Recalling Hawaii workers presents challenge in unemployment policy

A second wave of trouble could be headed for Hawaii’s unemployment system still swamped by coronavirus­-related jobless claims.

The state Department of Labor and Industrial Relations anticipates having to deal with appeals from displaced workers who are receiving unemployment checks that exceed what they can earn when employers decide to restore their pay.

This challenge is expected on two fronts.

One scenario involves employers who are calling back workers as part of resuming full or partial operations after being forced to close or reduce business because of COVID-19.

The other scenario involves employers who received proceeds from the federal Paycheck Protection Program that can be used to resume paying workers for eight weeks even if they don’t resume work because of coronavirus impacts.

In either case, employees aren’t entitled to unemployment benefits. But state officials already have seen cases where people don’t want to give up unemployment payments in favor of their employer resuming their pay.

“That technically isn’t a choice for them,” Scott Murakami, DLIR director, told the Hawaii Senate Special Committee on COVID-19 last week. “They’re supposed to go back to work.”

Murakami, however, noted that some such refusals to return to work have been made and that financial motivation exists because $600 in weekly federal unemployment pay was added to the maximum weekly state benefit of $648, which exceeds pay for many workers.

“The challenge is that we’re seeing some people don’t want to go back to work, and the reason is the benefit payment is much larger than the pay they may be receiving,” he told the Senate committee.

Handling and resolving such issues, however, is expected to be problematic because of the case volume and determining whether a recalled employee should lose unemployment benefits.

Under Hawaii’s unemployment system, employers are supposed to inform DLIR if they resume paying an employee or offer such payment. In this instance, the agency can terminate the jobless benefit.

However, there could be situations where an employee might not feel safe returning to work because of COVID-19 risks. Or an employee may not be able to arrange child care because school has been suspended.

These circumstances may or may not be valid reasons to keep unemployment benefits, but a person in such a situation could seek to appeal a denial of benefits and refuse to return unemployment payments distributed after an employer recall.

Murakami said such cases could take a long time to adjudicate.

“Some of these decisions are really hard,” he said during the Senate meeting.

In addition to this, DLIR’s computer system already has been bogged down with new claims and efforts by those receiving benefits to recertify their claim every week or two. Employers trying to notify the agency about worker recalls would only add to the congestion.

To alleviate logjams, the agency established online portals disconnected from the state mainframe system to receive claims and claim recertifications, though many people still have unresolved problems with claims.

On Monday, Murakami told the House Select Committee on COVID-19 Economic and Financial Preparedness that DLIR is working to build another online portal so that employers can easily notify the agency if they have resumed paying an employee or offered to do so.

Since March, when job losses due to COVID-19 began, about 234,000 Hawaii unemployment claims have been filed, excluding duplicate claims.

DLIR has denied 36,693 claims and 96,190 claims are in processing.

The agency also has reported paying 88,818 claims, or 38% of the claims filed. About $230 million in benefits, including the federal bonus, have been paid from April 1 to Friday.

DLIR spokesman Bill Kunstman said Monday that the agency has yet to compile a count of how many employers have notified the agency that they have resumed paying or offered to resume paying wages to people who filed for unemployment.

Hawaii businesses received $2.1 billion from the Paycheck Protection Program, or enough to support payrolls for 170,000 jobs as estimated by the Hawaii Bankers Association, though some of the money can be used to avoid cutting employees and to pay expenses such as mortgage interest, rent and utilities.