Arizona Court of Appeals Division One holds Arizona law did not mandate the Arizona Department of Economic Security to participate in the Federal Pandemic Unemployment Compensation Program.

On March 25, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which created and funded the Federal Pandemic Unemployment Compensation program (FPUC), a program providing supplemental unemployment benefits to qualified unemployed workers during the COVID-19 pandemic.  On March 27, 2020, the Arizona governor signed into law a directive for the Arizona Department of Economic Security (ADES) to join FPUC.  On July 10, 2021, the governor directed ADES to exit the agreement—58 days prior to FPUC’s expiration nationally.

Three Arizona workers and a non-profit workers organization sued, alleging Arizona’s exit from FPUC violated A.R.S. § 23-645, which requires ADES to “secure . . . all advantages available” under certain federal unemployment benefit programs.  The trial court denied relief, concluding the law did not compel Arizona to obtain FPUC benefits.

The Court of Appeals affirmed.  A.R.S. § 23-645 requires ADES to secure benefits for Arizonans available under “the social security act that relate to unemployment compensation, the federal unemployment tax act, the Wagner-Peyser act and the federal-state extended unemployment compensation act of 1970.”  The Court concluded that FPUC—created and funded by Congress under the CARES Act—was not a benefit under the acts referenced in § 23-645.  It explained FPUC was not an advantage under the Social Security Act, despite the federal government’s distribution of its benefits through Social Security infrastructure and methods of administration, and noted Congress had the ability to amend the Social Security Act in the CARES Act, but refrained from doing so.  The Court also held FPUC benefits did not constitute “advantages” under the 1970 Act, even though Congress borrowed definitions from the 1970 Act when creating the CARES act.

Judge Weinzweig authored the opinion; Judges Furuya and Perkins joined.

Disclosure: Osborn Maledon attorneys were involved in this case.

Posted by:  BriAnne Illich Meeds