Court: Arizonans won't get back jobless pay cut off by Gov. Ducey

PHOENIX — About 100,000 Arizonans whose extra federal unemployment benefits were cut off early during COVID by then-Gov. Doug Ducey, because he wanted them to go to work at restaurants and hotels, will not get the money they lost.

Without comment, the Arizona Supreme Court declined Tuesday to overturn lower court rulings that Ducey broke state laws when he unilaterally halted the extra $300 a week unemployed residents were getting in 2021. This ends any chance of those affected recovering the money they would have gotten had Ducey not ended Arizona’s participation in the federal program 58 days early.

The new order rests on the state Court of Appeals decision the governor acted within his authority. It does not address a key argument on behalf of the workers that Ducey acknowledged he cut the program short not to save money but to help certain Arizona employers find the workers they needed.

The Federal Pandemic Unemployment Compensation program was approved by Congress in March 2020, as the pandemic began and unemployment rose rapidly, to provide an extra $600 week on top of what each state offered.

In Arizona, the maximum state benefit at the time was $240 a week, the second lowest in the nation.

Filling minimum-wage jobs

Ducey initially directed the state Department of Economic Security to accept the extra funds, which the federal government later cut to $300 a week.

The Republican governor halted the extra payments on July 10, 2021, 58 days before the the federal program ended. His office said dropping the benefits back to $240 a week would help address what he saw as a labor shortage among some of the lower-wage sectors of the Arizona economy.

Ducey press aide C.J. Karamargin said at the time there were plenty of jobs and little reason for people to be collecting benefits. “The hospitality industry in Arizona, a critical part of our economy, was perhaps the hardest hit sector,’’ he said. “They cannot find enough workers for the jobs they have to fill. And this plan is aimed at helping them fill those positions.’’

Ducey’s office said there were those for whom the total benefits — the $240 a week maximum paid by the state plus the extra $300 — provided a disincentive to find jobs. The total benefit was $13.50 an hour before taxes; the state’s minimum wage at the time was $12.15.

Within his authority

That proved irrelevant to the Court of Appeals.

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In a ruling last year, Judge David Weinzweig said the governor was entitled to withdraw from the program early, even if it did leave what challengers of the move said were about 100,000 workers who had their benefits cut back to $240 a week.

The extra eight weeks would have come out to about $2,400 per individual, said attorney Paul Gattone, representing the workers. He said the state should have been required to go back to the federal government to secure that money to repay the workers.

Weinzweig, writing for the unanimous three-judge panel, rejected arguments state law required Ducey to pursue the maximum benefits available. He said that’s not how the laws are worded.

While Ducey said his move was designed to get people back to work, he did offer a carrot. He said anyone collecting benefits would get a one-time $2,000 bonus if they took a job by Sept. 6, 2001. DES said slightly more than 27,200 took advantage of that offer.

The state also offered some child-care help and 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 then in a video announcement of his decision.

Current benefits

The state’s minimum wage, required by law to be adjusted annually to keep pace with inflation, is now $13.85 an hour.

Maximum jobless benefits, which are supposed to equal one-half of what people were earning before losing their jobs through no fault of their own, have been boosted to $320 a week. But Arizona lawmakers lowered the time someone can collect to 24 weeks from 26 weeks.

The state Senate voted earlier this year to trim that to as little as 12 weeks when unemployment has been below 5% for the prior quarter, as it is now. But that measure, Senate Bill 1167, is stalled in the House.