RICHMOND, Va. (WRIC) – The Virginia Employment Commission will have to clear nearly all of its massive unemployment claim backlog by Labor Day as part of a settlement of a federal class-action lawsuit filed over delays at the state agency. 

The commission reported 92,158 unpaid claims awaiting adjudication as of May 10, according to the settlement filed Tuesday in federal court in Richmond. The settlement requires the VEC to “substantially resolve at least 95%” of these disputed claims by Sept. 6. 

Five Virginia residents struggling to get the unemployment insurance benefits they have sought sued VEC Commissioner Ellen Marie Hess in federal court in Richmond. The class-action lawsuit, filed on behalf of the plaintiffs by legal aid groups and pro bono partners, alleged VEC violated claimants’ rights for not responding to complaints and abruptly putting people’s benefits on hold without quickly adjudicating disputed claims. 

The settlement, the result of mediation ordered by U.S. District Judge Henry E. Hudson, also calls for VEC to speed up its ability to adjudicate these claims, aligning with a directive from Gov. Ralph Northam to resolve 10,000 cases a week by July and 20,000 by Aug. 1.

On the same day initial details of the settlement were revealed, Northam issued an order to use $20 million to add hundreds to VEC’s staff, to expand call centers and modernize the agency’s unemployment insurance IT program. While the governor’s office stressed the state plan was not announced to coincide with the settlement, one of the lawyers representing the plaintiffs said Tuesday that Northam’s order “didn’t occur in a vacuum.”

“We’ve been working on this for quite some time and tried to get the Northam administration to respond without us suing, but that was not working,” Steven Fischbach, an attorney with the Virginia Poverty Law Center, said in a phone interview.

The groups representing the plaintiffs are the Virginia Poverty Law Center, Legal Aid Justice Center and Legal Aid Works, along with the law firms Consumer Litigation Associates and Kelly Guzzo, PLC.

“I’m very comfortable saying that I believe our advocacy brought the governor to issue that order,” Fischbach continued. “And we are very glad that he issued that order.”

The Virginia Employment Commission must fulfill the following steps under the settlement, according to a release from the Legal Aid Justice Center:

  • Ensure the elimination of the VEC adjudication backlog before September 6, 2021 (Labor Day).
  • Accelerate the adjudication of claims to 10,000 cases weekly by July 1, 2021, and 20,000 cases weekly by August 1, 2021.
  • Quickly and immediately process adjudications for many applicants who are covered by Pandemic Unemployment benefits but have had to first await adjudication.
  • Identify and resume payments to those claimants who had been getting benefits but were improperly cut off.
  • Require state identification and better coordination of various alternate housing, food, and income benefits available to applicants in financial difficulty.
  • Subject the VEC’s new performance standards and deadlines to judicial supervision and require weekly information sharing to make that possible.

While he expressed his appreciation for Northam’s order, Fischbach pointed to other provisions in the court order that the groups were able to secure and the vital role Hudson played. One key arrangement, Fischbach explained, will require VEC to submit weekly reports for review until the end of the year “so we will know if they [VEC] meet those benchmarks.”

The reports to the legal groups will include adjudication numbers, the total number of unemployment insurance claims adjudicated the prior week and how many unpaid claimants are waiting for their cases to be heard and ruled upon.

In the court order, Judge Hudson acknowledged the unprecedented surge of unemployment insurance claims the VEC has dealt with and the effort it has taken to manage the state’s benefits program. The commission said it has processed 1.6 million claims and distributed $13.1 billion in benefits since the pandemic struck last March.

“The VEC is grateful that Judge Hudson has recognized the hard work of our employees throughout this pandemic, and we will continue to ensure Virginians have access to all benefits for which they are eligible,” Hess said in a statement Tuesday. “The VEC is focused on serving our customers, and we are committed to continuing the important work our team is doing for their fellow Virginians.”

According to data from the U.S. Department of Labor, over the first three months of the year Virginia ranked last in the nation in making determinations on cases within 21 days. The Joint Legislative Audit and Review Commission has been tasked with reviewing how the Virginia Employment Commission has processed unemployment insurance claims. 

The JLARC study, set to come Nov. 15, will examine the pandemic’s impact on VEC, the effectiveness of its response and how the employment commission administered the state’s unemployment insurance program. It will also look into how VEC will modernize its IT program, a 12-year effort that resumed in April, according to JLARC’s executive director.

“While I am optimistic that the VEC will stand by their obligations in this lawsuit, and that benefits will be provided to Virginias in a reasonable time, we should never have had to wait this long in the first place,” Ashley Cox, one of the plaintiffs in the lawsuit, said in a statement Tuesday.

“I am cautiously optimistic.” 

UPDATE: This story was updated after Judge Hudson officially signed the settlement between VEC and the plaintiffs on Tuesday evening after publication. The statement from Hess was also included.