‘Private right of action’ at heart of unemployment dispute

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Before the Indiana Court of Appeals, the governor and a group of unemployed Hoosiers are sparing over whether a state statute is intended to cover the extra unemployment payment provided by Congress to support those who lost their jobs as a result of the pandemic.

The opposing sides in Eric Holcomb, in his official Capacity as Governor, et al. v. T.L., et al., 21A-PL-1268, have quickly submitted their briefs outlining their arguments in the dispute that arrived at the appellate court June 28. At issue are the federal unemployment programs which provides benefits to self-employed and gig workers, gives an extra $300 a week to those who qualify for regular jobless payments, and extends benefits for an additional 53 weeks.

Gov. Eric Holcomb terminated Indiana’s participation in the programs June 19. He claimed the state’s economy has recovered from the COVID-19 slowdown and employers are looking for workers.

However, five Indiana residents and the Concerned Clergy of Indianapolis filed a lawsuit, trying to prevent the state from opting out of the federal programs before they expire in September. The plaintiffs asserted that a unique provision in state law, Indiana Code section 22-4-37-1, requires Indiana to secure for employees in Indiana “all rights and benefits conferred” under certain federal statutes.

Marion Superior Judge John Hanley issued a preliminary injunction less than a week after the state stopped accepting the federal funds. The state filed an appeal June 25, seeking a stay of the trial court’s ruling.

In its emergency motion to stay the preliminary injunction , the state argues that statute is “merely a declaration of purpose” and does not create a private right of action.

The statute pertains to the participation in the federal unemployment insurance program, Indiana asserts. Traditionally, in the unemployment insurance program, which is what the Legislature was envisioning when it crafted Ind. Code 22-4-37-1, money from the state trust fund pays the benefits to the jobless workers while the federal funds are used only to cover the state’s administration costs.

According to the state, nothing in the statute gives individuals the ability to require Indiana to accepts benefits from the federal government.

“Yet a single trial judge has determined that the Governor’s policy determination is unlawful and has ordered the State to re-enter the CARES Act programs exclusively on the basis of an Indiana statute that does not create any substantive rights – let alone privately enforceable rights – and instead merely asserts a declaration of purpose,” the state argues in its emergency motion.

The plaintiffs in the original lawsuit countered in their response the state’s interpretation would rob them of the ability to enforce the rights and benefits given by the statute.

“Workers who are denied unemployment compensation benefits by the Department of Workforce Development can file an administrative appeal, and once administrative remedies are exhausted, they can appeal to the Indiana Court of Appeals,” the plaintiffs argue. “But once the CARES Act programs are ended, workers will not be able to file claims for benefits and will not have an administrative remedy, as there will be no denied claims from which to appeal. Workers will be left without any remedy if there is no private right of action.”

The Court of Appeals has ordered the transcript from the trial court’s hearing on the motion for preliminary injunction be prepared by July 9. When it receives the transcript, the appellate court will proceed to rule on the state’s emergency motion.

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