Challenges of Delays in Processing Unemployment Benefits Advance

The U.S. Supreme Court on Feb. 21 reversed an Alabama Supreme Court ruling barring lawsuits that asserted unemployment benefits claims processing was unlawfully delayed. Although the U.S. Supreme Court let the claims proceed even though the administration-exhaustion requirement had not been exhausted, the high court said its holding was a narrow one. If the administrative-exhaustion requirement applied to these claimants, they would face a catch-22 with no viable solution, the court said in a 5-4 ruling.

Background

In this case (Williams v. Reed), 21 Alabama claimants applied for unemployment benefits during the pandemic. They contended that the Alabama Department of Labor unlawfully delayed the processing of their benefits claims. For example, plaintiff Derek Bateman alleged that he attempted to appeal his claim to an appeals tribunal. But according to Bateman, the department never scheduled a hearing or otherwise acted on his appeal, even after he attempted to follow up by email and phone calls numerous times.  

The 21 claimants sued the Alabama secretary of Labor. Invoking 42 U.S.C. Section 1983, they asserted, among other things, that the department’s delays in processing their benefits claims violated the due process clause of the 14h Amendment, as well as the Social Security Act of 1935.  

The claimants did not ask the Alabama court to rule that they were entitled to unemployment benefits, the Supreme Court noted. Rather, they simply asked it to order the department to promptly address their benefits claims.

The claimants sought a court order requiring the department to: 1) issue an initial nonmonetary decision within the next 10 days to every plaintiff who has not yet received a decision; 2) provide within 10 days a hearing date for each of the plaintiffs who has requested a hearing; 3) schedule such hearings for a date not later than 90 days after the request for the hearing; and 4) pay every approved claim within two days of the date of approval. 

The Alabama secretary of Labor moved to dismiss the complaint on several grounds. The secretary argued, among other things, that the state trial court lacked jurisdiction because the claimants had not satisfied the administrative-exhaustion requirement in Alabama Code Section 25-4-95.  

The state trial court granted the secretary’s motion and dismissed the complaint. The claimants appealed to the Alabama Supreme Court. That court affirmed on failure-to-exhaust grounds. The court concluded that under its precedents, Section 1983 did not pre-empt the state’s administrative-exhaustion requirement.

U.S. Supreme Court’s Narrow Holding

The U.S. Supreme Court said, “The Alabama Supreme Court ruled that the claimants could not sue under Section 1983 to challenge delays in the administrative process until the claimants completed that process. But that ruling created a catch-22: Because the claimants cannot sue until they complete the administrative process, they can never sue under Section 1983 to obtain an order expediting the administrative process. This court’s precedents do not permit states to immunize state officials from Section 1983 suits in that way. On that narrow ground, we reverse.”

The following articles from SHRM and other outlets provide additional background information and context.

Long Wait for Unemployment Benefits

Bateman, a shrimper in Alabama, couldn’t sell shrimp during the pandemic and sought unemployment benefits. After his application was denied, he allegedly spent months trying to appeal. He received some of the money he was owed nearly two years later, after he reportedly “lost everything.”

Claims May Go Forward

The claims against Alabama now may go forward. One man’s claim had been dismissed after he missed an administrative deadline due to being on a ventilator, according to the lawsuit.

Alabama said a high number of unemployment claims overwhelmed the agency during the pandemic, but many of the plaintiffs’ claims have been resolved.

Considerations When HR Challenges Unemployment Benefits

When an employer decides to participate in a fact-finding hearing conducted by the appropriate unemployment commission, it does so because it thinks the claim in question is unwarranted. Nonetheless, an employee has a legal right to receive unemployment if the employee has lost work through no fault of their own, such as in the case of a layoff or the employee’s work hours being restricted or reduced.