More lawsuits mount against states canceling unemployment benefits

Jobless workers in Tennessee, Florida, and Arkansas are suing their governors for opting out of unemployment programs earlier than the federal expiration in September, with one of the latest lawsuits finding success already.

They join similar cases in Indiana, Maryland, Ohio, Oklahoma, and Texas brought by unemployed residents in the last month.

Tennessee workers were the latest to file a lawsuit against Gov. Bill Lee on Wednesday, arguing that the workers cited in the lawsuit have been unable to pay for basic expenses since the cancellation of the federal programs.

"All class members have already suffered the loss of their benefits for three weeks, and will continue to suffer the deprivation," the lawsuit memorandum read. "Defendants' decision to terminate Tennessee's participation in the federal programs has severely limited Plaintiff's ability to pay for basic necessities, such as housing, food, utilities, and health care."

Similarly, ten Florida workers also filed a lawsuit against Gov. Ron Desantis on Sunday, saying the state has a statutory obligation to pay unemployed workers the additional $300 in weekly benefits funded by the federal government.

"Each of the Plaintiffs have suffered economic hardships because of COVID, have had difficulty finding work and now, with the discontinuation of the FPUC, face even more pressing financial hardships," the lawsuit said.

A group of workers represented by Legal Aid Arkansas filed a suit against the state on July 23 for the early termination of benefits, alleging the move runs counter to two state laws. On Thursday, an Arkansas judge ruled in favor of Arkansas Legal Aid, granting a preliminary injunction ordering Gov. Hutchinson to reinstate the pandemic unemployment benefits.

"The Court has serious doubts that the Governor and the Director of Workforce Services were acting within the scope of their duties, as these decisions would normally be the subject of legislation from the General Assembly," the order said. "The State is ordered to reengage these terminated programs if the United States Government will agree to permit the State to do so."

Two other lawsuits have been successful. In Indiana, benefits have been restarted, while earlier this month a Baltimore City Circuit Court judge granted a preliminary injunction against the governor, reinstating the benefits at least temporarily in Maryland.

"If the disincentive of unemployment benefits is real for some relatively small segment of the workforce, the cutoff of benefits would be real and immediate for almost all currently unemployed Marylanders," Judge Lawrence Fletcher-Hill wrote. "Not all of those workers will instantly move into new jobs, meaning uneven economic struggles at the individual level and an immediate loss of economic stimulus at the generalized level."

In all, 26 states cut off the extra $300 in weekly benefits early, while 22 of them also canceled the Pandemic Unemployment Assistance (PUA) program for workers who don’t normally qualify for regular unemployment insurance and the Pandemic Emergency Unemployment Compensation (PEUC) program that provides extra weeks of benefits.

More than 4 million workers are affected by the cuts in those states, losing a total of $22.5 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.

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The success of the three lawsuits may encourage workers in other states to file their own lawsuits, according to Andrew Stettner, an unemployment insurance expert and senior fellow at the Century Foundation.

"Indiana and Maryland are no worker's paradise when it comes to its unemployment law, but like most states, their laws direct the government to protect the unemployed from hardship and draw down federal aid to do so," he previously told Yahoo Money. "Legal actions in other states certainly have a chance at proceeding, and I'm hearing from frustrated unemployed workers across the country about their desires to join such suits."

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