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Unemployed factory worker sues as Virginia tries to claw back his jobless benefits

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For 26 years, Ernest Ray worked at a company in southwest Virginia that made compressors, in a physically demanding job that involved night shifts on a factory floor. When the plant closed in 2018, Ray applied for and received about $9,000 in unemployment benefits.

Three years later, Ray is fighting the Virginia Employment Commission in court as the agency tries to take the money back. It’s a case that, as Ray’s pro bono attorney sees it, illustrates the ethos of a radically dysfunctional agency.

“Like the teacher who doesn’t like children and the librarian who doesn’t like books, this is an agency that doesn’t like the people that it’s supposed to serve,” said Hugh O’Donnell, who has done decades of unemployment compensation work.

The agency has been under scrutiny for the past year and a half for a response that by some measures was among the nation’s worst to a surge in jobless claims due to the coronavirus pandemic. But cases like Ray’s, and interviews with attorneys and state audits, show the agency was plagued with a wide range of problems for years before the pandemic; they were simply brought to the forefront when hundreds of thousands of workers suddenly needed help.

U.S. economy grows despite labor shortage


Republican Governor-elect Glenn Youngkin campaigned on a promise to overhaul the agency, and Virginia Labor Secretary Megan Healy, who oversees it now, also says some problems are structural. She says the agency has long lacked sufficient resources thanks to a complicated federal funding formula that pays out less when the economy is strong and has also penalized the agency’s inefficiencies. Outside reviews have warned of problems going back nearly a decade, including major records-management issues, low staff morale and unclean facilities.

During the pandemic, the agency lagged in setting up certain benefit programs and allowed backlogs of cases to pile up, prompting a class-action lawsuit. An information technology modernization project eight years behind schedule exacerbated the situation, leaving claimants reliant on physical mail and call centers that a recent audit found were still only answering 12% of calls.

Virginia, which has relatively limited unemployment benefits, also has low recipiency rates, meaning only a small portion of unemployed workers actually receive jobless aid. The state has the third-lowest average rate in the nation over the past two decades, a recent audit found.

“The system is just broken”

“The system is just broken. There’s no other way to describe it,” said Martin Wegbreit, director of litigation at the Central Virginia Legal Aid Society.

President Joe Biden’s administration has said the pandemic exposed longstanding challenges in the unemployment insurance system nationwide, and that it needs comprehensive reform.

For Ray, the struggles with the agency began well before it was flooded with pandemic-related claims.

Deaf since birth, Ray spent decades making complicated machinery at Bristol Compressors. During his shifts, he wore safety glasses, gloves, an apron and steel-toed boots that sometimes grew even heavier when soaked with leaking coolant, Ray said in an interview, with his niece interpreting.

Ernest Ray, right, shakes the hand of his attorney Hugh O'Donnell at the Virginia Higher Education Center in Abingdon, Virginia, August 17, 2021.
Ernest Ray, right, shakes the hand of his attorney Hugh O’Donnell at the Virginia Higher Education Center in Abingdon, Virginia, August 17, 2021.

AP Photo/Sarah Rankin

“Top-of-the-line guy”

A former colleague, David Woodring, called him a “gentleman” and honest “top-of-the-line guy” who never missed work and performed a job that required a great deal of skill.

Ray made about $36,000 a year in his last year of work at the company, which closed despite receiving millions in taxpayer-funded incentives. Ray’s wages qualified him for $378 a week for 24 weeks, according to records in his case.

Ray, who is 57 with worn hands and a big white beard, began receiving those benefits without issue, started looking for a new job and meanwhile drove about 30 miles each way to an employment commission office in Bristol to comply with the state’s weekly work-search documentation requirements. He didn’t have a computer to do the paperwork online.

When his benefits ran out in May 2019, staff instructed him for reasons that are unclear to keep reporting his work-search details. Ray then missed one week due to a minor illness. After producing a doctor’s note, he received a notice saying he had been deemed unable to work — an applicant must be eligible to work to receive benefits — “due to medical reasons” and had received his payments in error. The state wanted the money back.

O’Donnell, a former executive director of a legal aid clinic, said none of it makes any sense. The doctor’s note, which is included in the lengthy case file, expressly said Ray was not incapacitated.

Ray appealed, but did so three weeks late, according to his lawsuit. Fluent only in American Sign Language, he had trouble reading the tiny print of the agency’s notice and understanding the bureaucratic language.

Focus on late appeal, not merits of case

Ray’s case has since been winding its way through the employment commission appeals process. At each stage, the state has fought him on the basis of his late appeal, not the merits of the case. The commission never explained its reasoning for seeking the repayment, O’Donnell said, blaming Ray at one point for an alleged lack of diligence.

Joyce Fogg, a commission spokeswoman, refused to comment on the specifics of the case. A spokeswoman for Attorney General Mark Herring declined to comment on the litigation.

Labor Secretary Healy and top commission officials have defended the work of the agency’s employees, who faced an unprecedented surge of applications amid the pandemic, changing federal guidance and confrontations — including death threats — from irate individuals.

Despite the flood of commission-related complaints, state officials have so far shown little appetite to push for sweeping reforms.

A scathing audit released by a watchdog agency this month made 40 recommendations for changes and faulted the administration of outgoing Democratic Governor Ralph Northam for waiting too long to address problems as pandemic-related claims surged. It also noted weak oversight from the federal Department of Labor and urged the General Assembly to do more.

Youngkin, who takes office in January, has promised an agency overhaul will be a top priority but so far has released no specifics about where he will start.

Ray and his niece say he was unable to find another job, largely because of his deafness. He is now getting by on Social Security disability benefits that started well after his unemployment benefits ended.

He said he doesn’t have the money to repay the state and worries constantly about his case.

“I lost my job and then it’s like something that should have been in place to help me find something else just turned into a bigger mess,” he said.

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