Indiana gets to keep unemployment benefits - but only because of a technicality

• An Indiana court of appeals reversed a ruling that said federal unemployment benefits should continue.
• But, because states need to give a 30 day notice to wind down benefits, jobless workers will still get them.
• It's a technicality that covers workers through all federal benefits winding down in September.

Jobless workers in Indiana will still receive their enhanced unemployment benefits, even after a court ruling struck down them again.

Indiana was one of the 26 states to end federal benefits early, and one of the first to see its jobless residents sue to get them back. Workers there sued the state after Governor Eric Holcomb prematurely ended benefits on June 19 - months ahead of the scheduled Sep. 6 expiration - and won a preliminary injunction in late June that temporarily reinstated benefits as the case proceeded. Benefits officially resumed in July.

On Tuesday, a court of appeals unanimously reversed that prior ruling, arguing that the Indiana law the residents and lawyers had identified as securing the federal unemployment benefits did not actually apply. It's an interesting twist, since lawsuits in other cases have hinged upon similar state laws.

"I want to thank the Court of Appeals on its ruling to reverse the trial court's decision on unemployment benefits," Gov. Holcomb said in a statement. "The state took the appropriate steps to terminate its participation in these optional federal pandemic unemployment programs and this ruling confirms that we had the legal authority to do so."

But the end result is that jobless Hoosiers will still receive their benefits through the day the American Rescue Plan set them to expire.

Scott Olson, a spokesperson for Indiana Department of Workforce Development, confirmed to Insider that benefits claimants will still be paid through September 4. That's because the Department of Labor requires that states opting out have to give 30 days notice. The next twist in the story is that 30 days from now goes past September 4, when all federal benefits are set to expire.

"The legal issues at stake in this proceeding are important to our clients and all Hoosiers because unemployment benefits play a vital role in keeping people out of poverty while they look for new employment," co-counsel Jennifer Terry (ILS) and Jeffrey Macey (Macey Swanson), who are representing the workers, said in a statement. "We are currently reviewing the Court's decision and conferring with our clients on next steps."

It's on that technicality that over 100,000 Indiana residents will still receive benefits they would have otherwise been completely cut off from. Indiana is one of the many states opting out of federal benefits to end participation in Pandemic Unemployment Assistance (PUA), which made gig workers and other self-employed workers eligible for benefits, as well as Pandemic Emergency Unemployment Compensation (PEUC), which extended how long recipients could get benefits.

Benefits for all workers on federal unemployment are set to wind down in September. 7.5 million Americans are projected to lose all of their unemployment benefits then, according to a report by Andrew Stettner from the left-leaning Century Foundation. In total, over 20 million Americans are set to lose out on benefits come September, according to an analysis from the left-leaning People's Policy Project. Some lawmakers and experts have argued that's too early of a cut-off, as the unemployment still remains high and the infectious Delta variant sweeps the country.

But the situation in Indiana shows how workers in states that have won back their benefits - and there are at least three - may be able to hold onto those benefits in the meantime.

Are you an unemployed worker with a story to share? Email this reporter at jkaplan@insider.com