More than 100 jobless Iowans told to pay back benefits
“To tell you that you’re approved, then wait three months and say, ‘No. No. No. Sorry. You’ve got to pay all that back.’ It was devastating.” James Furry Recipient of a letter from Iowa Workforce Development telling him to repay $2,912
DES MOINES, Iowa – James Furry still doesn’t understand how he became indebted to the state.
Furry, 59, was a maintenance worker at a Dubuque nursing home when the COVID-19 pandemic began. With an order from his doctor to quarantine, Furry filed for unemployment in April.
Furry, who weighs 300 pounds and suffers from chronic obstructive pulmonary disease, has survived three heart attacks. His father died of a heart attack. His brothers have suffered them, too.
He thought he qualified for benefits through Pandemic Unemployment Assistance, a federal program Congress created in March to cover people who stop working because they are especially vulnerable to the virus.
The state sent Furry payments for eight weeks. Then, in June, an Iowa Workforce Development fact finder told him he should never have received the funds, citing a law that requires claimants to remain “able and available” for work in order to qualify for unemployment compensation. Because Furry was in quarantine, he was not “able and available.”
Furry appealed the decision, but an administrative law judge sided with the fact finder.
A month later, he said, he found his wife crying. She showed him a letter from Iowa Workforce Development, telling him to repay $2,912.
“I don’t have that kind of money laying around,” he said. “I just don’t. We’re almost paycheck to paycheck.”
Furry, who filed for bankruptcy in 2017 and still has outstanding hospital bills tied to his heart attacks, said he worked out a deal with the state. He will pay about $100 a month for the next 21⁄ years.
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“It seems so unfair,” he said. “To tell you that you’re approved, then wait three months and say, ‘No. No. No. Sorry. You’ve got to pay all that back.’ It was devastating.”
Furry is among many Iowans – more than 100 in just one late July period examined by the Des Moines Register, part of the USA TODAY Network – ordered to return money even though they fit qualifications for PUA.
Congress created the program – part of the CARES Act – amid an unprecedented wave of layoffs and furloughs. PUA is supposed to cover workers who don’t qualify for standard, state-funded unemployment.
In addition to those vulnerable to the virus, the program covers part-time and self-employed workers, independent contractors, people who contract the coronavirus and those who can’t work because they must look after an infected family member or children out of school.
But some Iowa workers who have turned to PUA have found themselves entangled in confusing, quickly changing bureaucratic rules that even experienced attorneys say they struggle to follow.
The Register reviewed every administrative law judge decision published during the last seven business days of July. Out of 525 cases, the Register found that judges ordered 107 workers to return unemployment benefits. On average, the judges ordered repayments of $6,713.
The seven-day stretch reviewed by the Register accounts for about 4% of all business days since March 16, when unemployment applications began to spike in the pandemic. The sample looks only at administrative law judge decisions and does not account for cases in which workers or employers did not appeal Iowa Workforce Development fact finders’ decisions, which are not public record.
Interviews with a dozen Iowans who received orders for repayment revealed that the state forgave at least part of the debt in some cases. But not everyone received the same treatment.
In many of the cases that the Register reviewed, administrative law judges wrote that Iowa Workforce Development employees gave applicants benefits under the wrong program, even though they believed the workers didn’t qualify. The judges wrote that the agency employees wanted to provide income for workers amid the mass layoffs.
In an email about the Register’s findings, Iowa Workforce Development director Beth Townsend said the state followed federal guidance on how to administer PUA. She also said she was not aware of any broad problems that made it more difficult for workers to apply for the program.
“Customer service is also available to provide assistance,” she wrote.
National Employment Law Project senior policy analyst Michele Evermore said state agencies around the country have struggled to properly provide PUA to all workers.
“Everything about unemployment this year and PUA and all of the programs is just pandemonium,” she said. “I hate this metaphor, but everybody really was building the plane while they were flying it.”
Rules shift without explanation
Some employment law experts argue that Iowa Workforce Development should not have shuffled workers like Furry out of standard unemployment. They say he should have qualified for it the whole time.
In the early weeks of the pandemic, before Congress created PUA, Iowa Workforce Development had updated its website, posting notices expanding who qualified for standard unemployment, including when a “worker is immune-compromised, advised to quarantine.” The state later removed those notices without a formal announcement or explanation.
“I don’t think people understand what’s happened,” said Alex Kornya, general counsel at Iowa Legal Aid. “The conclusion most people draw is, ‘I was never eligible for this,’ which is not exactly accurate.”
The U.S. Department of Labor and state agencies both determine unemployment rules. The federal government provides general guidance, while agencies like Iowa Workforce Development decide how to use that guidance for workers in their state.
In early March, after the first U.S. COVID-19 outbreak in Washington state, U.S. Department of Labor Assistant Secretary John Pallasch reminded states that they have “significant flexibility” in interpreting unemployment rules.
For example, the federal government dictates that states can award standard unemployment only to people who continue to apply for jobs and don’t turn down “suitable” work. But, Pallasch wrote, states can determine that jobs requiring workers to leave their homes during a pandemic are not “suitable.”
On March 18, Congress passed the Families First Coronavirus Response Act, allowing states to further tweak their unemployment rules “on an emergency temporary basis.” Pallasch wrote another guidance to state agencies, encouraging them to give workers standard unemployment if they needed to stay home to care for family members or “avoid a reasonable risk of exposure.”
On March 27, Congress passed the CARES Act, creating PUA. The program covers many of the same people the state said it would cover, including workers without child care and those with underlying health conditions.
Iowa Workforce Development did not explain at the time what this meant for workers who had been receiving benefits under standard unemployment.
Asked when the agency officially expanded unemployment qualifications or ended those changes, Townsend simply wrote in an email, “The CARES Act was passed in late March which expanded the number of eligible recipients of unemployment benefits.”
However, the state began to post these changes 11 days before Congress passed the CARES Act.