Lawmakers: State 'Literally Failed Workers,' and Fixing the Unemployment System Won't Be Easy

Almost a year after Washington was hit by the first big pandemic-related layoffs, the state unemployment system is still straining under the crisis, lawmakers and worker advocates say.

Although the flood of jobless claims last spring has receded, thousands of Washingtonians are either waiting for payment from the state Employment Security Department (ESD) or appealing claims the agency has denied.

The filing process still can be complicated, slow and easily stalled, many claimants say. Those with questions often struggle to contact the agency. Its website and computer-generated notifications can be notoriously confusing and even inaccurate.

"It's incompetence," grouses Renton resident Kevin Johnsted, 55, one of many Washingtonians who were told by the ESD — incorrectly — that they owe federal taxes on unemployment benefits that were actually paid to criminals in last spring's $600 million fraud scheme.

"I have never seen a bureaucracy that was so completely unaware of the people it's supposed to be serving," adds Dennis Friscia, an unemployed Kent resident who has been without benefits since ESD cut him off in December and has been stuck in a frustrating loop of poor communication trying to verify his identity to the agency. "I am furious over it."

Frustrations like these are helping fuel legislative proposals to both fix existing problems and strengthen the unemployment system for the next crisis. Washington "literally failed workers" during the pandemic, says state Rep. Liz Berry, D-Seattle, one of dozens of lawmakers behind a broadly bipartisan effort to upgrade the state unemployment system. "So what can we do now to fix that for the future?"

But fixing those problems won't be easy or fast. Many of the system's failings during the pandemic were likely unavoidable given the historic scale of job losses; in the crisis's first three months, Washingtonians filed twice as many unemployment claims as they did during nearly two years of the Great Recession — and are still filing roughly twice as many claims as they were a year ago, before the pandemic.

Many claimants also stalled out while applying for emergency federal unemployment benefits, which had their own complex eligibility rules. And after last spring's fraud debacle, many legitimate claimants were ensnared in the agency's beefed-up anti-fraud measures.

Still, lawmakers say these challenges were magnified by structural problems in the state's unemployment system, which are the focus of several bills — notably Senate Bill 5193 and a companion House measure, HB 1487.

A top priority is expanding the number of so-called adjudicators trained to resolve eligibility questions and disputed unemployment claims. Because the ESD lacked enough adjudicators during last spring's claims surge, even minor issues spiraled into a huge backlog of people "stuck in a queue," says state Sen. Karen Keiser, D-Des Moines, chair of the committee with ESD oversight and a co-sponsor of SB 5193, which passed 48-0 on Thursday; the House could vote in early March.

Even now, the limited number of adjudicators may be affecting claimants such as Tim Orchard, a 54-year-old maintenance worker from Spokane, who says he has been waiting some 13 weeks for a benefit payment or "even a decision on my unemployment."

SB 5193 would create a reserve of trained adjudicators, drawn from state government workers and private citizens, whom the ESD could bring in during high-load periods.

Another top legislative priority is fixing the agency's often-confusing website and its automated notifications.

Critics point to a situation last fall when many claimants who were receiving federal unemployment benefits may not have understood an ESD notification saying their federal eligibility likely was ending. After thousands of claimants didn't respond correctly, in time or at all, many got notifications demanding repayment of thousands of dollars in federal benefits. (The ESD eventually suspended the eligibility process that had generated the confusing notifications.)

Notifications like that were "disheartening" for claimants "already fighting, some for months and months, to get unemployment that's due to them," says Rep. Gina Mosbrucker, R-Goldendale.

ESD's automated notification system also generated many erroneous 1099-G tax notices for Washingtonians whose identities were used to file fraudulent unemployment claims. Johnsted, the Renton resident, says he received such a notice in January despite having alerted the ESD to the fraud in May — and then contacted the agency at least five times before he got a corrected 1099 form. (The ESD says it now has sent corrected 1099s to all those who requested them.)

SB 5193 requires the ESD to "assure [that] written communications are tested and in plainly understood language." If any communications failed that test, the law directs the ESD to "consider" switching to manually generated notifications until the agency can update its automated system.

ESD officials say they've already made substantial improvements. A new "customer experience" team is improving notifications. The agency has been adding staff since the pandemic struck. The number of claimants in any given week who have yet to receive a benefit payment from ESD and are waiting for an ESD decision was around 8,800 as of last week, or less than half the level it was at for much of late 2020, says spokesperson Nick Demerice.

But lawmakers want to ensure that improvements continue even after the pandemic.

To that end, SB 5193 would subject the ESD to quarterly legislative review on key performance measures — among them, the number of claims in adjudication, and call center volumes, hold times, abandoned calls, and "all circuits busy messages." It also requires the agency to post performance data on an online dashboard.

"If there's something that's not getting done, and something that needs to be attended to, we can require that in law," says Keiser, adding that the ESD will face additional oversight by a recently re-established advisory committee from the business and labor communities. After the pandemic, the "ESD is going to be taking in quite a bit more information and guidance than they have before."

Lawmakers also want to address problems in the unemployment system outside of the ESD. One bill would expand state eligibility for workers who often struggled to get benefits during the pandemic, including some ride-hailing drivers and employees who quit voluntarily to care for family members, says Berry.

Lawmakers also want to help other state agencies that were overwhelmed by pandemic-related layoffs.

At the state Office of Administrative Hearings (OAH), for example, more than 31,000 claimants are waiting to appeal disputed unemployment claims, and the usual (pre-pandemic) monthlong wait for an appeals decision is now four months, says Lorraine Lee, OAH's chief administrative law judge, in a Feb. 5 letter to lawmakers. Without a temporary increase in funding for staff, Lee warns, the backlog "will rise to nearly 70,000 appeals and the wait time will climb to 23 months."

But some worker advocates say the proposed reforms don't go far enough or were weakened by amendments.

Under SB 5193, ESD's quarterly reviews will continue only through 2022 and the agency must publish performance metrics only when the state unemployment rate exceeds 5%.

Advocates are also unhappy that SB 5193 requires the ESD to merely study or "explore" other proposed improvements. These include automatic "triggers" that would boost staffing at certain workload thresholds; and a caseworker claims model that connects each claimant with a single ESD staffer through the claims process.

"The state Senate took most of the teeth out of the bill," says Anne Paxton, policy director at the Seattle- and Spokane-based Unemployment Law Project, which represents claimants appealing their claims.

Working Washington, a worker advocacy group, thinks lawmakers also should require the ESD to determine a claimant's eligibility within three weeks. "We think that's a solution that really forces other changes to get made" in the rest of the claims handling process, says spokesperson Sage Wilson.

Lawmakers say they'll revisit the issue if claimants tell them that reforms aren't working. "If their needs aren't being met, then the oversight piece is key and absolutely needs to be addressed," says Rep. Dan Bronoske, D-Lakewood, a lead sponsor of HB 1487.

Even the measures that seem likely to become law may not bring immediate relief for workers. Training adjudicators and testing notifications for clarity takes time and is "not going to happen overnight," Keiser says.

That means claimants might see more delays as ESD deals with an expected surge in jobless claims next month if Congress extends expiring federal benefits.

Reform's slow pace may also mean some tough choices for Washingtonians such as Friscia who can't wait any longer to get their benefits.

Early in the pandemic, the 68-year-old quit his gig driving for delivery services such as DoorDash because he didn't want to risk his health. But without the $211 weekly federal benefit he was receiving, Friscia says he has drained his small savings and will be forced to start driving for DoorDash again.

Adding to his angst, Friscia says the ESD demanded he repay the approximately $5,000 in benefits he received last year and implied he had obtained the funds fraudulently. "It's a heavy allegation," Friscia says. "It feels terrible. It's almost like criminalizing people."

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