U.S. okays special unemployment pay for disability recipients

Letter from Labor Dept. says state’s restriction does not apply for pandemic pay

"Unemployment Office" by Bytemarks | Flickr CC BY 2.0

After weeks of waiting and being told no, laid-off Wisconsin workers who also collect federal disability payments got some better news on Monday: They, too, can get jobless pay.

A U.S. Department of Labor official, in a letter sent Monday to the state Department of Workforce Development (DWD), said that Wisconsin residents enrolled in the Social Security Disability Insurance (SSDI) program — and who lost work because of the COVID-19 pandemic — can qualify for special unemployment payments for workers not eligible for regular unemployment compensation.

In a press release emailed at 9:31 p.m. Monday, DWD stated that having received “awaited official guidance” the department “today encouraged Social Security Disability Insurance (SSDI) recipients whose ability to work was impacted by COVID-19 to apply for Pandemic Unemployment Assistance (PUA) benefits.”

DWD said eligible applicants could receive PUA retroactive to the first week they were out of work due to COVID-19, as far back as the week ending Feb. 8.

The DWD statement said that Gov. Tony Evers, DWD Secretary Caleb Frostman, and Democratic members of Wisconsin’s Congressional delegation had sent letters to the Labor Department “arguing that SSDI recipients out of work due to COVID-19 should not be excluded from receiving PUA benefits, especially during a period of public health emergency.”

“If you lose work through no fault of your own, you should be eligible for Unemployment Insurance or its equivalent,” Frostman stated. “With today’s news, our state’s residents who receive SSDI and are out of work due to COVID-19 now have an opportunity to receive partial wage replacement through PUA if they are otherwise eligible.”

Up to now, however, DWD has either delayed or denied, in some cases for months, applications from more than 1,450 SSDI recipients who also worked and were laid off or had hours cut because of the pandemic. In an interview last week, Frostman said that the department did not believe it should unilaterally grant the applications at the risk of leading recipients to have to repay benefits should DWD be overruled.

Victor Forberger, who has represented several SSDI recipients seeking jobless pay, applauded the U.S. Labor Department’s decision. 

“I’m really happy. I’m glad people are going to start getting some money soon,” said Forberger, who is supervising attorney for the University of Wisconsin’s Unemployment Compensation Appeals Clinic. “I’m hoping the department will act quickly on paying benefits out.”

Forberger obtained a copy of the Department of Labor letter and shared it Monday evening with other lawyers representing workers as well as with the Examiner about 2-1/2 hours before the DWD announcement.

Shut out from unemployment

The question of unemployment coverage for SSDI recipients caught up in the COVID-19 pandemic’s spiraling unemployment has been complicated in Wisconsin because of a 2013 law, passed by the Legislature’s Republican majority and signed by then-Gov. Scott Walker, that blocks people on SSDI from filing for unemployment insurance (UI) even if they otherwise qualify.

While they are excluded from the state’s regular unemployment insurance program even during the pandemic, Forberger and other advocates for that group of workers have argued they should qualify for the special PUA program, which was included in the massive federal COVID-19 relief bill enacted in March. PUA was crafted to help independent contractors, gig workers, and a variety of other groups of workers not covered by regular UI.

As DWD was implementing the PUA program in Wisconsin, state officials at first concluded that SSDI recipients weren’t eligible because of the 2013 state law barring them from regular UI. In an email exchange, a U.S. DOL official concurred with that viewpoint.

But Frostman told the Wisconsin Examiner last week that he came to question that interpretation, and on June 9, he wrote to U.S. Secretary of Labor Eugene Scalia asking for a decision on whether SSDI recipients did or did not qualify. In his letter he suggested that to deny SSDI recipients PUA automatically would appear to violate federal laws against discrimination because of disabilities.

Frostman, in his interview last week, said he believed that SSDI applicants ought to be eligible for unemployment compensation if they lost a job, but that he needed DOL authorization before he could follow through on that principle. He also said it was his intention that the department put PUA applications from SSDI recipients on hold until he heard back from DOL. Despite that, DWD has continued to deny applications, and to contest subsequent appeals.

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In at least two instances, the department told SSDI applicants that their claims were approved and began distributing payments to their bank accounts — then subsequently issued claim denials to the same people. Forberger said Monday that he has since learned of at least two more people receiving SSDI who got approved for PUA and also denied. One received both the approval and denial notice in the same envelope, Forberger said.

Labor Dept. conclusion

The DOL’s response Monday to Frostman’s June 9 letter was written by John Pallasch, assistant secretary in charge of the DOL Employment and Training Administration (ETA), which administers unemployment compensation for the federal government.

Because under Wisconsin law people on SSDI are “ineligible for regular UC [unemployment compensation], they meet the PUA eligibility requirement of ‘not eligible for regular compensation,’” Pallasch wrote.

“Therefore, if they are unemployed, have reduced employment, or are unable to work or are unavailable to work due to one of the specified COVID-19 reasons” in the CARES Act and in the DOL’s follow-up guidance communication, he continued, “they may be eligible for PUA benefit.”

DWD communications director Ben Jedd told the Wisconsin Examiner last week that in the event of a federal decision allowing PUA for SSDI recipients, “the department [DWD] would rectify any cancelations that took place” before what was supposed to be a hold on those applications.

Besides allowing SSDI recipients to receive PUA if they lose work, Pallasch also wrote in his letter to Frostman that the state does not have to deduct any portion of the disability payment from an applicant’s PUA payment.

That possibility arose because another regulation that state and federal officials are following with PUA suggests that SSDI recipients might have a portion of their pandemic unemployment payment deducted based on the amount they get under the disability program — “but only to the extent that this benefit would be reduced under applicable state law,” Pallasch wrote.  

He continued: “Under Wisconsin law, SSDI income is not reduced from an individual’s entitlement to regular UC because, under the state’s law, an individual is ineligible for any UC if they are receiving SSDI. Therefore, it appears that under Wisconsin law, SSDI income would not be reduced” from a recipient’s PUA award.