PHOENIX — Gov. Doug Ducey broke no laws when he unilaterally cut off the extra $300 a week the unemployed in Arizona were getting last year, the state Court of Appeals has ruled.
Judge David Weinzweig acknowledged Congress in 2020 agreed to supplement the state benefits that were available to workers displaced by COVID. And Ducey directed the state Department of Economic Security to join.
But Weinzweig, writing for the unanimous three-judge panel, said the governor was entitled to withdraw from the program early even though it left what the attorney for those challenging the action said were about 100,000 people who had their benefits cut back to the state maximum of $240 a week, the second lowest in the nation.
The judge rejected arguments that state law required Ducey to pursue the maximum benefits available, saying that’s not how the law is worded.
The court did not address the fact Ducey, in halting the extra payments on July 10, 2021 — 58 days before the federal program actually ended — made it clear he was hoping that lower jobless benefits would help certain Arizona employers, particularly in the restaurant and hospitality industry, find the workers that they needed.
Central to the legal fight is the Federal Pandemic Unemployment Compensation program. Approved by Congress in March 2020, it initially provided an extra $600 a week on top of state benefits.
Arizona agreed to accept that money.
The amount was later cut to $300.
Attorneys for Unemployed Workers United and several individuals who lost their jobs because of the pandemic charged the legislature essentially required Ducey to go along. They cited state statutes that require the Department of Economic Security, which administers the unemployment fund, to “take such action as may be necessary to secure to this state and its citizens all advantage available under provisions of the Social Security act that related to unemployment compensation.”
Paul Gattone, one of the lawyers, said there were about 100,000 Arizonans still collecting benefits who should also have been getting the extra $300 for those remaining eight weeks. That comes out to $2,400 per individual, money he said the state should go back to the feds to secure.
Only thing is, Weinzweig said, the new benefits were not created under the Social Security act, making that state mandate inapplicable. And the judge said federal law specifically allowed states to withdraw with 30 days notice.
Ducey, in making the announcement in May, said the move was justified, citing the shortage of people willing to work.
The governor, however, attached a carrot to the plan.
He said anyone who was collecting benefits would get a one-time $2,000 bonus if they take a full-time job by Sept. 6. And the state also offered some child care assistance and even a semester of community college tuition for those who went back to work.
“In Arizona, we’re going to use federal money to encourage people to work ... instead of paying people not to work,” Ducey said in a video announcement of his decision.
In making the announcement in May, Ducey press aide C.J. Karamargin said there were plenty of jobs out there and little reason for people to be collecting benefits. More to the point, he said restaurants and hotels were struggling to find workers.
“The hospitality industry in Arizona, a critical part of our economy, was perhaps the hardest hit sector,” Karamargin said.
“They cannot find enough workers for the jobs they have to fill,” he continued. “And this plan is aimed at helping them fill those positions.”
But Karamargin said that problem extended to other sectors of the economy where employers were having trouble finding workers.
Inherent in that is the governor’s belief there are those for whom the total benefits — the $240 a week maximum paid by the state plus the extra $300 — provided a disincentive to find a job. That total came out to $13.50 an hour, before taxes are deducted.
By contrast, the state’s minimum wage at the time was $12.15 an hour; restaurants can pay $3 an hour less if the tips that servers get bring them up to the minimum.
Since that time, the minimum wage has risen to $12.80; it is going to $13.85 in January. Lawmakers also boosted the maximum jobless benefit to $320 a week, but lowered to 24 weeks from 26 the maximum number of weeks someone can collect.
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