—which is why it takes six weeks to train new staff.  


Finally, lots of things make people ineligible, and claimants don't understand why. See the above example about how receiving a pension in Michigan will reduce or eliminate that claimant's ability to collect unemployment benefits. Other earnings from another job will also reduce earnings. The agency's complicated formulas to calculate benefits amounts is not transparent to claimants. The agency's online platform does not clearly explain why benefits were reduced specifically to the claimant, and the general online information is hard to understand on an individual level.


Discuss the balance between a healthy worker not feeling comfortable with returning to a now-opened business that may want to end the unemployment benefits. 


This is a tough position for both workers and employers. To have to choose between their health and their livelihood is an untenable choice for workers.


For unemployment purposes, states generally use the reasonable person standard to determine whether leaving the job would be disqualifying or not. In other words, would a reasonable person in that claimant's shoes have returned to work? It is a case-by-case scenario for the agency to review. Typically, it is the claimant's burden of proof to show they were reasonable in their decision. 


There are going to be a lot of questions stemming from this issue of workers' health.  What if employers are doing everything in their power to limit the risks of contracting COVID-19? What if workers are still contracting or dying from COVID-19 despite the employers' efforts? What if the employer is not doing enough? What if the worker is immunocompromised or has other related health concerns? What if the worker lives with others who are immunocompromised? What is the nature of the job? What's the amount of exposure? The list goes on.


The best advice for employers and claimants: be reasonable and try to work together.  Neither claimants nor employers have dealt with a pandemic before. Claimants should discuss their concerns about returning to work with the employer first before leaving the job. Employers should try to accommodate and alleviate employees' concerns. Both sides should be flexible and listen to the other.


Also, we know that not all businesses are coming back to full-time work for all employees right away. Workshare (or short-term compensation programs) is a great option for claimants, employers and states alike. Claimants can be called back to work for reduced hours/wages (which may also limit COVID-19 exposure), and they can still obtain a percentage of weekly unemployment benefits along with the $600/week through July to help offset their wage reduction. They maintain their employment and job's fringe benefits. Employers retain their trained workforce as they cautiously restart businesses. That way, employers avoid extra costs in searching for, recruiting and training new workers.  Plus, the unemployment benefits from workshare programs are paid from the CARES Act's funds rather than states' trust funds.


You taught a course entitled "Problem-Solving Initiative: Repairing the Unemployment Safety Net" that included a discussion on preparing for the next recession. What were two takeaways from it? 


Federal funding to the administration costs of state agencies should be proactive rather than reactive.The administrative allocation system is driven by caseloads. This means that if there is an increase in claims, only then will funds to the state agency increase. This system is reactionary, causing a delay in receiving funding to the state agencies from the DOL during a recession. Claims processing becomes inefficient because the state agency cannot hire more staff to process the influx in claims until they receive more funding from the federal government—usually not until the beginning of the next fiscal year. 


In addition, the federal government should have noninterest loans to respond to unexpected recessions so that states are not forced to borrow significantly in order to pay out benefits The government also should have interest-free loans (to be paid back between 3-5 years) and other programs in place to assist states in having to pay out substantial increases of claims.

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