State of Alabama loses case before Supreme Court – could face numerous suits over COVID unemployment

February 21, 2025 – WASHINGTON, D.C. – The state of Alabama suffered a devastating loss in a cases before the U.S. Supreme Court. The court found that people denied unemployment claims by the state during the COVID pandemic can sue the state.

During the COVID-19 pandemic the state shut down in a failed attempt to stop the spread of the virus – which at that time was new to the country. The result was that hundreds of thousands of workers were suddenly jobless. Unemployment claims soared and the Department of Labor struggled to keep up with the sudden volume of new claims to consider.

The Department of Labor was inundated with both legitimate claims and fraudulent ones. The ADOL had to make the determination as to whether or not to reward or reject the claim rapidly on its best judgement. Thousands of claims were denied. Under the law, if an unemployment claim is rejected the applicant has a right to appeal. Under federal law the hearing officer that hears that appeal has to be an attorney. The problem for the state of Alabama is that ADOL only had three attorneys on staff whose job was to hear appeals of denials of unemployment. They soon had a caseload that was years behind. The law requires that an applicant who is denied cannot sue in circuit court until after the administrative options are exhausted. Well, if the state never gets around to an applicants' appeal then there will never be a day where the denied applicants can sue. The state did eventually expand the number of appeals attorneys to 25; but Alabama Legal Services was already in court representing dozens of denied unemployment applicants by that time.

The Alabama Supreme Court dismissed the lawsuit; but plaintiffs then moved to federal court where it eventually worked its way up to the Supreme Court of the United States.

The Supreme Court found that unemployment applicants must be able to sue the state of Alabama over the delay.

The 5 to 4 ruling comes with Chief Justice John Roberts voting with the three liberal jurists on the court and then Justice Brett Kavanaugh breaking from the Court's narrow conservative majority to side in favor of the plaintiffs.

"Because the claimants cannot sue until they complete the administrative process, they can never sue to obtain an order expediting the administrative process," wrote Justice Brett Kavanaugh in the majority opinion.

Anyone who was denied unemployment benefits in Alabama in the last five years should consult with their attorney to see if there is a possibility that they have an actionable claim against the state.

The Alabama Department of Labor is now the Alabama Department of Workforce.

(The report is based on original reporting by the Associated Press.)