Court orders Indiana to reinstate pandemic-era federal unemployment benefits

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A court in Indiana is temporarily blocking Governor Eric Holcomb's order to end federal unemployment benefits programs until a final ruling is made in a case brought by jobless workers in the state.

"Indiana should notify the U.S. Department of Labor immediately of its continued participation in the CARES Act programs pending further action by this Court," Marion Superior Court Judge John Hanley wrote on Friday.

The order comes after the state cut off benefits on June 19, affecting 236,000 unemployed workers and costing the state $1.3 billion in federal money that was allocated for the benefits.

Indiana is one of 26 states that eliminated or plan to eliminate certain expanded unemployment programs this month and early next month. The federal expiration is September 6.

BLOOMINGTON, INDIANA, UNITED STATES - 2020/12/15: Indiana Governor Eric Holcomb wearing a face mask speaks during a round table discussion at Catalent Biologics, where COVID vaccine vials are being filled. (Photo by Jeremy Hogan/SOPA Images/LightRocket via Getty Images)
Indiana Governor Eric Holcomb wearing a face mask speaks during a round table discussion at Catalent Biologics, where COVID vaccine vials are being filled. (Photo by Jeremy Hogan/SOPA Images/LightRocket via Getty Images)

The suit against the state was filed by Indiana Legal Services (ILS) and MaceySwanson Hicks & Sauer law firm earlier this month, claiming that canceling the benefits early would "cause irreparable harm to individual clients."

"These benefits have provided life-sustaining and crucial assistance to many Hoosiers during the pandemic," Jon Laramore, executive director of ILS, said in a statement this month. "The legislature passed a law creating a right to these benefits, and we’re asking Governor Holcomb to follow the law."

The challenge to Governor Eric Holcomb's decision was based on Indiana law 22-4-37-1 that requires the state to "procure all available federal insurance benefits to citizens," the organizations said in a statement.

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The cut-off in benefits includes the extra $300 in weekly benefits, the Pandemic Unemployment Assistance (PUA) program for workers who don’t normally qualify for unemployment, and the Pandemic Emergency Unemployment Compensation (PEUC) program that provides extra weeks of benefits.

"Indiana Indiana law recognizes the importance of these benefits," the court decision read. "Indiana law requires the acceptance of these benefits."

In May, lawmakers, including Sens. Ron Wyden (D-OR) and Bernie Sanders (I-VT), urged the labor secretary to find a way to pay benefits to PUA recipients, with Sanders noting in a letter that it's a “congressionally-mandated requirement."

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In the 26 states opting out early from the programs, more than 4 million workers will see their benefits slashed by at least $1,200 a month, losing a total of $22.1 billion in potential benefits, according to estimates by the Century Foundation. Nearly 3 in 5 workers affected by the early expiration will be left with no benefits at all.

"Kudos to Judge Hanley for standing up for unemployed workers and the state’s legal mandate to keep the jobless out of severe hardship," Andrew Stettner, an unemployment insurance expert and senior fellow at the Century Foundation, told Yahoo Money.

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Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova

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