Disabled, jobless and waiting for unemployment compensation

DWD seeks permission to pay, but has still denied claims — sometimes after approving them

DWD Secretary Caleb Frostman
Wisconsin Department of Workforce Development Secretary Caleb Frostman speaks at an informational hearing by the Senate Committee on Labor and Regulatory Reform in May. (Screenshot from Wisconsin Eye broadcast)

Karen Smith was receiving Social Security disability payments and working part-time as a grocery clerk when the COVID-19 pandemic began spreading in Wisconsin.

Smith, who is 59, has arthritis and a lung disease, is a recovering cancer patient and also has an autoimmune disorder. She asked her doctor what she should do.

“My doctor told me, ‘No, you need to get out of there. You can’t work right now…. You’re going to have to stop working until this pandemic is over,” Smith recalls.

Her employer gave her a leave of absence in April. Smith applied for unemployment, but she had worked too few hours since taking the job late in 2019 to qualify for benefits.

In May, the state Department of Workforce Development (DWD) began taking applications for the federal Pandemic Unemployment Assistance (PUA) program. PUA is targeted for people like her, with too little work history, as well as self-employed people, independent contractors and others who lost their jobs due to the virus but weren’t eligible for regular unemployment.

Smith applied online. After more than two months of waiting, with fruitless checks on her online account and long stretches on hold when she phoned to find out the status of her application, she got what sounded like good news.

Checking online at the unemployment website on Wednesday, July 22, Smith saw a notice her application for PUA had been approved. The first four weeks of claims were automatically deposited in her bank account.

She called to confirm what she was seeing on the screen, and got long holds and no answers. She went ahead and followed an instruction in the approval notice to file the rest of her claims, one week at a time.

On Thursday, she saw another notice that the pending claims were under review, she says — and a notice that her unemployment claim — approved just the day before — was now being denied because she was a recipient of Social Security Disability Insurance (SSDI).

Then she saw a notice on the website that her unemployment account was being suspended until 2022. After calling in again and sitting on hold for 45 minutes, she spoke with an unemployment insurance worker.

“That’s when he informed me, ‘You’re denied,’” says Smith — because she received SSDI. She asked why she had gotten a notice the day before that she had been approved and money in her bank account. “He said he had no clue.”

Disabled and working

Smith’s ordeal is an example of the troubles faced by  one particular group of workers who have been left out of the unemployment compensation system as Wisconsin grappled with a record number of laid-off workers as a result of the pandemic.

She is one of at least 1,450 people who are laid off from jobs and who also receive Social Security disability payments. And because of a 2013 law overhauling the state’s unemployment compensation system, SSDI recipients have been categorically denied unemployment pay.

The bill passed on a party-line vote and was signed by then-Gov. Scott Walker, becoming 2013 Act 36. Republican lawmakers who introduced the bill and voted for it claimed that SSDI recipients who sought unemployment compensation after being laid off were “double-dipping” in the words of then-state Sen. Frank Lasee (R-De Pere).

Under federal law, however, SSDI recipients are permitted to work so long as their job income falls below $1,260 a month. The federal Social Security Administration states that it seeks “to help people with disabilities achieve independence by helping them take advantage of employment opportunities” and that it’s possible to do so without losing their benefits. A 2018 statistical report from the Social Security Administration lists more than 158,000 “workers” among just over 186,000 SSDI recipients in the state.

Karen Smith says that when she first went on disability in 2018, she didn’t work. She later took a part-time job that helped pay some of her bills.

Ken Lonnquist is a Madison musician who has been disabled by failing vision since March 2015, but has also continued to perform part-time. His disability check is “a small stipend, it’s not a living wage,” Lonnquist says. The legislators behind the 2013 change “said they didn’t want people with disabilities to be ‘double-dipping’ — as if we were trying to rip off the state by working.”

“SSDI only goes so far,” says Alan Ferguson, a Mount Horeb electrical technician who has worked part-time since he was disabled by depression and post-traumatic stress disorder. Social Security officials understand that disability by itself may not be enough for many people to live on, he says. “That’s one of the reasons they allow us to work. They encourage us to work” — within the ceiling set by the rules of the Social Security Administration.

Stuck on a policy shift

Since the start of the pandemic, according to DWD communications director Ben Jedd, 1,458 SSDI recipients have applied for unemployment benefits.

Some initially sought regular unemployment benefits and were denied because of the 2013 SSDI exclusion. Others would not have qualified anyway: Smith because of her limited work hours before she went on leave, and Lonnquist and Ferguson because they are independent contractors.

All three were among those who applied for the Pandemic Unemployment Assistance program, which Congress included in the federal Coronavirus Aid, Relief and Economic Security (CARES) Act to help cover people who would get left out by regular unemployment insurance in what was already clear in March would be a massive economic dislocation.

“The PUA money was in part designated with specificity by the federal government to help gig workers — independent contractors,” Lonnquist says. “That money was designed for people like me.”

Initially DWD officials applied the state law with respect to unemployment and SSDI to the PUA program, denying those claims. The department sought guidance from the U.S. Labor Dept. Chicago office, where an official responded in late May that, based on the Wisconsin SSDI exclusion and relevant federal regulations, “We interpret this to mean claimants are ineligible regardless of the amount they receive under Social Security Disability benefits.”

But even as DWD continued to treat the applications that way, Secretary Caleb Frostman says he and his staff were having second thoughts about that.

“PUA was put out there in large part to help people who are ineligible for unemployment insurance,” Frostman tells the Wisconsin Examiner. Applying the SSDI exclusion to PUA “seemed like a really strange interpretation to me, because it at least seemed unlikely that Congress would have intended the CARES Act to disqualify disabled workers who received SSDI from getting PUA.”

Frostman and DWD followed up with a letter on June 9 to U.S. Labor Secretary Eugene Scalia, asking for a formal opinion on the matter. DWD has shared the letter and the earlier email exchange with the Chicago office with reporters.

“I am concerned that the interpretation [from the Chicago office] could be viewed as denying benefits based on disability using SSDI as a proxy or as having a disparate impact on individuals with disabilities because all SSDI recipients—by definition—have disabilities,” Frostman wrote to Scalia. “Discrimination on the basis of disability violates the Department’s obligations to comply with title II of the Americans with Disabilities Act…”

Denials continue

Despite that letter, however, DWD has continued to deny PUA claims made by people on SSDI.

Victor Forberger, supervising attorney for the University of Wisconsin’s Unemployment Compensation Appeals Clinic, is representing a number of SSDI recipients appealing those denials.

“There’s desperation all the way around here,” Forberger says. “Some of my clients have been able to find work and get new jobs, making much less but at least making something. But a lot of them are stuck, and unemployment is their only option. It’s being held out of their grasp for seemingly no rational reason.”

Frostman tells the Wisconsin Examiner that “my directive was not to deny anyone for PUA — at this point to kind of put them aside if they’re an SSDI recipient to avoid that heartache and consternation…until we get that guidance.”

It has already been six weeks since DWD sought that guidance. Frostman says he’s been told a response should be coming soon, but so far it has still not been received.

Wisconsin and North Carolina are the only states that restrict SSDI recipients from collecting unemployment, and in North Carolina, that limitation was suspended for the pandemic. Repealing the SSDI restriction altogether in Wisconsin “would be more equitable for folks with disabilities,” Frostman says. “If you lose work through no fault of your own, you should be eligible for unemployment insurance or its equivalent.”

If the Department of Labor does confirm that DWD can award PUA to SSDI recipients, says Jedd, the DWD spokesman, “the department would rectify any cancelations that took place prior to the hold.”

But in the meantime, the department does not appear to have consistently put on hold all PUA applications from people on SSDI. Besides representing clients who are appealing their denials, Forberger has written extensively on his blog — which focuses on all aspects of unemployment compensation law — about the DWD’s handling of applicants on SSDI.  

Forberger contends that DWD on its own could have chosen to interpret the PUA law to allow it to provide the benefits to SSDI recipients up front.

But Frostman says that would have led to another risk: What if the agency had made that interpretation, only to hear from the Labor Dept. that SSDI recipients were not eligible? By not unilaterally allowing those PUA claims without a federal OK, the DWD secretary says, “we would not have to recoup payments from folks that we’ve paid, and create additional economic heartburn or consternation for those claimants.”

Granted and taken away

Yet for at least two people that appears to be a risk they’re facing right now.

In addition to Karen Smith, Ken Lonnquist has also received communications from DWD both granting and denying his PUA claims. The first was a letter on June 26, telling him that he qualified and instructing him to start filing weekly claims. Two weeks later, a second letter came telling him he had been denied as an SSDI recipient.

He contacted Forberger, who has been helping with an appeal. Forberger also urged him not to spend any of the money he has received from the PUA so long as there’s a risk he’ll have to repay it.

Both Jedd and Frostman told the Wisconsin Examiner  they were not aware of anyone having been both approved and denied for PUA payments.

Karen Smith says she was relieved to learn on Wednesday that the PUA funds she applied for had begun to flow into her bank account.

“I got all excited when I got approved,” she says. “I hadn’t paid my car insurance. I didn’t have the money.”

When she learned of the conflicting finding Thursday that she had, instead, been denied, she knew she would have to put off that payment a little longer.

“I’ve got to leave it there,” she says of the money now in the bank. “I’m scared to death to touch it because they’re just going to end up coming back for it, anyway.